Earned Income Tax Credit

<p>If you earn a low to moderate income, the <a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit">Earned Income Tax Credit (EITC)</a> can help you by reducing the amount of tax you owe. To qualify, you must meet certain requirements and file a tax return. Even if you do not owe any tax or are not required to file, you still must file a return to be eligible. If EITC reduces your tax to less than zero, you may get a refund.</p><p>Note: If you earned less in 2020 than you did in 2019, you can use your 2019 income to calculate your EITC.</p><h3>Do I qualify for EITC?</h3><p>You qualify for EITC if:</p><ul><li><p>You have earned income and adjusted gross income within certain limits; AND</p></li><li><p>You meet certain basic rules; AND</p></li></ul><p>You either:</p><ul><li><p>Meet the rules for those without a qualifying child; OR</p></li><li><p>Have a child who meets all the qualifying rules for you or your spouse if you file a joint return.</p></li></ul><p>EITC has special rules for:</p><ul><li><p><a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/special-eitc-rules">Members of the military and members of the clergy</a></p></li><li><p><a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/disability-and-earned-income-tax-credit">Taxpayers with certain types of disability income or children with disabilities</a></p></li><li><p>Victims of <a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.fema.gov/disasters/disaster-declarations">presidentially declared disasters</a>.</p></li></ul><h3>Get Help with EITC</h3><p>Use the <a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/use-the-eitc-assistant">EITC Assistant</a> to find out:</p><ul><li><p>Your filing status</p></li><li><p>If your child qualifies</p></li><li><p>If you’re eligible</p></li><li><p>The amount of credit you may receive</p></li></ul>

Tax Benefits for Education

<p>Tax benefits can help with a variety of education-related expenses. These expenses include tuition for college, elementary, and secondary school. </p><h3>Find Out if You Qualify for Education Benefits</h3><p><a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.irs.gov/help/ita">Use the Interactive Tax Assistant</a> to see if you’re eligible for education credits or deductions. These include the:</p><ul><li><p>American Opportunity Credit</p></li><li><p>Lifetime Learning Credit</p></li><li><p>Student loan interest deduction</p></li></ul><h3>Learn About Claiming Education Credits</h3><p>An education credit helps you pay education expenses by reducing the amount you owe on your tax return. There are two types of education credits:</p><ul><li><p>The <a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.irs.gov/credits-deductions/individuals/aotc">American Opportunity Tax Credit</a> helps with expenses during the first four years of higher education. You can get a maximum annual credit of $2,500 per eligible student. If the credit lowers your tax to zero, you may get a refund.</p></li><li><p>The <a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.irs.gov/credits-deductions/individuals/llc">Lifetime Learning Credit (LLC)</a> can be used toward tuition payments and related expenses. To use the credit, you must attend a <a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/eligible-educational-inst">qualifying educational institution</a>. Use the LLC for undergraduate, graduate, and professional degree course expenses. Or, use the credit to help pay for classes that improve job skills. You can claim up to $2,000 per tax return, and there is no limit on the number of years you can claim the credit.</p></li></ul><p>You must meet income limits to be eligible for these credits. And you can’t claim both credits for the same student and the same expenses.</p><h3>Deduct Student Loan Interest From Your Taxes</h3><p>A deduction reduces the amount of your income that is subject to tax. As a result, deductions can lower the amount of tax you have to pay. You may qualify for a deduction based on your <a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.irs.gov/help/ita/can-i-claim-a-deduction-for-student-loan-interest">student loan interest</a>. </p><h3>Understand How Education Savings Plans Work</h3><p>Parents and students can save for school using education savings plans. These plans can help pay for elementary, secondary, and higher education expenses. The money you save or withdraw from your savings plan for qualified education expenses is tax-free. There are two types of savings plans:</p><ul><li><p><a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.finra.org/investors/alerts/college-savings-plans-school-yourself-you-invest">529 plans</a> are qualified tuition programs (QTPs) sponsored by states and colleges. They’re authorized under Section 529 of the Internal Revenue Code. With these plans, you can: </p><ul><li><p>Prepay or contribute funds to an account to help cover qualified higher education expenses</p></li><li><p><a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.irs.gov/newsroom/irs-offers-guidance-on-recent-529-education-savings-plan-changes">Withdraw up to $10,000 each year per eligible student</a> to cover tuition at elementary or secondary schools (K-12)</p></li><li><p>Transfer or rollover funds from the 529 plan to an Achieving a Better Life Experience (ABLE) account. These funds can benefit the savings account holder or a family member. <a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.usa.gov/disability-financial-support#item-214021">Learn how an ABLE account can help a person with a disability pay for education, housing, health, and other qualified expenses</a>. </p></li><li><p>Pay off up to $10,000 in student loan debts. </p></li><li><p>Pay for fees, books, supplies, and equipment required under qualified apprenticeship programs. </p></li></ul></li><li><p>The <a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.irs.gov/taxtopics/tc310">Coverdell Education Savings Account</a> can be used to pay for eligible K-12 and higher education expenses. You may contribute up to $2,000 per year for each eligible student. When you open the account, the person receiving the benefits must be under 18 or have special needs.</p></li></ul><h3>Exclude Education Benefits From Your Income</h3><p>You don’t have to pay tax on educational assistance benefits you receive from your employer under $5,250. These payments can be for tuition, books, and supplies for a course you’re taking. But, you can’t claim these expenses for any other deduction or credit, including the Lifetime Learning Credit.</p>

