CH 16 credits Flashcards
What is non-refundable mean?
credits CANNOT reduce the taxpayer’s tax liability below zero
What is Refundable mean?
credits may reduce the taxpayer’s tax liability BELOW zero.
Name the five child dependent care credit REQUIREMENTS
1) MUST file as joint return
2) MUST either work or look for work
3) Taxpayer ( including spouse) must have earned income
4) Taxpayer and child must reside at home.
5) care provider is not qualified if taxpayer can claim them as dependent. ( e.g., QC services aren’t acceptable).
What is eligibility for unmarried taxpayer who apply for child and dependent care credit?
Taxpayer who pays OVER HALF the cost of maintaining a household and living with QC for MORE THAN HALF A TAX YEAR.
IF QP, what is eligibility for CDCC( child and dependent care credit)?
1) a dependent who is a qualifying child and has not reach their 13th birthday when the care was provided.
2) Taxpayer’s dependent of any age who is physically or mentally incapable of self care and is abode with taxpayer where care is provided
3) Taxpayer’s spouse who is physically or mentally incapable of self care where care is provided.Spouse’s abode is same as a taxpayer.
What is qualified expense for CDCC eligibility?
Care expenses are those incurred for providing well-being and protection of a QP while employed or unemployed.
Care expenses are provided outside the home
QP MUST spend more than 8 hours in taxpayer’s home.
What are not qualified expenses when applying to CDCC?
Cost of transportation
cost of overnight camp expenses
Education cost for kindergarden or higher
( ALTHOUGH total cost of schooling below kindergarden qualifies if cost of schooling cannot be separated from the cost of care).
What is section 125 plans?
salary reduction arrangements by employers for one or more nontaxable benefits.
(E.g., flexible spending account used to pay child care expenses or medical expenses).
Taxpayer must reduce the amount if his employer did not include taxable income.
What are limits for employer-provided benefits ( EPB)?
Employer cannot exclude EPB from employees
employer exceeds ( “ smallest”)
1) qualified expenses
2) lesser of the taxpayer’s or spouse’s EI( earned income)
3) 5000 ( 2500 MFS)
How much does adoption expenses estimate?
adoption expenses estimate to 12970 per eligible child.
When does a taxpayer when adopted a child receive adoption credit?
the following year.
think: if reported on 2012 then received next year 2013,
What expenses qualify for adoption credit?
Expenses that qualify: adoption fees, court cost , attorney fees, travel expenses, and other related adoption expenses
Expenses that DO NOT qualify: surrogate parenting expenses, costs of adopting a spouse’s child, expenses paid with funds received from any government program , and amount allowed as a credit or deduction under any other federal income tax rule
What qualifies as eligible for adoption credit?
the child must be under age 18, physically, or mentally incapable of self care.
special needs child must be us citizen and is required to have “ special assistance” for the family.
When does adoption credit phase out?
when taxpayer’s AGI exceeds 194,580 ( fully 234,580)
Is adoption credit non refundable?
yes
