3 Tax Credits Awaits Americans, Here Are The Details

During tax filing season, the tax credits provide taxpayers with a dollar-for-dollar reduction on their tax bills. In this article, read and find out the 3 biggest tax credits you may qualify for in 2023!

Income Tax Return [Photo: MARCA]

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Child Tax Credit

According to an article in NerdWallet, the Child Tax Credit provides up to $2,000 per qualifying child. $1,500 of these tax credits may potentially be refundable. However, the higher the income of an applicant is, the less chance they will qualify for the tax credits. This is because an applicant may only qualify for the full tax credit if their adjusted gross income is less than $400,000 for joint filers and $200,000 for all other filers.

Child and Dependent Care Credit 

In general, the Child and Dependent Care Credit is up to 35% of up to $3,000 of the costs spent for taking care of a child below 13. A spouse, parent, or other dependents unable to take care of themselves is also qualified for these tax credits. For two or more dependents, up to $6,000 of tax credits may be received.

However, for high income earners, the percentage of expenses that are allowed is decreased. Therefore, the amount of the tax credits for these earners will also decrease. In addition, expenses that are made outside of a dependent care spending account or other programs with tax advantages may decrease the tax credits as well.

Earned Income Tax Credit

The Earned Income Tax Credit (EITC) can provide $560 to $6,935 worth of tax credits. However, the amount of tax credits depends on the tax-filing status and how much a taxpayer earns. A taxpayer’s adjusted gross income in 2022 must be around or less than $59,000. However, if a taxpayer earned more than $10,300 of capital gains, dividends, and investment income in 2022, they will not be able to qualify.

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