Select an item from the list below:
- Adoption Credit
- Child and Dependent Care Credit
- Child Tax Credit
- The Additional Child Tax Credit
- Earned Income Credit
- American Opportunity (AOC) and Lifetime Learning Credits
- Tuition and Fees Deduction
- Retirement Savings Contributions Credit
- Credit for Excess Social Security Tax or Railroad retirement Tax (RRTA) Withheld
- Foreign Tax Credit
For tax year 2023, the maximum adoption credit is $15,950 (from $14,890). Modified adjusted gross income (MAGI) beginning at $239,230 (from $239,230) and completely phased out at a MAGI of $279,230 (from $263,410). The credit is NOT refundable. The credit for a special needs child is allowed for the year in which the adoption becomes final. No credit for a special needs child is allowed until the adoption becomes final.
Child and Dependent Care Credit
*Amount is up to 20-35% of total qualifying expenses and credit is Non-refundable
*Only $3000 for one person and $6000 for two or more people of total qualifying expenses is deductible
*Daycare credit is given for children under age 13
For tax year 2023, the Child Tax Credit remains at a maximum of $2,000 per qualifying dependent under the age of 17 of which up to $1,600 (from $1,500) is refundable.
The credit amount decreases if your modified adjusted gross income exceeds $400,000 (MFJ) or $200,000 (all other filers).
You must have earned income to qualify for a portion or all of the child tax credit.
The Additional Child Tax Credit
The Additional Child Tax credit allows you to receive up to $1,600 of the Child Tax Credit per child (listed above).
You may receive less than the full amount of the Child Tax Credit because this credit is limited to your available tax liability. In certain cases, you may be entitled to an additional credit in excess of your tax liability. The additional child tax credit is available to taxpayers with an income greater than $2,500 and is A REFUNDABLE CREDIT!!!
Earned Income Credit
The Earned Income Credit is a refundable credit for low-income workers with earned income. The credit is available for taxpayers with or without children. You could be entitled to a refundable credit of up to $3,995 (if you have one qualifying child), $6,604 (if you have two qualifying children), $7,430 (if you have three or more qualifying children) or $600 (if you have no qualifying children). You have earned income if you work for someone else or if you are self-employed. Taxable earned income includes wages, salaries, tips, union strike benefits, long-term disability benefits received prior to minimum retirement age, and net earnings from self-employment. If you qualify for the Earned Income Credit, it reduces the tax you owe. The credit is refundable if your withholdings and earned income credit amount are greater than the tax liability you may have on your tax return.
**Qualified dependent must be under age 19 or under age 24 if full time student unless the qualifying child has a permanent and total disability which would allow EIC to be claimed at any age.
American Opportunity Credit and Lifetime Learning Credits
The maximum American Opportunity Credit remains at $2,500 per eligible student of which up to 40% is refundable. The maximum Lifetime Learning Credit remains at $2,000 per tax return.
The phase-out range for the Lifetime Learning Credits is $160,000- $180,000 and $80,000 – $90,000. The phase-out range for the American Opportunity Credit is $160,000 – $180,000 (MFJ) and $80,000 – $90,000 for all other filing statuses. If your AGI is over $90,000 ($180,000 for joint filers), you cannot claim the credit.
The deduction for tuition and fees expired on December 31, 2020. However, taxpayers who paid qualified tuition and fees in 2018, 2019 and 2020 could claim a maximum deduction of $4,000.
Retirement Savings Contributions Credit
If you contribute to an IRA or an employer-provided retirement account, such as a 401(k), you may be eligible for a credit. The credit is based on up to $2,000 of your contribution for the year. You must be age 18 or older to claim the credit and you cannot be a student or claimed as a dependent on another’s return. The credit is in addition to any deduction or exclusion from income for the contribution.
Credit for Excess Social Security Tax or Railroad Retirement Tax (RRTA) Withheld
The maximum social security taxes or RRTA tier 1 an individual must pay in 2023 is $9,932. If you worked for one employer and paid more than $9,932, you must contact your employer for a refund of the overpayment. If you worked for more than one employer and the combined total of your social security taxes or RRTA is greater than the maximum amount, you may claim the excess taxes paid as a refundable credit on your tax return.
Foreign Tax Credit
If your Form 1099-INT or Form 1099-DIV shows you paid foreign taxes, you may be eligible to claim either a credit or an itemized deduction for these taxes. Generally, the foreign tax credit results in a greater tax savings than deducting the foreign taxes as an itemized deduction.
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