Saturday, February 13, 2010


Tax Credits are usually better than tax deductions because a dollar's worth of credit can reduce your tax a dollar, instead of just a dollar multiplied by your tax rate. Some credits are "refundable" which means that if you owe no tax or less tax than the credit, you can get a refund.
A non-refundable credit will reduce your tax to zero, but will not get you a refund. So if your tax was $ 1000 and you had a $ 2000 credit, you would get a $ 1000 refund if the credit was refundable, but if it were non-refundable, it would only wipe out the $1000 tax due.

Some credits and the forms you need to file to support the credit are:
Schedule R, Credit for the elderly
Form 1116- Foreign tax credit
Form 4136 -Fuel tax credit
form 3468- Investment tax credit
Form 5405- First-time homebuyer credit
Form 8396- Mortgage Interest Credit
Form 8834- Qualified Electric Vehicle Credit
Form 8863- Education Credit
Form 8880- Retirement Saving Credit
Forms 8908 and 8909 - Efficient Energy Credits
Schedule - EIC Earned Income Credit
Schedule - M Making Work Pay Credit

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