Energy Tax Incentives

<p>Energy-related tax incentives can make home and business energy improvements more affordable. There are credits for buying energy efficient appliances and for making energy-saving improvements.</p><p>Find out if you qualify for state, local, utility, or federal incentives.</p><h3>Energy Tax Breaks by State</h3><ul><li><p>Find programs and policies in your state that support renewable energy and energy efficiency. Search the <a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.dsireusa.org/">Database of State Incentives for Renewables and Efficiency (DSIRE)</a>.</p></li><li><p>Find out if your state offers a <a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.taxadmin.org/sales-tax-holidays">sales tax holiday</a> on energy-efficient home appliances.</p></li></ul><h3>Energy-Saving Home Improvements</h3><p><a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.irs.gov/forms-pubs/about-form-5695">Residential Energy Credits allow savings</a> for any of these purchases for your home:</p><ul><li><p>Solar panels</p></li><li><p>Solar water heaters</p></li><li><p>Small wind turbines</p></li><li><p>Geothermal heat pumps</p></li><li><p>Fuel-cell equipment</p></li></ul><p>These tax credits are valid through 2021. </p><h4>Energy Tax Breaks for 2020 Tax Year</h4><p>They include credits for:</p><ul><li><p>Energy efficient homes</p></li><li><p>Energy-efficient commercial buildings</p></li><li><p>Nonbusiness energy property</p></li><li><p>Qualified fuel cell vehicles</p></li><li><p>Alternative fuel vehicle refueling property</p></li><li><p>Energy tax incentives for biodiesel and renewable diesel extended through 2022</p></li></ul>

Tax Relief in Disaster Situations

<p>The Internal Revenue Service (IRS) offers <a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.irs.gov/businesses/small-businesses-self-employed/disaster-assistance-and-emergency-relief-for-individuals-and-businesses">special tax help</a> to individuals and businesses hurt by a major disaster or emergency.</p><h3>Get Your Tax Refund Faster After a Disaster</h3><p>In a <a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.fema.gov/disasters/disaster-declarations">federally-declared disaster area</a>, you can get a faster refund by filing an <a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.irs.gov/taxtopics/tc308">amended return</a>. You will need to claim the disaster-related losses on your tax return for the previous year.</p><p>Get guidance from the IRS on <a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.irs.gov/businesses/small-businesses-self-employed/faqs-for-disaster-victims-amended-returns">amending a tax return</a> or <a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.irs.gov/businesses/small-businesses-self-employed/faqs-for-disaster-victims-extensions-of-time-to-file">filing an extension after a disaster</a>. </p><h3>Tax Relief for Recent Disasters</h3><p>Get a list of the <a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.irs.gov/newsroom/tax-relief-in-disaster-situations">most recent disasters which may be eligible for tax relief</a>.</p>

Federal Tax Deductions for Charitable Donations

<p>You may be able to claim a deduction on your federal taxes if you donated to a <a href="https://webcf.waybackmachine.org/web/20210420073926/https://apps.irs.gov/app/eos/">501(c)3 organization</a>. To deduct donations, you must file a <a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.irs.gov/forms-pubs/about-schedule-a-form-1040">Schedule A</a> with your tax form. With proper documentation, you can claim vehicle or cash donations. Or, if you want to deduct a non-cash donation, you'll also have to fill out <a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.irs.gov/forms-pubs/about-form-8283">Form 8283</a>.</p><h3>How Much Can You Deduct?</h3><p>The amount of money that you can deduct on your taxes may not be equal to the total amount of your donations.</p><ul><li><p>If you donate non-cash items, you can claim the fair market value of the items on your taxes.</p></li><li><p>If you donated a vehicle, your deduction depends on if the organization keeps the car or sells it at an auction. “<a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.irs.gov/pub/irs-pdf/p4303.pdf">A Donor’s Guide to Vehicle Donation</a>” explains how your deduction is determined.</p></li><li><p>If you received a gift or ticket to an event, you can only <a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.irs.gov/charities-non-profits/charitable-organizations/charitable-contributions-quid-pro-quo-contributions">deduct the amount that exceeds the value of the gift or ticket</a>. </p></li></ul><p>Note: Limits on cash and non-cash charitable donations have increased or been suspended. Learn more about <a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.irs.gov/charities-non-profits/charitable-organizations/charitable-contribution-deductions">charitable deductions in 2020</a>.</p><h3>Keep Records of Charitable Donations</h3><p>To claim deductions, it’s important to keep records of your donations to charities. You may not have to send these documents with your tax returns, but they are good to keep with your other tax records. Common documents include:</p><ul><li><p><a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.irs.gov/faqs/itemized-deductions-standard-deduction/gifts-charitable-contributions">Written acknowledgment</a> of vehicle donations</p></li><li><p><a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.irs.gov/charities-non-profits/charitable-organizations/charitable-contributions-written-acknowledgments">Bank records or a written communication</a> for cash donations</p></li><li><a href="https://webcf.waybackmachine.org/web/20210420073926/https://www.irs.gov/forms-pubs/about-form-8283">Form 8283</a> for non-cash deductions</li></ul>