Don't Miss These Tax Credits

YahooFinance

You may not be an 'extreme' couponer, and saving a few dollars here and there may not be worth your time. But what about up to $10,000 in coupons? 

The IRS has nearly five figures of savings just waiting for you in the tax version of coupons, a.k.a. tax credits. A credit directly reduces your tax bill—what you owe—just as coupons cut your spending totals.  And tax credits don’t happen automatically. You need to claim them to get your savings.

[Related: 20 Tax Changes You Need to Know About]

Here are some credits you can’t afford to let pass by:

Many Americans saw their income drop or stay low in 2011 so if you made $49,078 or less last year, make sure to claim the Earned Income Tax Credit, which can be as high as $5,700 for the year. That's ample savings. 

Parents and families have several credits available as well. The Child Tax Credit is worth up to $1,000 per qualifying child but phases out starting at $75,000 in income if you’re a single filer, $110,000 for joint filers.  And if you were working or looking for work in 2011 and had to pay for childcare, you can claim a portion of those childcare costs as a Child and Dependent Care Tax Credit of up to $3,000 for one child or $6,000 for two. 

Education is pricey enough so we can use all the savings we can get. There are two large education tax credits that you or a family member may be eligible for. The American Opportunity Credit of up to $2,500 is available if you or a dependent (or spouse) is enrolled at least halftime in a four year undergraduate degree program. This credit is for those first four years only, so there’s no credit should Junior take more than that to graduate. Generally, you need to make less than $80,000 adjusted gross income as a single filer and $160,000 as a joint filer to qualify. The credit goes beyond tuition to also cover fees, books and supplies. 

[Related: Hashtags Can Now Save You Money When You Shop]
The second educational credit is the Lifetime Learning Credit, which very much belongs to folks going beyond the four years of undergrad, such as with continuing education programs as well as classes to improve job skills. No need to be going for a degree here, but income limits are lower, at $60,000 for a single filer and $120,000 for joint filers. Keep in mind that you can only take one of these educational credits at a time, and they cannot be combined with deductions you may want to take for tuition and fees.

No need for scissors to clip these ‘coupons', but the savings are real.

Got a tax tip you’d like to share or have a question? Tweet @carmenwongulric, #OnFile.

View Comments (19)