Personal Tax Credits

Question 1

Describe the Lifetime Learning Credit.

Answer 1

1. Allowed up to $2,000 per taxpayer;
2. 20% of up to $10,000 of educational expenses;
3. Qualified educational expenses are nondeductible tuition and academic fees incurred by a taxpayer, spouse, or any dependent of the taxpayer.
4. Phase-out begins after $107,000 with (excess/20,000 - 1.0) X expenses.

Question 2

List the eligibility requirements for the dependent care credit.

Answer 2

Care must be provided for: 1.A dependent who has not reached the age of 13;
2.A dependent (or spouse) who is mentally or physically incapacitated and lives with the taxpayer for more than half the year.

Question 3

How is the dependent care credit calculated?

Answer 3

1. Begins at 35% if AGI is less than $15,000 and is reduced by 1% for each $2,000 increment (or part) in AGI;
2. The minimum dependent care credit percentage is 20%;
3. Limited to $3,000, or $6,000 if more than one dependent. Cannot exceed wages of lowest paid spouse.

Question 4

Describe the child tax credit.

Answer 4

A $1,000 credit is allowed for each qualifying child under the age of 17.
Phase-out with AGI over $110,000.
PO amount is $50 X ea. $1,000 increment over $110,000.

Question 5

Describe the American Opportunity Credit.

Answer 5

1.Allowed up to $2,500 (2013) per year for each eligible student;
2.100% of first $2,000 and 25% of next $2,000 on qualified educational expenses;
3.Qualified educational expenses are nondeductible tuition and academic fees incurred during first four years of post-secondary education.
NO PHASE-OUT!

Question 6

What expenses qualify for the adoption credit?

Answer 6

Qualified expenses include adoption fees, court costs, attorney fees, and travel expenses.