Maximize your Refund!

Cola Tax & Solutions
The additional child tax credit is a tricky tax credit that is meant for the low-medium income families, and it is fully refundable which means it could put dollar for dollar in the taxpayer’s bank account! In order for a taxpayer to qualify for the additional tax credit they must claim the child tax credit. The child tax credit is a credit up to $1,000 that the taxpayer receives per dependent child under the age of 13. For example, the taxpayer has one child and his tax is $600 dollars. The taxpayer’s child tax credit will be $600. That will leave the tax payer with a tax bill of nothing. If the taxpayer made more than $11,000 dollars and less than the limit for the credit, then the taxpayer can claim the additional child tax credit. The scenario can change; the taxpayer has three kids and a tax liability of $500. If the taxpayer qualifies for the additional child tax credit they can be looking at a credit up to $2,500. However, these cases are very rare and easily looked over by a tax preparer. A good tax preparer will prepare the tax return according to the taxpayer’s documents. Then, the tax preparer will look at the return and see what could be claimed or increased if the return is filed differently. Small things could make a huge difference. Example: A taxpayer, with one child, claims $500 dollars in student loan interest paid. By claiming that deduction he will make his taxable income zero and make him owe zero in taxes. Sounds like the write thing to do right? Wrong. If the taxpayer did not claim that $500 deduction his taxable income might have been up to $500. Tax on that is around $50. He would then apply the child tax credit for $50. If he qualifies for the additional child tax credit the taxpayer will then have just increased his return by $950. Yes, the return, as in the bottom line. Scenarios as simple as that happen a lot more than you think. Especially by people using tax software as it does not check for that. Since the student loan interest is above the child tax credit naturally the system would say the taxpayer is not eligible for the child tax credit or the additional credit. Taxpayers are not required to claim student loan interest paid and by all means it is legal to not claim it. So, keep that in mind and make sure to ask your tax preparer what they are doing to maximize your refund!
Cola Tax & Solutions