Filing a tax return may put unexpected money in your pocket

It’s true that if you didn't earn much money in 2011, you may be exempt from filing a tax return. While not filing does save time and energy, failure to file could result in missing out on receiving refundable credits. Probably the most common credit that working families and individuals forego, not realizing they are entitled to it, is the Earned Income Tax Credit, or EITC. The EITC is a tax credit that goes to people who worked during the tax year but didn’t have a significant amount of income. The purpose of the EITC is to help low- and moderate-income taxpayers keep more of what they’ve earned.

An estimated 20 percent of all eligible taxpayers nationwide do not file for the Earned Income Tax Credit.

Other credits and refunds to be aware of are:

1. Child Tax Credit – This credit is worth up to $1,000 per child under the age of 17 and drops as earned income increases.

2. Adoption Credit – People who have adopted a child may be able to claim a refundable tax credit for qualified expenses related to the adoption.

3. American Opportunity Credit – Students in their first four years of post-secondary education may qualify for as much as $2,500 through this credit. Forty percent of the credit is refundable, so even those who don’t owe tax can get up to $1,000 of the credit as cash back for each eligible student.

One of the easiest ways to make sure you getting the tax credits you are eligible for is through free tax preparation services throughout Oregon and Southwest Washington. Click here for a complete list of free tax preparation sites.