In our previous article, we have covered 3 out of 5 lesser-known tax credits you should not miss in your tax returns. They are the Home Energy Tax Credit, the Hybrid Vehicles Tax Credit and the Mortgage Interest Credit. Click here to read or watch more IRS Help resources.
Today, we conclude this two-part series with the final 2 tax credits you should know of.
4. Health Coverage Credit
If you as an individual or a family have lost health insurance coverage due to foreign business competition, you may be eligible for the Health Coverage tax credit. This credit will pay for your health insurance premiums. The US government, in association with other federal agencies, state governments and healthcare groups, are offering this tax credit. Other persons who are receiving from the Pension Benefit Guaranty Corporation (PBGC) or other trade-related government agencies can also claim this tax benefit.
But there are some conditions. Your health plan must be approved by the IRS. Your eligibility is determined by your participation in approved health plans. If you are eligible, you need to fill up IRS Form 8885 which will be mailed to you in a health coverage tax credit kit. You need to submit IRS Form 8885 together with your tax returns.
5. Undistributed Mutual Fund Capital Gains Tax Credit
Under normal circumstances, you would submit Form 1099-DIV to declare your mutual fund capital gains. However, at times your mutual fund company may send another form i.e. Form 2439 to you. Receiving this form indicates that there has been a portion of the capital gains that has been withheld by the mutual fund corporation. Thus you are eligible for a tax credit on the amount withheld.
Most mutual fund companies would give you a pro-rata amount of capital gains as one of their shareholders. But there is nothing to stop mutual fund companies from withholding some capital gains, pay a tax on it and make a capital gain allocation.
So if you receive Form 2439, you should report the capital gain, claim the tax credit and adjust the basis of your fund’s shares.
If you require more information, you can download IRS Publication 564 from the IRS website, www.irs.gov.
It would be smart of you to claim any of these 5 lesser-known tax credits if they apply to you. The relevant IRS Publications would furnish you with more information on each of the credits. Alternatively, you can call us at (813) 229-7100 for a free consultation.