Credits Flashcards
Earned Income Tax Credit
This is for households who make less than $51K /$57K MFJ
If no kids get $543, 3,618 first child 6,728 3 kids
Special rules for military and clergy
What is the difference between a deduction and tax credit
A deduction reduces your income before you calculate the tax you owe
Credits reduce the amount of tax you owe. Some credits are refundable and will give you a refund even if you do not owe tax
Child Tax Credit
$3,600 per child under 6 $3,000 per child age 6-16 17 years old eligible for $3,000 It is not considered income limited 75K Single and 150K MFJ
Recovery Rebate Credit
If you didn’t get the first or second round of stimulus payments - you can take this
Advance child tax credit
This is early payment of the Child Tax credit
Adoption Credit
This is a credit for qualified adoption expenses paid to adopt an eligible child.
Non refundable
Max 14,440 per child
lose it if you make more than $214 - 254K
Credit for the Elderly or disabled
65 or older or permanently disabled and have AGI - under 25K - lower thresholds
Savers Credit
its 1K/2k S/MFJ if you contribute to a retirement account and make less than 33K/66K S/MFJ
Foreign Tax Credit
Non refundable tax credit for income taxes paid to a foreign government as a result of foreign income tax withholdings
- you can get it if you work in a foreign country or have investment income from a foreign source
- You must have paid or accrued the tax
- It must be an income tax
- If you have foreign income you can exclude up to $108K from income
Excess Social security and RRTA Tax withheld
RRTA - Rail Road Retirement Tax Act
This is if you had more than 1 employer and had too but Social Security tax withheld or RRTA withheld - then the excess becomes a credit against your income tax return
Credit for Tax on Undistributed Capital Gains
This is in response to receiving a form 2439 Notice to Shareholders of Undistributed Long-Term Capital Gains.
- Essentially it is when a mutual fund company does not distribute all of its capital gains to its shareholders and then pays tax on them.
- you report the gains as if you actually received them but them can claim a credit for the taxes they pay.
Credit for Prior Year Minimum Tax
This lets you get back the money you paid as an AMT in a prior year.
You can only claim this credit in a year when you don’t have to pay AMT
You can’t use the credit to reduce you AMT liability in the future
Residential Energy Efficient Property Credit
This is a credit you can get for putting in energy-efficient upgrades into your home
- 10% of the cost of qualified energy efficiency improvement
- the amount of the residential energy property expenditures paid or incurred by the taxpayer during the taxable year
- a portion of the cost can be credited against your taxes
- 26% tax credit for solar systems installed in 2023
- It is not refundable but can be carried back 1 year and forward for 20
Plug-in Electric Drive Vehicle Credit
Credit up to 7,500 for a new qualified plug-in vehicle
It is 2,500 based plus 417 for each kilowatt hour of battery capacity in excess of 5 kilowatt hours
can be bought or leased
once 200K cars are sold the credit phases out
Premium Tax Credit
This is a refundable credit that helps eligible individuals cover the premiums for their health insurance purchased through the healthcare market place
your family income must be less than 400% of the poverty level.
Health Coverage Tax Credit
Has been extended through December 31, 2021
It is a tax credit to offset the cost of their monthly health insurance premium.
American Opportunity and Lifetime Learning Credit
credit up to 2,500 per eligible student
if the credit reduces the tax you owe you can get 40% of the remaining amount of the credit (up to $1,000) refunded to you
Income must be 80K or less single in 180K MFJ
