What Are Some of the Most Common Tax Credits Available?

Filing your taxes can be a complex process.  In fact, the American tax system is one of the most complex in the world and there is no single person that understands all of the US tax code.  In addition to being confusing, taxes can be expensive.  However, with the help of some common tax credits, you can reduce the amount that you owe the government in taxes.

There are quite a few common credits that you can take off of your taxes.  For instance, child and dependent care expenses can be deducted.  The amount that you can deduct depends on the amount of money that you earned during the year, as well as the amount that you paid for child care, the number of children or dependents and other factors.

In addition, you can also deduct the cost of education from your taxes.  You are limited to either the Hope Credit or the Lifetime Learning Credit here (not both).  These can help you recoup the cost of your education (or your child’s education) as well as paying less in taxes.

Earned income credits are another way that you can save on your taxes.  Quite a few people are able to take these deductions on their taxes.  The EITC is designed to help out low and moderate income families by providing tax relief.  However, there are several restrictions on these deductions from your taxes, and they vary depending on your income level, the number of children you have and other factors, as well.

Finally, you might be able to take advantage of the first time homebuyer credit, as well.  There is also the Making Work Pay Credit for qualifying taxpayers, which offers a significant reduction of your taxes. 

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