Earned Income Tax Credit

• The Earned Income Tax Credit, usually referred to as the EIC or EITC, is a credit for individuals who have relatively low incomes, but work. The income limit for the EITC in the 2010 tax year ranges from $13,460 for a single person to $43,356 for a person with three children, with limits increasing by $5,010 for married couples filing jointly. The EITC is refundable, meaning that those eligible to receive it can get a check even if it means reducing their total tax liability to less than zero.
  
  

Child Tax Credits

• The IRS offers two credits designed to making having children a little bit less expensive. The first is a child tax credit that can be worth as much as $1,000 in tax savings, while still allowing you to exempt your child from your taxes. The second is a credit for the cost of paying someone to take care of your under-age-13 children while you work, known as the "Credit for child and dependent care expenses," as filed on Form 2441.
  
  

Education Credits

• While those who itemize their deductions can write off a portion of the tuition and fees that they pay for post-secondary education, the large number of people who claim the standard deduction are unable to benefit from this write-off. To open up the opportunity to more taxpayers, the IRS offers both a Hope credit and a lifetime learning credit that can help to defray some of the cost of college for either taxpayers or their dependents.
  
  

"Hybrid" Credit

• Until December 31, 2010, the IRS offers generous credits toward the purchase of a number of alternative fuel vehicles, such as gasoline hybrids and lean-burn "clean" diesels. In addition to these credits, a $7,500 credit is being offered for the purchase of electric vehicles and plug-in hybrid vehicles. This credit extends past December 31, 2010.
  
  

State Credits

• Although the federal government's credits are well known and heavily publicized, many states also offer a range of tax credits. Some simply mirror federal credits, such as the 22 states that offer their own EITC. Others are specific to state taxes, such as the "renter's credit" that some states offer to allow those who rent to get a little bit back from their taxes.