Ladder Up ensures clients receive the tax credits they deserve, and often, these credits are significant amounts of money. Tax credits reduce a client’s tax liability. Some tax credits are refundable, but many are non-refundable. A refundable credit is given to clients, even if they do not owe any tax. A non-refundable credit is given to a client up to the amount of tax owed. Below is an outline of the most common tax credits.
Child Tax Credit*
Clients may qualify for a non-refundable child tax credit of up to $2,000 per qualifying child. Parents with either a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN) may claim the Child Tax Credit, however, their dependents must have an SSN that is valid for employment, and issued before the due date of the return.
Additional Child Tax Credit
Certain taxpayers who get less than the full amount of the Child Tax Credit may be entitled to the Additional Child Tax Credit, which is refundable and up to $1,500 per child.
Credit for Other Dependents
There is a $500 nonrefundable credit available for dependents who don’t qualify for the Child Tax Credit, such as children who are age 17 or above, children with an ITIN, or qualifying relatives.
Child and Dependent Care Credit*
The non-refundable credit is for childcare costs (for children under 13) that enable the parent to work, look for work, or attend school. This credit can range from up to $1,050 for one qualifying child, to up to $2,100 for two or more qualifying children.
Earned Income Credit*
The Earned Income Credit (EIC) is refundable and can range from up to $560 with no qualifying children to up to $6,935 for three or more qualifying children. The EIC eligibility requirements require taxpayers and qualifying children to have an SSN that is valid for employment, and issued by the due date of the return.
Retirement Savings Credit
If you contributed to a retirement plan, such as 401K plan or an IRA or Roth IRA, you may be entitled to a nonrefundable credit of up to $1,000 if single or up to $2,000 if married filing jointly.
Other Credits You May Qualify For
- American Opportunity Credit, Lifetime Learning Credit and Premium Tax Credit
*Credits in 2022 return to 2019 levels, likely resulting in a smaller refund for clients impacted.