A tax credit is a dollar-for-dollar reduction of taxes owed. Some tax
credits are refundable meaning if you are eligible and claim one, you can get
the rest of it in the form of a tax refund even after your tax liability has
been reduced to zero.
Here are four refundable tax credits you should consider to increase your
refund on your 2011 federal income tax return:
1. The Earned Income Tax Credit is for people earning less
than $49,078 from wages, self-employment or farming. Millions of workers who
saw their earnings drop in 2011 may qualify for the first time. Income, age and
the number of qualifying children determine the amount of the credit, which can
be up to $5,751. Workers without children also may qualify. For more
information, see IRS Publication 596, Earned Income Credit.
2. The Child and Dependent Care Credit is for expenses paid
for the care of your qualifying children under age 13, or for a disabled spouse
or dependent, while you work or look for work. For more information, see IRS
Publication 503, Child and Dependent Care Expenses.
3. The Child Tax Credit is for people who have a qualifying
child. The maximum credit is $1,000 for each qualifying child. You can claim
this credit in addition to the Child and Dependent Care Credit. For more
information on the Child Tax Credit, see IRS Publication 972, Child Tax Credit.
4. The Retirement Savings Contributions Credit, also known
as the Saver’s Credit, is designed to help low-to-moderate income workers save
for retirement. You may qualify if your income is below a certain limit and you
contribute to an IRA or workplace retirement plan, such as a 401(k) plan. The
Saver’s Credit is available in addition to any other tax savings that apply.
For more information, see IRS Publication 590, Individual Retirement