While taxes are a regular part of life, this fact does not make them any less confusing. The entire reason that accountants and tax preparation services exist is because the tax code is extremely complex and difficult to understand. Due to this, there are many common questions that people have when it comes to doing their taxes. The following five questions are the most common ones heard by accountants.

1. I Did Not Make a Lot of Money Last Year, so Will I Still Need to File Taxes?

Individuals who made more than $10,300 will have to file their taxes. Meanwhile, married couples filing jointly must file their taxes if they made more than $20,600 during the year. While the Internal Revenue Service does not require people who make less than this to file, many people still do. Lower incomes tend to receive a tax refund because these households typically pay more in taxes than they owe. Millions and billions of dollars are left with the government every year because people do not file taxes when they have a low total income. On average, unclaimed tax refunds are $600 or higher per person.

2. Who Can I Claim as a Dependent?

In essence, individuals can claim a child or relative as a dependent. To qualify, the tax filer must provide over half of the dependent’s financial support. Other factors like where the dependent lives, their income, age and relationship to the tax filer are also taken into account. Individuals can deduct elderly parents, relatives and significant others if these individuals receive most of their monetary support from the tax filer. The deduction for a dependent was at $4,000 in 2015, so households should not miss out on this important deduction.

3. What is the Earned Income Tax Credit? Do I Qualify for It?

The earned income tax credit targets low-income and middle-income households. An estimated 7 million people qualify for this deduction, although many people forget to include it on their taxes. This tax credit is intended to be for working people who have earned income from the previous year. If the couple is married, they cannot be filing separately. Additionally, households must have a qualifying child or be between the ages of 25 and 65. To qualify for this credit, individuals cannot be a dependent on someone else’s tax return. The credit is just $503 for someone with no children. For the maximum number of dependents, individuals can receive a tax credit worth $6,242.

4. What Tax Credits Are Available for College Students?

With student debt being an increasing burden for families, the tax code has been redesigned to provide some relief. The American Opportunity Tax Credit allows families to get a credit worth $2,500. Even if the family does not owe taxes, they can get a refund of up to $1,000 from this tax credit. Meanwhile, tuition and fees can be deducted as long as the deducted amount is less than $4,000. Another alternative is the Lifetime Learning Credit. Taxpayers can gain a credit of $2,000 on their tax return for any fees or tuition paid directly to their college.

5. What Tax Deductions Are Available for Parents?

Parents are able to take advantage of numerous tax credits. Other than the earned income credit, parents can get a dependent care credit or a child tax credit. People with large families can receive a credit of $1,000 for each of their children through the child tax credit. Meanwhile, the child and dependent care tax credit allows for a $1,050 credit for childcare costs.

To save money on taxes, households must utilize all of the tax credits at their disposal. During the tax year, families should make sure to keep their receipts in case they want to do an itemized deduction or claim specific credits. By planning in advance, individuals and families can make sure that they are able to claim every tax credit that is available to them.

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