Haven’t filed your taxes yet? Well you are in luck. Here are some tax tips to save money and cut your taxes.
Non-Business Energy Property Credit. You can cut your taxes and save on your energy bills with certain home improvements. The Non-Business Energy Property Credit is worth 10 percent of the cost of certain qualifying energy-saving items you added to your home in 2015. This may include insulation, windows, doors and roofs. Additionally, you may be eligible to receive another credit for the actual cost of certain property. This may include items like water heaters and heating and air conditioning systems. The credit amount for each type of property has a different dollar limit. This credit has a maximum lifetime limit of $500. You may only use $200 of this limit for windows. Be sure to have a written certificate from the manufacturer that their product qualifies for this tax credit. Under the current law, this credit is available through Dec. 31, 2016.
Residential Energy Efficient Property Credit. This tax credit is 30 percent of the cost of alternative energy equipment installed on or in your home. Qualified equipment includes solar hot water heaters, solar electric equipment, wind turbines and fuel cell property. There is no dollar limit on the credit for most types of property. You can also carry forward the unused credit to the next year’s return. This credit is available through 2016. Contribute to Retirement Accounts. If you haven’t already funded your retirement account for 2015, you can still do so. The deadline is April 18, 2016 to contribute to a traditional IRA, deductible or not, and to a Roth IRA for tax year 2015. Child Tax Credit. The child tax credit is worth up to $1,000 per child under the age of 17. Some taxpayers utilizing the child tax credit could reduce their federal income tax liability to zero. Technically, there is no limit to how many children you can claim for child tax credit purposes, but additional dependents will expose a taxpayer to the alternative minimum tax. Here are the four things you need to know about the Child Tax Credit
- Qualifications – A qualifying child must pass several tests: (i) the child must have been under age 17 at the end of 2015; (ii) the child must be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half-brother or half-sister. The child may be a descendant of any of these individuals. A qualifying child could also include your grandchild, niece or nephew; (iii) the child must have not provided more than half of their own support for the year; (iv) the child must be a dependent that you claim on your federal tax return; (v) the child cannot file a joint return for the year, unless the only reason they are filing is to claim a refund; (vi) the child must be a U.S. citizen, a U.S. national or a U.S. resident alien; and (vii) in most cases, the child must live with you for more than half of
- Limitations – The Child Tax Credit is subject to income limitations. The limits may reduce or eliminate your credit depending on your filing status and income. The child tax credit starts to be reduced when income reaches the following levels:
- $55,000 for married couples filing separately,
- $75,000 for single, head of household, and qualifying widow(er) filers, and
- $110,000 for married couples filing jointly.
The credit phases out as income rises.
- Additional Child Tax Credit – Any Child Tax Credits in excess of a person’s tax liability can potentially be refunded. For taxpayers with one or two children, the refundable portion of the Child Tax Credit is the smaller of the unused portion of the Child Tax Credit or 15 percent of the person’s earned income over $3,000. For taxpayers with three or more children a more complex calculation exists.
- Schedule 8812 – If you qualify for the Child Tax Credit, make sure you complete and attach Schedule 8812 with your tax return.
Home Office Tax Deduction. The eligibility rules for claiming a home office have been loosened to allow more filers to claim this deduction. Individuals who have no fixed place of business can claim a home office.
