Examples of Credits
Foreign Tax Credit (Form 1116)
The foreign tax credit is intended to reduce the double tax burden that would otherwise arise when foreign source income is taxed by both the United States and the foreign country from which the income is derived. Generally, only income taxes paid or accrued to a foreign country or a U.S. possession, or taxes paid or accrued to a foreign country or U.S. possession in lieu of an income tax, will qualify for the foreign tax credit. Qualified foreign taxes do not include taxes that are refundable to you or taxes paid to countries whose government is not recognized by the United States.
Child Care Credit (Form 2441)
This is a non-refundable credit. If you have NO tax liability, then you will not receive the Child Care Credit. If the Filing Status is Married Filing Joint both the Taxpayer and Spouse must have Earned Income to be eligible for the Child Care Credit.
Education Credits (Form 8863)
Expenses that qualify are tuition and fees required for enrollment or attendance at any college, vocational school, or other post-secondary educational institution eligible to participate in the student aid programs administered by the Department of Education.
Retirement Savings Credit (Form 8880)
You may be able to take a credit if you, or your spouse if filing jointly, made eligible contributions (other than rollover contributions) to:
- Traditional or ROTH IRA,
- Elective deferrals to a 401(k), 403(b), governmental 457, SEP, or SIMPLE plan,
- Voluntary employee contributions to a qualified retirement plan as defined in section 4974(c) (including the federal Thrift Savings Plan) or
- Contributions to a 501(c)(18)(D) plan.
The Retirement Savings Contributions Credit applies to individuals with incomes up to $28,750 ($43,125 for head of household) and married couples, filing jointly, with incomes up to $57,500. You must also be at least age 18 (born before January 2, 1993), not a full-time student*, and not claimed as a dependent on another person’s return. The credit is a percentage of the qualifying contribution amount, with the highest rate for taxpayers with the least income.
*You were a student if during any part of 5 calendar months of 2012 you:
- Were enrolled as a full-time student at a school, or
- Took a full-time, on-farm training course given by a school or a state, county, or local government agency.
A school includes technical, trade, and mechanical schools. It does not include on-the-job training courses, correspondence schools, or schools offering courses only through the Internet.
Adoption Credit (Form 8839)
You may be able to take a tax credit of up to $12,650 for qualifying expenses paid to adopt an eligible child (including a child with special needs). The adoption credit is an amount subtracted from your tax liability. The adoption credit is not available for any reimbursed expense. Qualifying expenses include reasonable and necessary adoption fees, court costs, attorney fees, traveling expenses (including amounts spent for meals and lodging while away from home), and other expenses directly related to and for which the principal purpose is the legal adoption of an eligible child. New for 2012, this credit is no longer a refundable credit, meaning that you will not be able to claim it if you owe no tax. For 2012, the credit begins to phase out if your modified adjusted gross income is in excess of $ 189,710. Click here for more information regarding your prior year carryforward.
DC First-Time Homebuyers Credit (Form 8859)
You may be able to claim a one-time tax credit of up to $5,000 ($2,500 if married filing separately) if you buy a main home in the District of Columbia. You must reduce the basis of your home by the amount of the credit you claim. Only purchases after August 4, 1997 qualify for this credit. The credit is not allowed if you acquired your home from certain related persons or by gift or inheritance.
Child Tax Credit
In many cases, you can receive a credit of up to $1,000 per dependent you list on your return who is under the age of 17. TaxSlayer will automatically calculate this credit for you based on the dependents and other information you enter into your return. For more information on this credit, click here.