5 Tax Credits and Deductions You Need to Know About

Don't let Uncle Sam take any more of your money than he can.

Mar 17, 2014 at 4:30PM

No one likes paying taxes. In fact, the name of the game is to keep as much of your hard-earned money as possible. Although taxes are essential, the IRS understands they can be tough on low- and middle-income folks. That's why there are credits and deductions to help you survive tax season.

1. The Earned Income Tax Credit
The Earned Income Tax Credit was designed to subsidize low-income working families. To qualify for this credit, you must be at least 25 years old and at most 65 . The amount of credit you get is based on your income level and tax status (single, married, etc.). The EITC is especially helpful for people who don't make a lot of money but are supporting children; the maximum credit of $6,044 is available to someone supporting three or more children. People without children are eligible for smaller credits. To find out how much you can get from the EITC, check out IRS.gov.

2. Credits for job hunters
Tax credits can also help offset the costs of job hunting. If you are looking for a job, you can write off certain expenses, even if you did not get any job offers. You can deduct the cost of printing resumes, business cards, and other documents, as well as travel expenses. If you drive your own car, you can receive a credit of $0.565 per mile, and you can also deduct expenses for tolls and parking. You can even count food and lodging expenses if you have to travel overnight. If you get a job that requires you to relocate, you may be eligible for another deduction. People who move more than 50 miles for a new job can deduct the cost of moving, including a deduction of $0.24 per mile if they drive their own car.

3. The Child and Dependent Care Credit
The Child and Dependent Care Credit is a great credit for parents or caregivers. This credit is available to people who paid for care for a child, spouse, or dependent in the last year. You can only claim the Child and Dependent Care Credit for qualifying dependents: children aged 12 or younger or a spouse or dependent who is mentally or physically incapable of self-care. Additionally, the care must have been provided so that you could look for work. The credit can cover up to 35% of qualifying expenses, depending on your adjusted gross income.

4. The American Opportunity Tax Credit
The American Opportunity Tax Credit helps alleviate the tax burden on students in college. The AOTC is a rebrand of the Hope Credit that expands the credit to cover four years of undergraduate education (versus the Hope Credit's two years) and to include expenses like textbooks and supplies. Students who earn more money get less credit, but students with incomes of up to $80,000 are eligible for the full credit of $2,000 on the cost of qualified tuition and materials. Students must be enrolled at least half-time to qualify.

5. The Savers Credit
The Savers Credit exists to help low-income taxpayers save for retirement. It credits taxpayers for making eligible contributions to retirement plans like IRAs, 401(k)s, or other qualified investment accounts. Individuals who earned up to $29,500, married couples filing jointly who earned a combined $59,000, and heads of household who earned up to $44,250 can qualify for the Savers Credit. People who claim this credit must be at least 18 and not full-time students.

Is Uncle Sam about to claim 40% of your hard-earned assets? 
Thanks to a 2013 law called the American Taxpayer Relief Act, he can -- and will -- if you aren't properly prepared.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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