(Thechieftainspear) –With tax season in full swing, many Americans are looking for ways to increase their refunds or reduce what they owe. Various tax credits can help eligible filers significantly lower their tax liability—and in some cases, even receive additional money back.
Understanding Tax Credits vs. Deductions
Before diving into available credits, it’s important to distinguish tax credits from deductions:
- Tax credits directly reduce the amount of taxes owed and may even result in a refund.
- Deductions lower taxable income, which can indirectly reduce the tax bill.
Credits are often offered by both federal and state governments as incentives, such as encouraging environmentally friendly purchases or assisting families with childcare expenses.
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Types of Tax Credits
There are several categories of tax credits, each designed to benefit different taxpayers:
✔ Low-to-moderate-income individuals
✔ Families with children
✔ Retirement savings contributors
✔ Students paying for education
✔ Green energy adopters
Among these, the Earned Income Tax Credit (EITC) is one of the most significant, offering thousands of dollars to eligible filers.
Earned Income Tax Credit (EITC) – Who Qualifies?
The EITC can provide up to $7,830 for qualifying taxpayers who file by April 15, 2025. However, eligibility depends on factors like income, filing status, and age.
- Income Limits: Individuals or families with an adjusted gross income (AGI) below $66,819 may qualify.
- Investment Cap: Those with more than $11,600 in investment income (such as stock sales) are not eligible.
- Children Not Required: While having children can increase the credit amount, it is not mandatory to qualify.
- Age Requirements: Applicants must be at least 25 but under 65 years old.
- Citizenship & Social Security: Filers must have U.S. citizenship (or legal residency) throughout 2024 and possess a valid Social Security number.
For full eligibility details, taxpayers should refer to the IRS website.
Why Refunds May Be Lower This Year
Although millions of Americans have already received refunds, the average refund amount has been 32% lower compared to last year, according to tax experts. To avoid refund delays, filers should ensure they submit accurate information and choose direct deposit for faster processing.
Taking advantage of eligible tax credits can make a significant difference, either by reducing tax liability or increasing refunds. As the deadline approaches, now is the time to review available credits and maximize your return.
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