Two Federal Tax Credits: Investment Tax Credit & Working Tax Credit
There are several tax credits that people may be eligible for when they do their income tax return, or when a business does their taxes at the end of the year. Two of these that are fairly new and are given to those who are making contributions towards society and who pay into the federal government throughout the year through their paychecks or business practices. They are the investment tax credit and the working tax credit.
Tax Credit Vs Tax Deduction
The ITC, or investment tax credit, gives an individual or business a reduction in their liability after the prior year’s investments into solar energy generation advancements. This and other renewable energy tax policies serve a purpose in making high-wage American jobs, thus bringing about economic growth and helping to protect the environment. These tax policies also lower energy bills for businesses and consumers. This incentive to invest in the solar energy industry ensures the construction of projects, manufacturing, and the ultimate growth of the solar industry throughout the United States. This tax credit is currently only in effect until December 31, 2016. Though this has only recently gained momentum, a similar incentive was put in place in 2006 through the Energy Policy Act of 2005. The investment tax credit is a 30% uncapped tax credit for commercial and residential solar systems. When the economy took a dramatic downturn in 2008, the Emergency Economic Stabilization Act of 2008 provided for the commercial and residential solar ITC to be extended for eight years. The ITC helped to bring about significant growth between 2006 and 2007 for the solar industry in the United States.
Income Tax Credit
The working tax credit, or Making Work Pay credit, is for those who work yet meet the guidelines under a certain amount. It is likely that people will receive the $400 credit if they have a low to moderate work income. Someone will receive this even if they are not getting a refund check back, as it will go towards paying off part of what they will have to pay in back taxes to the government. You can either use a tax program yourself which walks you through each step to let you know what credits and deductions you are eligible for, or you can go to a qualified tax preparer or tax attorney who will help you to receive the highest refund or owe the least possible. The federal government has executed the Earned Income Credit, working tax credit, and various others to aid the working class in keeping more of their money in their pockets rather than having to give to the government or receive very little.
Through the investment tax credit and working tax credit, many people and businesses have benefited from the actions that they have taken in the previous year. In the current economy every little bit counts, therefore you should do an in-depth review of anything you are eligible for, whether it is on your own or by talking to a tax preparer. Doing your tax return does not have to be a stressful experience, even though most people dread this time of year as they expect to get charged by the IRS or not get much of the taxes back that they put in.