Popular tax credits for New York tax filers

Thomas H. Mattox, acting commissioner of the New York State Department of Taxation and Finance, is reminding New York taxpayers who are preparing their personal income tax returns to take advantage of a host of family-friendly credits that lower tax bills and increase refunds.

Mattox says income tax filers who last year claimed the most popular credits — the Earned Income Tax Credit, Child and Dependent Care Credit, Empire State Child Credit, Household Credit and College Tuition Credit – received over $2 billion from the State in tax breaks or refunds.

Some tax breaks, like the New York State and New York City Earned Income Tax Credits, may result in a refund even when no tax is owed, Mattox says.

Millions of New York tax filers, Mattox adds, take advantage of one or more of the folllowing popular credits: Earned Income Tax Credit (EITC), Child and Dependent Care Credit, Empire State Child Credit, College Tuition Credit/Itemized Deduction, Household Credit

“These tax credits are designed to provide real tax relief for working families. The credits help families meet day-to-day expenses and save for the future. We encourage all qualified taxpayers to apply for these family-friendly tax credits.” the commissioner stated.

Some tax credits are “refundable,” meaning they can not only reduce or eliminate your 2010 tax liability, but any remaining credit balance will be paid in the form of a check or direct deposit.

Earned Income Tax Credit (EITC).

This refundable credit is available to working families with incomes up to $43,352 ($48,362 for married taxpayers filing jointly) depending on the number of children in your household. Married taxpayers who file jointly and have no dependent children can earn no more than $18,470 in order to qualify ($13,460 for other taxpayers). New York City taxpayers may also claim a City of New York EITC.

To qualify for this credit you must have worked at least part of the year. You must file Form IT-215 to claim the credit. Publication 310-NY contains more information on the program.

Certain non-custodial parents may claim a Noncustodial Parent New York State EITC in place of the regular State EITC. This innovative credit is designed to encourage non-custodial parents to play an active role in the financial support of their children and to keep current their support orders as determined by the courts. Please see Form IT-209 for instructions.

Child and Dependent Care Credit.

Working parents who pay for child care may be able to claim some of those expenses as a credit on their federal and state tax returns. The credit equals 110 percent of the federal child care credit for taxpayers with incomes under $25,000. Percentages ranging from 110 percent down to 20 percent apply for those whose incomes range from $25,000 to over $65,000. Many New York City residents with incomes of $30,000 or less who paid child care expenses may be eligible to also claim the New York City Child and Dependent Care Credit in addition to the federal and state credits.

Eligible taxpayers are advised to keep records of child care payments throughout the tax year. The Tax Department says that, in order to claim the Child and Dependent Care Credit, verifiable receipts for payments to care providers are required. The provider’s social security number or employer identification number is also required in order to claim the credit.

Empire State Child Credit.

Resident taxpayers may also claim this refundable credit that is based on the number of children ages 4-16 who qualify the taxpayer for the federal child tax credit or additional child tax credit. The credit available is the greater of $100 per qualifying child or 33 percent of the federal credits.

College Tuition Credit/Itemized Deduction.

If you, your spouse, or your dependent(s) were a college student, you may be entitled for the refundable college tuition credit. The credit is up to $400 per student and available to full-year New York State residents. Alternatively, a college tuition itemized deduction is available to residents, non-residents and part-year residents.

Household Credit.

If you are married, head of household or a qualifying widow or widower with a dependent child, your income is $32,000 or less and you can’t be claimed as a dependent on another person’s federal return, you can qualify for a nonrefundable Household Credit of up to $75, plus up to $15 for each dependent exemption on your federal return. Single filers with incomes up to $28,000 also can qualify. New York City residents are eligible for an additional New York City Household Credit.

Because eligibility for refundable credits entitles the taxpayer to a cash payment over and above any refund of tax withholding, the Tax Department often requests documentation in order to verify eligibility. For instance, self-employed individuals who claim the EITC must maintain documentation of business receipts and expenses throughout the year in order to verify their business activities.

For more information about all available credits, visit the Tax Department’s website, www.tax.ny.gov.

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