Tax Tips for People With Low Income

Taxes play a role in your finances, and if you're a low-income earner, there may be some tax credits that you qualify for. These tax credits can reduce your tax burdens and you'll keep more money in your pocket. It will take research, but it's possible to do your taxes in an efficient manner without getting into legal troubles with the IRS. Here are some tax tips for low-income families.

Earned Income Tax Credit

This is a tax credit that is designed for low-income families, and you can still receive it even if you owe taxes. You may qualify for the EITC if your adjusted gross income is below $21, 430 if you have no children or $42,158 if you have one child. If you're married and filing jointly, your income must be below $27,380.

Adoption Tax Credit

If you adopted a child recently, you can deduct adoption expenses from your tace and receive a tax credit of up to $14,000 for those expenses.

American Opportunity Credit

You can claim this credit up to the first $2500 that you spent on tuition, fees, books, and supplies for your or your children's educational expenses.

Saver's Credit

If you contribute to an individual retirement account or your employer's 401K plan, you may qualify for a saver's credit on your taxes. The amount of credit you receive will depend on your adjusted gross income but you can receive between a 10 and 50% credit.

Deductions For Medical Expenses

If you and your family's medical expenses exceed 7.5% of your annual income, you can deduct them from your tax returns. These medical expenses include fees to doctors and specialists, hospital expenses, substance abuse treatment, and payments for eyeglasses, insulin, and wheelchairs.

Free Tax Preparation Services

Not everyone can afford to pay an accountant or a tax professional to assist them with their taxes. Thankfully, there are free options that are available to you. Programs such as Volunteer Income Tax Assistance and Tax Counseling For The Elderly can offer the guidance you need to get your taxes done effectively.

Credit For Other Dependents

Suppose you're caring for elderly parents or a disabled relative. You can receive a tax break thanks to the Credit For Other Dependent tax credit. You can receive up to a $500 tax credit for each dependent you support.

With these helpful tax tips, low-income families can reduce their tax burdens and they'll keep more of their hard-earned money.