Tax Credits & Gift tax Flashcards
When are items eligible for the marital deduction?
For example, when Calvin and Jasmin became engaged in Mar-22, Calvin gave Jasmin a ring that had a FMV of $25k. After their wedding in Oct-22, Calvin gave Jasmin a sports car with a FMV of $70k. Both of them are US citizens. What is the amount of Calvin’s 2022 gift tax marital deduction?
Items are eligible for deduction when gifts are given to a donee who at the time of the gift is the donor’s spouse.
Calvin’s gift of the $70k car to Jasmin AFTER their wedding is eligible for the marital deduction. The ring does not qualify bc they weren’t married at date of gift.
Answer = $70k
3 characteristics of a complex trust include:
The trustee:
1) has the discretion whether to distribute or accumulate income
2) may make charitable contributions
3) may distribute corpus
For the adoption credit, what expenses are taken into account in the year the adoption becomes final?
What type of credit is this?
What is the max amount of the credit?
Expenses include:
1) adoption fees
2) court costs
3) attorney fees
4) other expenses directly related to legal adoption
Nonrefundable credit up to $14,890 (2022)
Characteristics of the earned income credit include what 3 things?
To be eligible,
1) an individual must have earned income and must maintain a household for more than 1/2 the year for a qualifying child
2) Qualifying child includes the taxpayer’s grandchild who lives more than 1/2 the year with them and is under 19 years old, or a full-time student under age 24, or disabled
3) The credit is not available to married filing separately taxpayers
The Family Tax Credit of $500 applies to which of the following?
a) A 15-year-old niece who is a qualifying child
b) A 7-year-old child who is a qualifying child
c) A 30-year-old nephew who is a qualifying relative
d) A parent that is 60% supported by the taxpayer but is not a qualifying relative
c = correct. The nephew is not eligible for the child tax credit since he is 18 in 2021 or older, so he can be used to claim the family credit.
To qualify for the credit you must be a dependent,
What are some characteristics of the lifetime learning credit?
It provides a credit of 20% of up to $10k of tuition and fees paid by a taxpayer for one or more students for graduate and undergraduate courses at an eligible institution.
It can be claimed for an unlimited number of years, is available on a per-tax return basis, and covers tuition and fees paid for the taxpayer, spouse, and dependents
Characteristics of the Child Care Tax Credit include:
1) the credit is from 20% to 35% of:
-Certain dependent care expenses limited to the lesser of A) $3k for 1 individual, $6k for 2 or more
-Taxpayer’s earned income, or spouses if smaller
-Actual expenses
