J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

Chapter 25

Personal Tax Credits Reduce Your Tax Liability

In this chapter you will find discussions of the child tax credit, dependent care credit, earned income credit (EIC), adoption credit, retirement savings credit, health coverage credit, mortgage interest credit, and the credit for plug-in electric vehicles. Education tax credits are discussed in Chapter 33.

The child tax credit for 2012 is $1,000 for each qualifying dependent child under age 17. To claim the credit, you must follow the steps on the “Child Tax Credit Worksheet.” There is a phaseout of the credit (25.3). If the credit exceeds your tax liability, you may be entitled to a refundable credit called the “additional tax child credit”.

The dependent care credit is for working people who pay care costs that allow them the freedom to work. Depending on your income, the credit is 20% to 35% of up to $3,000 of care expenses for one dependent and up to $6,000 of expenses for two or more dependents. If your adjusted gross income exceeds $43,000, the maximum credit is $600 for one dependent and $1,200 for two or more dependents.

The earned income credit (EIC) is provided to low-income workers who support children, and a limited credit is allowed to certain workers without qualifying children (25.10).

An adoption credit of up to $12,650 may be claimed in 2012 for costs of adopting a child under the age of 18 or a disabled person incapable of self-care.

For years after 2012, several credits discussed in this chapter are scheduled ...