Tax Credits to Keep in Mind for 2010 Taxes

While it may be too late to take advantage of tax credits for 2009, now is the best time to look forward to next year. If you know which tax credits are available for 2010, there is a much better chance that you will find a way to benefit from them.

Here is a list of tax credits to keep in mind for 2010:

1. Child Care Credit. This is one tax credit that is overlooked by thousands of people every year. You may be surprised to learn that you qualified for this credit in the past, but forgot to take advantage. Those who most often miss this credit are those who pay childcare expenses through an employer reimbursement account. At this time, up to $6k can qualify for the child care tax credit. There is still a $5k limit in place on expenses paid through a tax favored employer reimbursement account. In short, this means that you can spend $5k through your employer account, but if you incur another $1k in expenses you have the ability to claim the credit on that amount.
2. Earned Income Tax Credit. Did you know that more than 24 million taxpayers took advantage of the Earned Income Tax Credit (EITC) in 2008? On average, it allowed these taxpayers to claim roughly $2,000 each. While these numbers are staggering, it is hard to believe that roughly 25% who qualify fail to take advantage. Although the rules of the EITC can seem complicated, you don’t want to miss out for this reason. Generally speaking, this credit is used to give money to low income workers. That being said, many who are part of the “middle class” also qualify. The amount of refund that you receive through the EITC depends on factors such as the size of your family, marital status, and of course, income level.
3. Energy Savings Home Improvement Credit. Although this credit is capped at $1,500, millions of people are set to qualify for 2010. The energy savings home improvement credit is for home upgrades during 2010 including windows, outside doors, skylights, water heaters, air conditioners, high efficiency furnaces, and pigmented roofs.
4. Plug-in Electric Drive Vehicle Credit. Are you interested in buying a plug-in vehicle? These are sure to become more popular over the next few years. The minimum amount of this credit is $2,500 with a maximum of $7,500. The amount that you receive is based on the capacity of the battery. If you are interested in buying a new vehicle, and want to take full advantage from a tax point of view, do not overlook this credit.

If you have any questions about whether or not you qualify for these tax credits – or any others – contact a qualified professional. It’s better to find out for sure than to miss out on a credit that could have saved you thousands of dollars.

Although you just finished filing your 2009 return, it is time to look to next year. Start by learning which tax credits you may qualify for.