Every year most of us make a New Years resolution to get out of debt by the end of the year. One thing I am definite about is it took us longer than a year to get this far in debt. Every month Corporate America has a holiday or occasion for us to spend money on. We feel we must so we go get a credit card which pulls us farther in the whole. Department stores will get you a percentage off of your purchase if you just fill out a credit application. As I’ve said before we work for Uncle Sam January through April, for Corporate America May through August and we live on what is made September through December. It is time to stop!!!
As we work on getting our finances together, I would like for us to look at tax credits. Which tax credits are you taking advantage of? There are three that I would like to talk about, College Expenses, Saving for Retirement and Earned Income Credit. The Hope Credit is for a student’s first two years in college. The Lifetime Learning Credit is actually that, ” lifetime”. As you continuously grow in business or your career take some classes and take advantage of this credit. The classes you take don’t have to be in your career or business, it can be for anything. Working on losing weight? Take college level classes on diet and exercise. Did you know you can get a credit for saving money? Yep! I wrote another blog article on growing your interest in a Certificate of Deposit. When you set the CD up at your bank if you are not re-investing the interest made then have it deposited into an IRA account. You save up to $5,000 a year and get a credit of up to $1,000. There a some qualifications one being born before January 2, 1993. Reply to this blog and we can take a look at the other qualifications. If you have a 401(k) you can qualify for this credit also. Lastly, Earned Income Credit is one of the most abused credits today. Unlike other credits that dissipate the taxes owed, this one actually gives you money back. Internal Revenue is cracking down on abusers of this credit and it is a high audit category. Depending on your income, filing status and where or not you have a child you could get as much as $6,000 back. Again, if you reply to this article we can discuss how this credit can or cannot work for you.
You should not pay more in taxes than you have to. Making adjustments to your income, starting a business, rental properties, contributions to you retirement, self-employment health insurance all effect how much your income is lowered which lowers your taxes. Your credits lowers those taxes.