Tax Calculations and Credits

may reduce personal tax liability to zero, but they may not result in a cash refund

subtracted from income tax liability and may result in a cash refund when the credit exceeds tax liability owed even if no tax is withheld from wages

both parents are working, pay someone to babysit. one dependent 3,000; 2 or more dependents 6,000

1. a qualifying child under age 13 2.

any disable dependent 3. a spouse who is disabled and cannot take care of themself

babysitter, nursery school, day care

Max = 35%, AGI must be 15,000 or less Phase out = 20-35% the credit decreases for each 2,000 of AGI over 15,000 Minimum = 20% for individuals wiht AGI of more than 43,000

15% credit

1. 65 years of age or older or 2. under 65 and retired due to permanent disability

american opportunity credit, the lifetime learning credit and non taxable distribution form a Coverdell Education Savings account

available against federal income taxes for qualified tuition, fees and course material paid for a student's first four years of post secondary education at an eligible educational institution

max = 2,500 100% of qualified expenses plus 25% of the next 2,000 of expenses

per student basis and must be on behalf of taxpayer, taxpayer's spouse or taxpayer's dependent

Phase out begins at 80,000, full phase out at 90,000

available for an unlimited number of years for qualified tuition and related expenses (except books) at eligible educational institutions

equal to 20% of qualified expenses up to 10,000; 2,000 dollar maximum per year

begins at 52,000 with full phase out at 62,000 (104,000-124,000 joint)

can both be claimed on one year

credito for adopted a child is available

12,650 per child 12,650 per special needs child

189,710-229,710

all reasonable and necessary expenses, costs, and fees are available for credit. medical expenses do not qualify

for adopted the child of a spouse or for a surrogate parenting arrangement

non refundable tax credit that may offset both regular and alternative minimum tax is available for contributions to either a traditional IRA or ROth IRA

1.

at least 18 by close of year 2. not a full time student 3. not a dependent

taxpayer may claim a credit for foreign income taxes paid to a foreign country

there is no limit on foreign taxes used as a deduction. however, foreign tax credits are limited to the lesser of 1. foreign taxes paid or 2. taxable income from all foreign operations/taxable income + exemptions X US tax

available to employers who hire employees from a targeted group

40% of first 6,000 of first year wages

taxpayer may claim a 1,000 tax credit for each qualifying child

CARES rules apply, except that a child must be under the age of 17 and child must be a citizen of the US

refundable credit

paycheck credit

an employer who has had SS tax withheld in a greater about than the maximum for a particular year may claim the excess as a credit against income if that is the result from corrected withholding by two or more employers

employer must refund the excess to the employee

small business with 100 or less employees who earned at least 5,000 in preceding year are allowed a credit for 50% of the first 1,000 of qualified start up costs for a pension plan

allows some employees a tax credit for providing health care costs coverage to their employees

up to 35% of the employer's costs of the plan premium

costs of family members, sole proprietors, partners, s corporation owners, shareholders owning more than 5%

if the expenses were used to qualify for the credit they are not allowable as tax deductions

a credit of up to 80% of health care premiums for qualified health insurance paid by certain taxpayers for the taxpayer and qualifying family members is allowed

a maximum credit of 15% of qualifying nonbusiness energy property or improvements