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Get Credit Where Credit’s Due, According to SJ Accounting Firm
TTK & Associates: Lower Your Tax Bill by Taking Advantage of These Allowable Credits
EGG HARBOR TOWNSHIP, N.J., March xx, 2012 – What’s better than a big tax deduction? A big tax credit.
“Tax deductions come off your adjusted gross income, therefore lowering your tax liability. But tax credits are dollar-for-dollar reductions of the taxes you owe, so are far more valuable than an equivalent amount deduction,” says Emily K. Vu, president of TTK & Associates, an accounting firm with several offices in South Jersey.
As an example, if your income goes from $50,000 to $48,000 as a result of a $2,000 above the line deduction, your tax liability, based on 15 percent, will drop $500, from $6,256 to $5,756. But if your tax bill based on a $50,000 income is $6,256, then a $2,000 credit will directly reduce dollar for dollar your total tax liability so you’ll pay the lower amount or get a refund based on the amount of tax payment you already paid.
“Better still, certain tax credits are refundable, which means if you’re able to claim them, you can get money back even if your tax liability is zero.”
Vu suggests considering these four refundable tax credits as you prepare your 2011 Federal tax return:
1. The Earned Income Tax Credit is for people earning less than $49,078 from wages, self-employment or farming. “Many workers who weren’t eligible before but whose wages decreased in 2011 may find that they qualify for the first time,” says Vu. 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. The particulars are covered in 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. (IRS Publication 503 for more information)
3. The Child Tax Credit is for people who have a qualifying child. The maximum credit is $1,000 for each qualifying child, and it can be claimed even if you’re claiming the Child and Dependent Care Credit. (IRS Publication 972 for more information)
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. “If your income is below a certain threshold and you contribute to an IRA, a 401K or other workplace retirement plan, you may qualify,” Vu says. (IRS Publication 590 for more information)
Every person’s situation is different, and there are other credits that may apply. “Speak with an experienced tax accountant to make sure you get credit where it’s due,” Vu advises.
About TTK & Associates
TTK & Associates was founded by Emily K. Vu and provides a full range of accounting services that includes bookkeeping, payroll, tax planning, and tax preparation. TTK specializes in assisting individuals and business owners with tax audits and back tax problems. Its tax professionals will work with the client to resolve tax issues and fight for their right to fair treatment. For more information on TTK & Associates, call 609-484-0005 or visit www.ttkassociates.com.