When people think of big tax breaks on a tax return for individuals, they typically think of the credits for having children or dependents or the deduction home owners receive for mortgage interest paid over the course of the year. If you don’t have a child or dependent and still are working to buy your first home, you would not qualify for these tax breaks. But not to worry! There are other tax breaks out there that you might qualify for!
One of the most popular tax credits that you might qualify for is the Earned Income Tax Credit (EITC). The Earned Income Tax Credit is a benefit for working people with low-to-moderate income. To qualify, you must meet certain requirements and have filed a federal tax return. If you qualify for this credit, you may be able to receive up to a $510 credit on your tax return.
Maybe you are heading back to school, another credit you may qualify for is the American Opportunity Credit. This is a credit for qualified education expenses paid for an eligible student for the first four years of higher education. With this credit, you can receive up to a $2,500 credit on your tax return for the amount you spent on qualified tuition or course materials.
One other credit for education expenses is the Lifetime Learning Credit. Although the maximum amount of this credit is less than the American Opportunity Credit, it has less stipulations with it. The credit is worth up to $2,500. It does not require a certain attendance or have a certificate or degree requirement. With this credit, you do not have to be pursuing a degree and it is also available for any year of post-secondary education, not just the first four years as with the American Opportunity Credit.
Student loan interest is another type of educational tax break you can take on your tax return. If you paid student loans in the previous year, you can reduce your tax bill by deducting up to $2,500 in interest paid over the year. There are income limits for this deduction.
Have you been contributing to a retirement account? If so, you may qualify for the Savers Tax Credit. This credit allows for up to $1,000 if you file single or $2,000 if you file a joint return of what you contributed over the course of the year.
These are just a few examples of tax breaks that you might qualify for without children or mortgage interest. Not sure if you qualify? Polston Tax can help you decide which tax breaks are best for you. Call us today at 844-841-9857 or click below to schedule your free consultation.