Tax credits reduce what you owe Uncle Sam and can put some hard-earned cash back in your wallet. There are two types of credits: refundable and nonrefundable. While both will decrease your debt, only refundable credits can get you a refund even if you don’t owe any taxes.
If you use ezTaxReturn to prepare and e-file your taxes, you’ll receive step-by-step guidance to take advantage of credits for which you’re eligible. Regardless, it’s good to know what’s available. So, here is a quick review of five potentially beneficial tax credits.
1. Earned Income Credit
The EIC is a refundable credit for workers below a certain earnings level. Income limits and credit amounts vary based on earnings, filing status and eligible children. You can still qualify for a reduced credit even if you do not have kids.
To qualify for the Earned Income Credit for tax year 2022, your earned income and adjusted gross income (AGI) must each be less than:
| Qualifying Dependents Claimed | Single, Head of Household, or Widowed | Married Filing Jointly |
| Zero | $16,480 | $22,610 |
| One | $43,492 | $49,622 |
| Two | $49,399 | $55,529 |
| Three or more | $53,057 | $59,187 |
There is also an investment income limit of $10,300.
The maximum amount of the credit is:
- $6,935 with three or more qualifying children
- $6,164 with two qualifying children
- $3,733 with one qualifying child
- $560 with no qualifying children
2. Child Tax Credit
Have a dependent under 17 years of age? If so, you may qualify for the Child Tax Credit which is worth up to $2,000 per child. Up to $1,500 per child is refundable as the Additional Child Tax Credit. Dependents must be 16 or younger at the end of the year to qualify. If the dependent turned 17 during the income year, they will not qualify for the Child Tax Credit.
3. Saver’s Credit
The Saver’s Credit helps low-income workers save for retirement. To qualify, you must contribute to an IRA or retirement plan at work and fall below the income limit. The credit will be 10%, 20% or 50% of your contribution up to $2,000 based on your adjusted gross income. The chart below will help calculate your credit.
| 2022 Saver’s Credit | |||
|---|---|---|---|
| Credit Rate | Married Filing Jointly | Head of Household | All Other Filers* |
| 50% of your contribution | AGI not more than $41,000 | AGI not more than $30,750 | AGI not more than $20,500 |
| 20% of your contribution | $41,001- $44,000 | $30,751 – $33,000 | $20,501 – $22,000 |
| 10% of your contribution | $44,001 – $68,000 | $33,001 – $51,000 | $22,001 – $34,000 |
*Single, married filing separately, or qualifying widow(er)
4. Premium Tax Credit
If you bought insurance through the Health Insurance Marketplace, you may be eligible for the Premium Tax Credit. This credit may be used in advance to help lower monthly premiums or it can be claimed when you file your tax return. If your income is between 100% and 400% of the Federal Poverty Level, you qualify for premium tax credits in all states to lower your Marketplace health insurance premiums. If your FPL income is below 150%, you qualify to enroll for healthcare through a Special Enrollment Period.
5. Child and Dependent Care Credit
If you pay someone to watch your child, disabled spouse or other dependent while you go to work, you may qualify for the Child and Dependent Care Credit. You can claim up to $3,000 in expenses for one person or $6,000 for two or more people. The credit amount ranges from 20-35% of your expenses depending on your adjusted gross income.
