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Is your salary under $50,000 per year? Read on for some tax breaks you may be entitled to. [[{“value”:”
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Being a lower earner might make your bills difficult to manage. But unfortunately, that doesn’t let you off the hook from paying taxes. The good news, though, is that there are certain tax breaks you may be privy to if you earn $50,000 or less. Here are some tips that can help you maximize them.
1. Don’t spend money to file your taxes
If you earn $79,000 or less, you’re eligible to file your taxes for free. What’ll happen is you’ll get tax software options to choose from, and you’ll be able to submit your return electronically.
That’s a good thing, because if you’re due a refund, you’re going to want that money to hit your checking account as soon as possible. Electronically filed returns are typically processed much more quickly than returns filed on paper.
2. See if you qualify for the Earned Income Tax Credit
A tax credit is a dollar-for-dollar reduction of your tax liability. Some tax credits are non-refundable, which means the most they can do is reduce your tax liability to $0. But the Earned Income Tax Credit, or EITC, is fully refundable. So if you’re eligible for it, it could put a nice chunk of money in your pocket.
As you can see from the following table, if you earn $50,000 or less, whether as a single tax-filer or a member of a couple filing jointly, you may qualify for the credit.
So let’s say you’re married with a joint household income of $48,000. As long as you have one or more qualifying children in your household, you should be eligible for the credit.
3. Claim back some of your child care costs
If you earn $50,000 or less, then child care costs may be a huge burden for you. But one credit called the Child and Dependent Care Credit could offer some relief.
The credit allows you to claim between 20% and 35% of up to $3,000 in child care costs for one child, or between 20% and 35% of up to $6,000 in child care costs for two or more children. Children need to be under the age of 13 to count for the purpose of the credit.
The percentage of your costs that you’re allowed to claim depends on your income. If it’s $15,000 or less, you can claim 35% of the aforementioned costs. That percentage then decreases as your income increases. But for those making $43,000 or more, the percentage of costs you can claim is 20%.
So, let’s say you make $45,000 and have one child whose care costs you $8,000 per year. In that case, you can claim 20% of $3,000, or $600. You should also know that unlike the EITC, the Child and Dependent Care Credit isn’t refundable.
If you don’t earn such a high wage, it’s important to snag every single tax break you can. These specific benefits are ones that might do you a world of good, so make sure to take advantage of a free tax-filing service and to claim any credits you’re entitled to.
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