| When you are preparing your federal income tax | | | | number of years. The student does not need to be |
| return, you should be aware that there are many | | | | pursuing a specific degree or course of study to obtain |
| different tax credits available to taxpayers. We are | | | | the credit. |
| going to focus here on some of the more common | | | | Be aware, however, that if you file married separately, |
| ones to take advantage of. | | | | or if you can be claimed as a dependent on someone |
| 1.Child Tax Credit | | | | else's return (i.e., your parent's), you cannot claim either |
| The tax law allows you take a $1,000 credit for each | | | | of the education tax credits. Both credits are subject |
| dependent child (under age 17 by December 31st of | | | | to phaseouts depending on your income. |
| the filing year), against taxes owed. Remember this is | | | | Home Energy Efficiency Improvement Tax Credits |
| not a deduction, this is a CREDIT. A credit reduces | | | | Consumers who purchase and install specific products, |
| your income tax dollar for dollar, and thus is extremely | | | | such as energy-efficient windows, insulation, doors, |
| advantageous. This credit does, however, begin to | | | | roofs, and heating and cooling equipment in the home |
| phase out at $110,000 adjusted gross income for joint | | | | can receive a tax credit of up to $500. |
| filers, and $75,000 adjusted gross income for single | | | | There is also available a credit equal to 30% of |
| filers. | | | | qualifying expenditures for purchase for qualified |
| 2.Education Credits | | | | photovoltaic property and for solar water heating |
| There are actually two credits available, depending | | | | property used exclusively for purposes other than |
| upon your situation. | | | | heating swimming pools and hot tubs. The credit |
| A.The Hope Credit | | | | cannot be more than $2000. |
| The Hope Credit is available to students in their first | | | | Improvements must be installed in or on the taxpayer's |
| two years of college (freshman and sophomore year) | | | | principal residence in the United States. Home |
| or vocational school. The maximum amount of credit | | | | improvement tax credits apply for improvements |
| available is $1,650. The expenses that you may include | | | | made between January 1, 2006 and December 31, |
| in the calculation of this credit is basically just the cost | | | | 2007. |
| of tuition. | | | | Be sure to visit the IRS website for further information |
| B.The Lifetime Learning Credit | | | | on tax credits available. By keeping an open mind and |
| The Lifetime Learning Credit is available for all years of | | | | good records, you will be able to take advantage of |
| education past high school, and for courses to acquire | | | | the "freebies" offered by the IRS, and save on taxes. |
| or improve job skills. It's available for an unlimited | | | | |