People often choose to work part-time because they are students, they have multiple jobs, or because they are simply unable to find a full-time job. While this can make paying taxes more difficult, there are a few simple steps that can help substantially lower a qualifying part-time employee’s taxable income.
The earned income tax credit (EITC) is designed to help employees with low incomes pay reduced taxes. Whether a person qualifies for this benefit depends on a series of factors, including:
The person’s income
Whether the employee files jointly or separately
Whether he or she has children
For 2017, qualifying incomes range from between $14,880 to $53,505. Although it depends on how many children a taxpayer has and what his or her income is, an eligible taxpayer stands to save between $506 and $6,269 on their taxes by using the EITC.
Those who work part-time and are also self-employed can deduct certain expenses incurred as a part of running their business. For example, a self-employed blogger could claim a home office deduction if he or she uses a home office exclusively to conduct business on a regular basis. Self-employed taxpayers can also deduct a portion of their utility bills as long as they use their home as their primary place of business.
Many part-time employees are also students who are working to pay for tuition and other school-related expenses. For taxpayers in this situation, there are two tax credits that may help offset their expenses. The first is known as the American Opportunity Credit, which is worth $2,500 per eligible student and covers tuition, books, and school fees for the first four years of a degree. The second is known as the Lifetime Learning Credit and covers up to $2,000 per tax year. It covers the same expenses as the American Opportunity Credit and is available to either the student or parent who is paying the bills but not to both parties.
To learn more about your tax credit options, please contact a member of our CORE financial team today. Our Oklahoma City office can be reached by calling 405-288-1206, while a member of our Lawton team is available at 580-353-2376. If you’d prefer to speak with a Tulsa representative please call 918-209-3441 today.