It's complicated, but the Earned Income Tax Credit (EITC) is worth exploring if you or someone you know has modest earnings.
- The credit reduces any federal income tax you owe, dollar-for-dollar.
- If the credit completely eliminates your tax bill, and some credit is still left over, you can actually get a cash refund for the remaining amount.
To help you find out if you qualify, TurboTax asks simple questions so you can get the largest possible credit.
The qualifications for EITC are:
For example, if you're making monthly payments to the hospital for last year's operation, you can only deduct what you paid so far, not what the total operation will eventually cost you.
However, if you charged the entire bill to your credit card which you're still paying off, you can claim the full cost.
The IRS defines the "paid date" as:
- The date you put the bill on your credit card;
- The date you mailed or delivered the check or money order;
- The date the charge appeared on your statement, if you paid the bill online or via telephone.
Medical, dental, and vision expenses are reported on Schedule A and entered in the Deductions & Credits section:
- Open your tax return.
(To do this, sign in to TurboTax and click the orange Take me to my return button.) - Search for Schedule A and then click the "Jump to" link in the search results.
- Answer Yes on the Did you have any medical expenses in 2016? screen.
- You will then be prompted to enter your medical expenses, starting with prescriptions.
If you're using Federal Free Edition or Basic and your medical expenses are large enough that you would benefit from itemizing deductions, you'll be prompted to upgrade to Deluxe, as the Federal Free and Basic versions do not handle Schedule A.
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