Any parent knows that kids can be awfully expensive.
They eat a lot, or sometimes not much at all, picking all over their food and wasting it.
They tend to sprout up like weeds, outgrowing clothes, shoes and even hats and gloves before those things get a proper wearing. (By that, I mean there should be holes in all those items before they’re handed down to a younger sibling).
And then, of course, kids want a lot of stuff. Can you say iPhone, Nintendo DS or Xbox 360 Kinect?
One way to get the government to send you a juicy check like that is to claim tax credits.
A tax credit reduces the taxes you owe dollar for dollar. What’s even better is that some tax credits are refundable, meaning you get that sought-after check back from the feds.
If you’re looking to fatten your bank account, the IRS wants you know about the following four tax credits that you should consider claiming (if you’re eligible, of course):
The Earned Income Tax Credit is a refundable credit for certain people who work and have earned income from wages, self-employment or farming. Income, age and the number of qualifying children determine the amount of the credit. EITC reduces the amount of tax you owe and may also give you a refund. For more information see IRS Publication 596, Earned Income Credit.
The Child and Dependent Care Credit is for expenses paid for the care of your qualifying children under age 13, or for a disabled spouse or dependent, to enable you to work or look for work. For more information, see IRS Publication 503, Child and Dependent Care Expenses.
The Child Tax Credit is for people who have a qualifying child. The maximum amount of the credit is $1,000 for each qualifying child. This credit can be claimed in addition to the credit for child and dependent care expenses. For more information on the Child Tax Credit, see IRS Publication 972, Child Tax Credit.
The Retirement Savings Contributions Credit, also known as the Saver’s Credit, is designed to help low-to-moderate income workers save for retirement. You may qualify if your income is below a certain limit and you contribute to an IRA or workplace retirement plan, such as a 401(k) plan. The Saver’s Credit is available in addition to any other tax savings that apply. For more information, see IRS Publication 590, Individual Retirement Arrangements (IRAs).
This is just a sampling of federal tax credits. Lots of other ones exist too, and each one is subject to its own qualifications, limitations and rules. But the point is this: if you legitimately qualify for a tax credit, do go ahead and claim it. The refund you could get will make your time and effort worthwhile.
To find grants or loans to purchase or rehabilitate housing, your best bet is to seek out federal money that is provided to state and local governments, and in turn, passed along to investors or organizations. For example, through HUD’s Neighborhood Stabilization Program, home-buyers can purchase foreclosed properties that may need fixing. To learn more about this program, visit http://www.hud.gov/nsp. Additionally, once you get a little experience under your belt, be sure to check out the HOME Investment Partnership Program (http://www.hud.gov/sec3.cfm). These funds are provided via HUD to non-profit or for-profit organizations with experience in providing affordable housing to low-to-moderate income people. Activities for which funding is available under the HOME program includes: • Homebuyer assistance, such as down payment aid and closing-cost help, acquisition, rehabilitation or new construction of homes • Homeowner rehabilitation, including help for owner occupants to repair or reconstruct their homes • Site improvements, demolition, relation and administrative costs • Tenant-based rental help, such as economic aid for rent, security/utility deposits • Rental housing, including purchase rehabilitation and construction
Texas-based Homeownership Programs As for specific programs in Texas, you can get grant funds up to 5% of your mortgage amount, along with two type of loans with interest rates that are typically 1% below current market rates via the Texas First Time Homebuyers Program. For more information, call the Texas Department of Housing and Community Affairs at 512-475-3800 or toll-free at 800-525-0657 or visit: http://www.tdhca.state.ts.us. My understanding is that these loans and grant funds are made available to those planning to become owner-occupants of their homes – not simply buy houses for investment potential and resell them. Read on for more tips on how to find housing grant or loan programs offered in your area.
State Housing Finance Agencies Start by turning to State Housing Financing Agencies (HFAs). These are state-chartered authorities established to help meet the affordable housing needs of the residents of their states. Although they vary from state to state, most HFAs are independent entities that operate under the direction of a board of directors appointed by each state’s governor. Their reason for being is to help homeowners, so they can often point you in the direction of incredible housing and development programs you never dreamed existed. There is a National Council of State Housing Agencies (NCSHA) active in Washington D.C. to keep the issue of affordable housing high on the government’s list of national priorities. Housing Finance Agencies and NCSHA (http://www.ncsha.org) can help you tap into three federally authorized programs, including Mortgage Revenue Bonds and Mortgage Credit Certificates, and the HOME Program.
• Mortgage Revenue Bonds State and local housing agencies also offer loans to first-time buyers via mortgage revenue bond programs. Mortgages funded with these instruments often feature low down payment options and have interest rates as much as 1.5% to 2% below conventional 30-year fixed rates.
• Mortgage Credit Certificates The Mortgage Credit Certificate (MCC) Program is another perk available through states to qualified first-time homebuyers. This benefit is in the form of federal income tax credit of between 10% and 20% of the annual interest you pay on your mortgage.
• Home Investment Partnership Program (HOME) Available from the U.S. Department of Housing and Urban Development, the HOME program is the largest federal block grant available to state and local governments. The HOME program allocates roughly $2 billion to local governments each year in an effort to create affordable housing for low-income households. One component of the HOME initiative is the American Dream Down payment Initiative. Through ADDI, you can receive down payment assistance, money for closing costs, and even funds to fix up a home you are buying. The cash comes in the form of a loan equal to 6% of the purchase price or $10,000, whichever is greater. The loan carries a 0% interest rate and a maximum loan term of 10 years. For each year you live in the house, 10% of the loan amount will be slashed. If you stay in the home 10 years, the entire amount will be forgiven. If you sell your home before 10 years – and most first-time buyers do sell their homes after an average of four or five years – the remaining amount of the loan must be repaid. This program is open to all first-time buyers who haven’t owned a home within the past three years. The money provided via ADDI can be used to purchase a one-to-four family house, condo, cooperative unit, or manufactured housing. To qualify, your income must not exceed 80% of your area median income. Get more information about this initiative through your state housing finance agency, or by visiting HUD’s website at: http://www.hud.gov. Also, if you find out about a program like this one that receives federal money, but the money hasn’t come through yet, put your name on the list to be notified about a change in status ASAP. That way you’ll be ahead of lots of other people who are also seeking housing grants or forgivable loans.
• Housing Redevelopment Offices In addition to state housing finance agencies, contact the Housing and Redevelopment Office in your state, county or city. Members of The National Association of Housing and Redevelopment Officials (NAHRO) (http://www.nahro.org) champion the cause of adequate and affordable housing for all Americans – especially those with low and moderate incomes.
Be mindful that state housing agencies and redevelopment offices across the country can use lots of different names. One might be called a “Housing Finance Agency,” as is the case with the Vermont Housing Finance Agency, while another one is dubbed a “Housing Development Authority,” as is true of the Virginia Housing Development Authority. Any agency with the name “Home” “Housing,” “Community Development,” “Mortgage Finance” – or similar words – is a good place to find homebuyer assistance programs.