Your Refundable Tax Credit - Tax Services Near Me | Palma Financial
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A refundable tax credit is a tax credit that directly reduces the taxes owed by the taxpayer.

There are three types of refundable tax credits:

– The Earned Income Tax Credit is a federal income tax credit for low-income working individuals and families.

– The Child Tax Credit is a U.S. federal government tax credit for parents, worth up to $1,000 per qualifying child under 17 years old.

– The American Opportunity Tax Credit is a federal income tax credit worth up to $2,500 per year for four years of postsecondary education in the United States in order to encourage people to enroll in higher education institutions and complete a degree program in order to enter the workforce quickly and efficiently.

Tax services near me want you to know about two main types of tax credits: refundable and nonrefundable. 

Each of these gives you the chance to lower your taxes this year.

But keep in mind, tax credits are different from deductions.

A simple way to think about it is that a tax deduction reduces your taxable income, while a tax credit is a reduction in tax liability that’s applied after your taxes are tallied.

Here are some common refundable tax credits to be aware of:

  • American opportunity tax credit — if you paid qualified higher education expenses
  • Child tax credit — if you have a family with qualifying children under age 17
  • Earned income tax credit — if you’re under a certain threshold of earned income
  • Premium tax credit — if you’ve purchased qualifying health insurance

The above credits are just the basics. There are many more tax credits you could take advantage of this year.

I don’t want you to overpay the IRS, so if you’d like, I can give you a free tax assessment, and I could come up with a tax plan for you.

Let’s talk: schedule a time here to discuss our tax services near me.