Sunday, September 19, 2010

Qualifying for Money Giveaways from the Government

Since retiring in October 2007, our taxable income is much lower. We now qualify for a number of tax credits that we weren't eligible for in the past. In 2010, our plan is to take advantage of as many possible tax credits as we can. If the government is going to give money away, I want to be in line :-) Here are tax credits for which we expect to qualify:
  • Child tax credit. This is a $1000 refundable tax credit for each qualifying child that is under 17. We have one daughter and she meets the criteria. For reference, $500 of this tax credit is part of the Bush tax cuts. If the tax cuts are allowed to expire, the child tax credit would revert back to $500.

    We've always considered ourselves fortunate to have our daughter. We're now better off because the government pays us for having her in our family.

  • Saver's credit. This is a credit for up to $1000 single and $2000 married filing joint on the first $2000 each person contributed to a retirement savings account. Even when we weren't eligible for the credit, we put the maximum contributions in our retirement accounts.

    In 2010, the government will pay us for saving.

  • Making work pay credit. The government will refund up $400 single and $800 married filing joint of the Social Security taxes (FICA) that have been paid. This credit is part of American Recovery and Reinvestment Act (ARRA) stimulus bill and covers the 2009 and 2010 tax years.

    This credit is similar to getting a 7% raise on the first $6000 to $12000 of earned income. We qualified for part of this credit in 2009 and will receive the full credit in 2010.
  • The maximum payment we can receive from these three credits is $2600. We plan to take advantage of as much as possible by keeping our adjusted gross income under the thresholds needed to qualify. In the future, we will evaluate the benefits of qualifying for energy or educational tax credits which we will not use in 2010.

    For more on New Beginnings, check back every Sunday for a new segment.

    This is not financial or tax advice. Please consult a professional advisor.

    Copyright © 2010 Achievement Catalyst, LLC

    No comments: