Tax Credits!

Question 1

Credit for Child and Dependent Care

Answer 1

CDC, creepy. 13th creepy.

• Percentage of expenses paid for care of a dependent.
• $3,000 for one dependent, and $6,000 for 2+ of qualifying expenses.
• Credit percentage of 20% (for AGI > 15K)
• AGE 13 Max!

Question 2

Child Tax Credit

Answer 2

• $2,000 for each qualifying child.
• UNDER age 17, son, daughter, stepchild, foster children.
• Reduced by $50, for each 1K above 400K MAGI (MFJ) and 200K MAGI (Single).

UP TO $1,400 per child is REFUNDABLE.

Question 3

TCJA “Family” Credit

Answer 3

$500 for each dependent who isn’t a qualifying child (but still receiving 50% + of support). Could be 17+ children, elderly parents, disabled adult children, etc. Same phase-out thresholds as CTC (200/400AGI)

NOT refundable

Question 4

Foreign Tax Credit

Answer 4

US taxpayers who pay income taxes to Foreign governments can:

• Deduct those taxes for U.S. tax purposes
• Credit them dollar for dollar against their income tax liability.

Question 5

Adoption Credit

Answer 5

Special Needs = No expenses required to qualify. You get max.

Otherwise:

• Credit based upon adoption-related expenses (court, attorney, travel to foreign country, etc.)
• NOT surrogate parenting
• Max is 13,840 / eligible child.
• Phase-out MAGI between 207 - 247K

When to claim:

• If foreign national, only in year adoption is finalized
• If US citizen, you can take in subsequent years if you have qualifying expenses

Question 6

Credit for Elderly and Permanently and Totally Disabled

Answer 6

Available for individuals who:

(1) Reach age 65
(2) Under 65, retired with permanent and total disability AND receives disability income.

Question 7

Low Income / Rehabilitation Credits

Answer 7

Low income, no income phase out. 25K deduction equivalent.

Historical rehabilitation credit is still available, but not productive. It phases out at 200K AGI.

Question 8

Earned Income Credit

Answer 8

Refundable! Meant to get people on the books. For those with earned income under low amounts.

Question 9

Lifetime Learning Credit

Answer 9

NO maximum number of years

• $2,000 maximum credit, 20% of first 10K of expenses
• Undergraduate or graduate
• Lower phase-out (114-134 MAGI (JNT)

Coordination Rules!