Credits

Question 1

Earned Income Tax Credit

Answer 1

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

Question 2

What is the difference between a deduction and tax credit

Answer 2

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

Question 3

Child Tax Credit

Answer 3

$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

Question 4

Recovery Rebate Credit

Answer 4

If you didn’t get the first or second round of stimulus payments - you can take this

Question 5

Advance child tax credit

Answer 5

This is early payment of the Child Tax credit

Question 6

Adoption Credit

Answer 6

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

Question 7

Credit for the Elderly or disabled

Answer 7

65 or older or permanently disabled and have AGI - under 25K - lower thresholds

Question 8

Savers Credit

Answer 8

its 1K/2k S/MFJ if you contribute to a retirement account and make less than 33K/66K S/MFJ

Question 9

Foreign Tax Credit

Answer 9

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

Question 10

Excess Social security and RRTA Tax withheld

Answer 10

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

Question 11

Credit for Tax on Undistributed Capital Gains

Answer 11

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.

Question 12

Credit for Prior Year Minimum Tax

Answer 12

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

Question 13

Residential Energy Efficient Property Credit

Answer 13

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

Question 14

Plug-in Electric Drive Vehicle Credit

Answer 14

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

Question 15

Premium Tax Credit

Answer 15

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.

Question 16

Health Coverage Tax Credit

Answer 16

Has been extended through December 31, 2021

It is a tax credit to offset the cost of their monthly health insurance premium.

Question 17

American Opportunity and Lifetime Learning Credit

Answer 17

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