Tax season 2023: Here are some tax credits you can use to get the most out of your refund
Asher Notheis
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The deadline to file taxes is in less than a week, and there are several credits taxpayers can take advantage of if they wish to make the most of their returns this year.
Tax credits are defined as credits that directly subtract money from federal income taxes that a taxpayer might owe. Tax credits contrast with tax deductions in the way they operate: Every dollar a taxpayer earns in tax credits is a dollar they save in taxes. Meanwhile, tax deductions lower the amount of taxable income a taxpayer may owe, indirectly lowering your tax bill in the process, according to CNET.
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Child Tax Credit
The Child Tax Credit is for families who have children 16 and under, and it gives $2,000 for every child with a Social Security number who is under 17 by the end of 2022. This $2,000 amount phases out for single tax filers making $200,000 annually and for married couples filing jointly making $400,000 a year.
Taxpayers who have children or other dependents 17 or older by the end of 2022 can get a $500 credit for each dependent.
Adoption Credit
Taxpayers who either adopted a child or started the adoption process in 2022 can get up to $14,980 back for eligible expenses involved in the adoption process, such as travel costs and court fees.
Those eligible for this credit can claim it by filing Form 8839, “Qualified Adoption Expenses.”
Earned Income Tax Credit
This credit, intended for low- to moderate-income taxpayers, is worth as low as $560 to up to $6,935, depending on a variety of factors. The $560 credit has an income limit of $16,480 for single filers with no children, while the income limit for married people filing jointly with no children is $22,160. Meanwhile, the $6,935 credit has an income limit of $53,057 for single filers with three children and $59,187 for married people filing jointly with three children.
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Lifetime Learning Credit
The Lifetime Learning Credit will offer 20% back on the first $10,000 spent on higher education expenses at eligible institutions. The maximum benefit per return is $2,000, with the credit phasing out at $80,000 of modified adjusted gross income for single filers or $160,000 for married filing jointly. The credit is fully eliminated at $90,000 of modified adjusted gross income or $180,000 for married people filing jointly.
American Opportunity Tax Credit
This credit will give 100% back on the first $2,000 in higher education expenses for those claiming it, who will then receive 25% back on the next $2,000, giving eligible taxpayers a total maximum benefit of $2,500. Fees that count for this credit include tuition, book expenses, supplies, and equipment. Room and transportation expenses do not count for this credit.