Tax Credits
What are the child tax credit requirements and amounts?
A qualifying child for purposes of the child tax credit is a child who: 1. Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew), 2. Was under age 17 at the end of 2014, 3. Did not provide over half of his or her own support for 2014, 4. Lived with you for more than half of 2014 (see Exceptions to time lived with you, later), 5. Is claimed as a dependent on your return, 6. Does not file a joint return for the year (or files it only to claim a refund of withheld income tax or estimated tax paid), and 7. Was a U.S. citizen, a U.S. national, or a U.S. resident alien. For more information, see Publication 519, U.S. Tax Guide for Aliens. If the child was adopted, see Adopted child, later.
Cap gain are counted as part of AGI and may phase you out of other tax benefits.
$50 of your tax credit for every $1000 over the phase out limit.
How do I calculate the dependent care credit?
PUB 503
Tests To Claim the Credit To be able to claim the credit for child and dependent care expenses, you must file Form 1040, Form 1040A, or Form 1040NR, not Form 1040EZ or Form 1040NR-EZ, and meet all the following tests.
1. The care must be for one or more qualifying persons who are identified on Form 2441. (See Qualifying Person Test.)
2. You (and your spouse if filing jointly) must have earned income during the year. (However, see Rule for student spouse or spouse not able to care for self under Earned Income Test, later.)
3. You must pay child and dependent care expenses so you (and your spouse if filing jointly) can work or look for work. (See Work-related Expense Test, later.)
4. You must make payments for child and dependent care to someone you (and your spouse) cannot claim as a dependent. If you make payments to your child, he or she cannot be your dependent and must be age 19 or older by the end of the year. You cannot make payments to: a. Your spouse, or b. The parent of your qualifying person if your qualifying person is your child and under age 13. See Payments to Relatives or Dependents under Work-related Expense Test, later.
5. Your filing status may be single, head of household or qualifying widow(er) with dependent child. If you are married, you must file a joint return, unless an exception applies to you. See Joint Return Test, later. 6. You must identify the care provider on your tax return. (See Provider Identification Test, later.) 7. If you exclude or deduct dependent care benefits provided by a dependent care benefit plan, the total amount you exclude or deduct must be less than the dollar limit for qualifying expenses (generally, $3,000 if one qualifying person was cared for or $6,000 if two or more qualifying persons were cared for). (If two or more qualifying persons were cared for, the amount you exclude or deduct will always be less than the dollar limit, since the total amount you can exclude or deduct is limited to $5,000. See Reduced Dollar Limit under How To Figure the Credit, later.)
FORM 2441 and 2441 instructions submitted with 1040.
MAX 3000 in expenses per child and 5000 can be claimed for a work related plan.
What expenses qualify to be eligible for dependent care credit?
What are the phase-outs and amount for the American Opportunity credit?
PUB 970
Effect of the Amount of Your Income on the Amount of Your Credit - The amount of your American opportunity credit is phased out (gradually reduced) if your MAGI is between $80,000 and $90,000 ($160,000 and $180,000 if you file a joint return). You cannot claim an American opportunity credit if your MAGI is $90,000 or more ($180,000 or more if you file a joint return).
What is the maximum Lifetime Learning credit that a taxpayer may take?
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You can claim once PER household / 20% of the first 10,000 in expenses.
How does the Foreign Tax Credit work?
Form 1116 – taxed at the higher of the two tax rates between countries.
Tax credit for the lesser of foreign OR US tax.
You only pay extra money when your foreign tax is lesser than your US tax rate on the same income.
Does a client have to file form 1116?
File 2 1116 forms one for general category income and one for passive category income.
Line 48 on 1040 for flow through.
Two jobs. Excess SS withheld (line 71) You can deduct that.
118,500 with
6.2% withheld and the employer kicks in the same amount of 6.2%
1.45 withheld - no limit all income is subject to this. 1.45 from the employer as well.
.9% withheld for anything above $200,000
An additional 0.9% Medicare/hospital insurance tax (for a total employee contribution of 2.35%) is assessed on wages exceeding $200,000 ($250,000 for married couples filing joint returns, $125,000 for married individuals filing separate returns). An additional 0.9% Medicare/hospital insurance tax (for a total Medicare portion of 3.8%) is assessed on self-employment income exceeding $200,000 ($250,000for married couples filing joint returns, $125,000 for married individuals filing separate returns).
http://www.ssa.gov/oact/cola/cbb.html
What is the eligibility for the Retirement Savers credit?
Can you review the requirements for the earned income tax credit?