Key Takeaways
- The earned income tax credit (EITC) is designed to help lower-income people who have jobs keep more of their income.
- Maximum qualifying income for the EITC ranges between $18,591 and $66,819 for 2024, depending on filing status and qualifying children.
- The maximum EITC ranges from $632 if you have no qualifying children, up to $7,830 if you have three or more qualifying children.
- The premium tax credit is for people with low to moderate income who purchase health insurance through the health insurance Marketplaces.
Earned Income Tax Credit
The Earned Income Tax Credit, or EITC, is designed to help lower-income people who have jobs keep more of their income. Whether or not you qualify for the credit depends on your income and whether you file Single or Married Filing Jointly, or if you have children. Maximum qualifying income ranges between $18,591 and $66,819 for 2024, depending on filing status and qualifying children. Other eligibility requirements are:
- have a Social Security number
- be a U.S. citizen or resident alien
- not filing as married filing separately
- have income from working for someone or from self-employment
- your earned income and investment income is less than the required limits
For 2024, the maximum EITC ranges from $632 if you have no qualifying children, up to $7,830 if you have three or more qualifying children.
Premium tax credit
The premium tax credit is for people with low to moderate income who purchase health insurance through the health insurance Marketplaces. To be eligible, you must file as:
- Single
- Qualifying Surviving Spouse
- Head of Household
- Married Filing Jointly
You also need to:
- get your health insurance through the Marketplace
- be within certain income limits
- not be eligible for health insurance through the government or your employer
- not be claimed as a dependent of another person
If you qualify, you can choose to have all or some of the credit paid to your health insurer to help cover your premiums, or you can wait until you file your tax return to receive it.
TurboTax Tip:
If you work part time and are self-employed, you can deduct qualifying expenses incurred during the course of running your business, including the use of part of your home for business.
Self-employed home office deductions
Individuals who work part time and are self-employed can deduct expenses incurred during the course of running their business, including the use of their home. To claim a home office deduction, you need to use part of your home to conduct business on a regular basis, and it needs to be the principal place of your business.
If you claim home business deductions, be sure you can back them up. As an example, the IRS looks at the percentage of space you use in your home for business and applies it to the percentage of deductions you make. If you use a bedroom as an office, and it works out to 15 percent of the total square footage of the building, you can likely deduct 15 percent of utility bills from your income.
Education tax credits
Some part-time employees are students working to help pay for tuition and school expenses or may have children going to college. There are two tax credits that can be applied against your part-time income to help offset school expenses.
The American Opportunity Credit is worth up to $2,500 per eligible student. It is for tuition, books and fees for the first four years of earning a degree. You can get a refund of up to $1,000 if, after applying the credit to your tax bill, you have a credit amount remaining. For example, if you owe $1,000 in taxes and you qualify for a $2,000 American Opportunity Credit, you’ll get a $1,000 tax refund.
The second education-related credit is the Lifetime Learning Credit. It is for tuition, required books and supplies, and fees. It allows a credit up to $2,000 per tax year. Only the parent or the student can claim these credits—not both. So, if your parents are paying for your education and they claim the credit, you cannot claim it on a separate tax return.
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