Don’t Leave Money on the Table at Tax Time!

>>Loose ChangeA weird thing happened when I did my taxes this year. I gathered all my documents, answered a million questions in the tax software, and then when I hit “save,” a big number appeared at the top of my screen in the little window marked “refund.” According to the calculations, I was due several thousand dollars in refunds.

Why was this weird? Because every year I actively try to avoid getting a tax refund. I agonize over my tax withholding and make changes throughout the year to ensure I am putting aside exactly the taxes I owe and not a penny more.

What changed this year was that I started keeping fastidious records—I tracked medical expenses, business spending, and every single dime spent on donations and educational needs. And by doing so, I was able to avail myself of a host of tax credits that not only reduced my liabilities, but also put money in my pocket.

According to the>> National Women’s Law Center, working families have access to thousands of dollars in tax credits that many never even use. Although many types of tax software help filers discover their eligibility, families who fill out simple tax forms like the 1040ez might never know they could pay less.

Here are a few>> federal tax credits that you might have missed:

  • The Federal>> Child Tax Credit: Families who make at least $3,000 a year are eligible for a credit of $1,000 per child. This credit is refundable even for workers who pay little or no taxes.

  • The>> Earned Income Tax Credit: A family of four who made less than $51,000 is eligible for this credit, which gives taxpayers up to $6,000 back, even if they did not owe or pay taxes. It is intended to help offset the cost of Social Security Taxes and help keep working families above the poverty line.

  • The>> Child Care Credit: Designed to help offset the costs of providing care for children while parents work, this $2,100 credit decreases taxes for any household in which both parents work. This year I was able to use this credit to help offset the costs of my son’s preschool, which he attends in the mornings while I work.

North Carolina has similar credits to help offset the cost of state income taxes, but some, such as the state earned income tax credit, will end after this year. If you have questions about whether you qualify for these tax credits, or need help filing, there are hundreds of programs that help low-to-middle income taxpayers. Call your local library or town hall for more resources on applying for tax credits and filing your taxes. And >>Turbo Tax has helpful information in their tax guide. 

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