Taxpayers can reduce their income tax liability by claiming the benefit of certain tax credits. Each dollar of tax credit offsets a dollar of tax liability. The following are a few of the available tax credits.
Certain low to moderate income households may claim an Earned Income Credit. The maximum Earned Income Credit for 2014 was $6,143 for taxpayers with three or more qualifying children. In order to qualify for the credit, taxpayers must have adjusted gross income of less than $52,247 (married filing jointly) or $46,997 (single head of household). The earned income credit is a refundable credit.
The nonrefundable adoption credit for adopting an eligible child in 2014 is a maximum $13,190 per child. Your modified adjusted gross income must be below $197,880.
There are two education credits available: the American Opportunity Tax Credit and the Lifetime Learning Credit. The American Opportunity Tax Credit offers a maximum annual credit of $2,500 per eligible student. The Lifetime Learning Credit is worth up to $2,000 per tax return.
Effective for tax years beginning after Dec. 1, 1997, taxpayers who have qualifying children for whom the taxpayer may claim a dependency exemption and who are less than 17 years old as of the close of the tax year are entitled to the child tax credit. The amount of the credit for 2014 is $1,000.