Other credits

There are several other tax credits you’ll want to investigate. There’s no limit on the number of credits you can take, provided you qualify for each of them. And while some have income limits, others are available no matter how much you earn.

Energy savers

Anyone who buys a qualified hybrid vehicle — one that uses both electricity and gas — in 2006, 2007, 2008, 2009 or 2010 may be able to take a hybrid tax credit. The amount varies from model to model, and once a car manufacturer has sold a total of 60,000 hybrid cars — not 60,000 of each model — the credit for that manufacturer’s cars is reduced and then disappears. The manufacturer will provide this information.

If you install qualified energy savings devices in your primary home in 2006 or 2007, you may qualify for the residential energy-efficient property credit. Some of these energy-saving devices include insulation systems that reduce heat loss, exterior windows and skylights, exterior doors, certain metal roofs, qualified furnaces and hot water heaters, solar panels, solar water heating equipment and fuel cell power plants.

The amount of credit varies, so you may have to do a little research to figure out your savings. But if you qualify, you’ll enjoy a financial benefit for saving energy in your home.

Retirement savings contributions credit

Did you know that saving money for retirement may actually help you save on taxes? If you contribute to a retirement savings plan, such as a Roth IRA, traditional IRA or a plan your employer offers such as a 401(k), you may qualify for the saver’s credit. This credit will offset your contribution if your adjusted gross income (AGI) is less than the limits for your filing status.

There are restrictions that limit the eligibility of people who can be claimed as dependents, are enrolled as students and are younger than 18. But if those limits don’t apply to you, you can complete IRS Form 8800, attach it to your return and subtract the credit.

Mortgage interest credit

The IRS designed the mortgage interest credit to help lower-income individuals own homes. If you took a mortgage loan to purchase a home and received a mortgage credit certificate (MCC) from your state or local government, you may qualify for a credit to offset the mortgage interest you pay. (If you take this credit, you must reduce any mortgage interest deduction by the amount of the credit.) To figure the credit, use Form 8396 and attach it to your tax return. Be sure to include the credit on line 54 of your Form 1040. Use the Form 1040 instructions for more information.  If you qualify for a larger credit than you can take in any one year, you may be able to carry it forward, or use the credit over the next three years or until you have used it up, whichever comes first.