People are filing their 2008 income tax returns earlier this year, according to the Internal Revenue Service. Early filing statistics also show that the average individual refund is up. Reasons for larger refunds may include benefits from tax breaks such as the first-time homebuyer credit.

If you haven’t filed yet, there is still time. LSU AgCenter family economist Jeanette Tucker says taxpayers should be aware of five popular credits that could increase their refund.

#1 Earned Income Tax Credit

This is a refundable credit for low-income working individuals and families. Louisiana is the first southern state to establish an Earned Income Tax Credit for state taxpayers.

“All taxpayers eligible for the federal earned income credit are also eligible for the state credit,” Tucker said.

Workers must meet the income and eligibility criteria and file a tax return to get the credit.

#2 Child and Dependent Care Credit

This 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.

#3 Child Tax Credit

This 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.

“The IRS has expanded this credit for 2008,” Tucker said. “Around 13 million children will benefit.”

#4 Retirement Savings Contributions Credit

This is also known as the Saver’s Credit and is designed to help low- and 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.

#5 Health Coverage Tax Credit

Individuals who are receiving certain Trade Adjustment Assistance, Alternative Trade Adjustment Assistance or pension benefit payments may – be eligible.

Second chance to claim economic stimulus payment

Last year, more than 100 million individuals received economic stimulus payments. But 4 million people who qualified for the stimulus payment did not file a tax return and, therefore, did not get their payment.

“Seniors, veterans, people with disabilities and anyone who missed filing will get a second chance,” Tucker said.

The Recovery Rebate Credit allows individuals to claim the credit by filing a 2008 tax return. The IRS says eligible taxpayers are:

· Individuals who did not receive an economic stimulus payment.

· Those who received less than the maximum economic stimulus payment in 2008 – $600 per taxpayer and $1,200 if married, filing jointly – because their qualifying or gross income was either too high or too low.

· Families who gained an additional qualifying child in 2008.

· Individuals who could be claimed as a dependent on someone else’s tax return in 2007, but who cannot be claimed as a dependent on another return in 2008.

· Individuals who did not have a valid Social Security number in 2007, but who did receive one in 2008.

Basic tax preparation and planning

Before filing your return, gather tax records, review and organize them. If you prepare your own tax return, study this year’s forms and instructions and begin your preparations. If you do not complete your own returns, deliver your tax records to a qualified tax preparer.

Some taxpayers will qualify for free tax preparation assistance. This assistance is available in most communities for those with low to middle incomes and for the elderly.

The IRS has Volunteer Income Tax Assistance (VITA) sites set up in communities across the country. AARP also provides tax preparation assistance for older taxpayers through their Tax Aide program. VITA sites provide fast electronic tax filing, and some can help taxpayers open bank accounts. To find the VITA location nearest you, call the IRS at 800-829-1040.

The IRS encourages taxpayers to file electronically. E-file offers faster refunds, greater accuracy and no paper return to mail.

Expecting a refund?

Tax refunds can be sizable for some families. Tucker says by carefully planning ahead, a tax refund can help you get out of debt or help you make more money.

“A good use of a refund would be to put it toward repaying debts such as credit card balances,” she said.

Those with no outstanding debts should consider investments. Another good option is to invest in yourself by taking professional improvement classes or job training classes. This could lead to a raise, promotion or a better job.

Learn more about Personal Finance at the LSU AgCenter.

Tobie Blanchard

The LSU AgCenter is one of 11 institutions of higher education in the Louisiana State University System. Headquartered in Baton Rouge, it provides educational services in every parish and conducts research that contributes to the economic development of the state. The LSU AgCenter does not grant degrees nor benefit from tuition increases. The LSU AgCenter plays an integral role in supporting agricultural industries, enhancing the environment, and improving the quality of life through its 4-H youth, family and community programs.