Abo and Company Gives You the Credit You Derserve
While tonight is Superbowl 50, considering that Abo the "super jock" typically crashes by the sixth inning, we spent this cloudy Sunday afternoon in Mount Laurel, New Jersey hoping that many of you consider this to be a great time to start organizing your tax papers. We'll send this email alert out Monday when the game's results and award winning commercials are a thing of the past. Hopefully you even completed the tax organizers we mailed to clients over the last several weeks or went to our website to print out the blank one we make available.
Anyway, it's criminal to take tax deductions and credits to which you're not entitled, but it's a darn shame to miss those that are lawful. The endless tampering by Congress with tax deductions, credits, capital gains taxes and income tax rates makes it more essential than ever to have tax returns prepared and reviewed by a professional tax advisor (hopefully that be us) to determine whether such deductions and credits are permitted but, equally important, you've availed yourself to those you're entitled.
So here are some federal tax credits that help us here at Abo and Company increase your 2015 refund:
1. The Earned Income Tax Credit is for people earning less than $53,267 from wages, self-employment or farming. Millions of workers who saw their earnings drop in 2015 may qualify for the first time. Income, age and the number of qualifying children determine the amount of the credit, which can be up to $6,241. Workers without children also may qualify.
2. The Child and Dependent Care Credit is for expenses paid for the care of your qualifying children under age 13, or for a disabled spouse or dependent, while you work or look for work.
3. The Child Tax Credit is for people who have a qualifying child. The maximum credit is $1,000 for each qualifying child. You can claim this credit in addition to the Child and Dependent Care Credit.
4. The Retirement Savings Contributions Credit is designed to help low-to-moderate income workers save for retirement. You may qualify if your income is below a certain limit and you contribute to an IRA or workplace retirement plan, such as a 401(k) plan. The Saver's Credit is available in addition to any other tax savings that apply.
5. The American Opportunity Tax Credit expanded and renamed what we used to know as the Hope scholarship credit for higher education costs. It can be claimed for expenses paid for tuition, certain fees and course materials. It is a tax credit of up to $2,500 of the cost of tuition, fees and course materials paid during the taxable year. Also, 40% of the credit (up to $1,000) is refundable. This means you can get it even if you owe no tax. Generally, a taxpayer whose modified adjusted gross income is $80,000 or less ($160,000 or less for joint filers) can claim the credit for the qualified expenses of an eligible student.
6. The Adoption Credit, the largest refundable tax credit available to individuals, enables taxpayers to take up to $13,400 for qualified expenses paid to adopt an eligible child. (While an Abo child will not qualify, Marty may offer a personal incentive for anyone who closes The Bank of Dad to his two sons).
7. The Foreign Tax Credit offers individuals a federal tax credit for income tax paid to a foreign country (with certain limitations and paid to countries that are recognized by the United States and do not support terrorism).
8. The Nonbusiness Energy Property Credit is available to individuals for the installation of nonbusiness energy property, such as residential exterior doors and windows, insulation, heat pumps, furnaces, central air conditioners, and water heaters. There is a $500 maximum lifetime credit that has been extended retroactive to January 1, 2015 all the way through December 31, 2016. It is available for qualifying expenditures made so why not take advantage of it.
Please appreciate that a tax credit is a dollar-for-dollar reduction of taxes owed. Some tax credits are actually refundable meaning if you are eligible and claim one, you can get the rest of it in the form of a tax refund even after your tax liability has been reduced to zero.