Everyone looks forward to a tax refund; it can be an unexpected bonus to receive a check in the mail or in your bank account. How much you get back depends on many factors, including the number of your dependents, your filing status and your eligibility for credits or deductions. The only calculation of certainty is that you'll receive 100 percent of your taxes back if you make less than a certain amount per year -- based on your filing status.
100 Percent Refund
This is the only category for which a percentage of your return can accurately be calculated. It is based solely on your filing status and income, and a dollar amount the federal government sets. If your status is single and you make less than $9,370, your refund is 100 percent of the taxes you paid. If you file as head of household, and you make less than $12,000, you get it all of your withheld taxes back. If you're over 65, you can make up to $13,450. If you're married, filing jointly, both under 65 and you make less than $18,700, you get a refund of all the withheld taxes.
Earned Income Tax Credit
The earned income tax credit is an opportunity to get more back than you paid in taxes. If your income falls below specified amounts for your filing status, and you have a qualifying child or are single with no child, you may be eligible for this windfall. A qualifying child is generally your adopted, foster or biological child, their children, your siblings or their children -- if the children are under 19, or under 24 and going to school -- who live with you for more than half the year. For 2010, if your filing status is single with no children and your income is less than $13,460, you pass the income test for the credit and your refund could increase by as much as $457. If you have three or more children you could gain as much as $5,666. This credit represents 3 to 13 percent of your income, depending on your filing status and number of dependents.
Child Tax Credit
The child tax credit can also increase your refund, even if you owe no taxes. You must have earned income to take this credit. The maximum you can claim is $1,000 per child, which is returned to you as part of your refund. If your income exceeds the qualifying income, you must reduce your child tax credit accordingly. You will receive 100 percent of the child tax credit if your adjusted gross income is less than $75,000 filing single, head of household or widow(er); $55,000 if married filing separately; and $110,000 if married filing jointly. If you do not receive the maximum credit, however, you may qualify for the additional child tax credit, which may afford you the maximum allowed.
Each year the IRS publishes tax tables, which your payroll department uses to calculate your withholding. The tables reflect the tax you owe on your gross income. The percentages withheld range from 10 to 35 percent, depending on your income. When you file your taxes, any excess that was withheld comes back to you as a refund. Tax deductions to which you are entitled, reduce your income, subsequently reducing the amount of tax you owe. This overpayment is reflected as a refund of your taxes.
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