3 tips for filing your tax return if you earn less than $50,000 a year
Looking for ways to lower your tax bill? Take a look at these three tips.
Tax season continues, with the Internal Revenue Service (IRS) accepting and processing 2023 tax returns and issuing refunds accordingly. The average refund being distributed this year is $3,109, up six percent compared to those being sent this time last year. When filing your taxes there are certain benefits and credits that can be claimed by those who make $50,000 that can help to lower their tax bill.
Tips for filing taxes if you earn less than $50,000
When filing your taxes there are certain benefits and credits that can be claimed by those who make $50,000 that can help to lower their tax bill.
Use Free File
If you earn $79,000 or less, you can file your taxes for free using the IRS Free File program to submit your return electronically. This will allow you to receive your tax refund sooner. The IRS aims to send the refund within 21 days to those who filed their return electronically and chose direct deposit as a payment method. You can track your refund using the “Where’s My Refund?” tool created by the tax authority.
See if you qualify for the Earned Income Tax Credit (EITC)
Tax credits can reduce your tax liability, and the Earned Income Tax Credit is one of those benefits. The credit is refundable most low-or-moderate-income workers can receive from $600 to $7,430 on their tax return, depending on eligibility criteria. The amount of tax support depends on the number of children the taxpayer has and their annual income.
The eligibility requirements are as follows:
- Have worked and earned income less than $56,838 for individuals and $63,398 for married taxpayers filing a joint return. h
- Have investment income less than $11,000 in tax year 2023
- Have a valid Social Security number
- Be a US citizen or year-round resident alien
- Not filing Form 2555 (foreign earned income)
The maximum amount of the credit that a taxpayer can claim this year is:
- If you do not have qualifying children: $600
- If you have a qualifying child: $3,995
- If you have two qualifying children: $6,604
- If you have three or more qualifying children: $7,430
Write off some of your childcare costs
If your income is low, you may be eligible for the Child and Dependent Care Credit. This credit allows you to claim between 20 and 35 percent of up to $3,000 in childcare costs for one child or between 20 and 35 percent of up to $6,000 in childcare costs for two or more children under 13 years old. The percentage you can claim depends on your income. If your income is $15,000 or less, you can claim 35 percent, but if you earn $43,000 or more, the percentage of costs you can claim is 20 percent.