Who wants to tell us. Why do Tax Credits matter?

Transcription

1 Who wants to tell us Why do Tax Credits matter?

2 Non-Refundable Credits

3 Non-Refundable Credits Other Dependent Credit Lifetime Learning (Education) Credit Credit for Child and Dependent Care Retirement Contributions Residential Energy Credits Foreign Tax Credit Elderly or Disabled Portland, OR Metro TY2016 3

4 Child and Dependent Care Credit Allows taxpayer to claim child and dependent care expenses paid during the tax year for their: Dependent child under age 13 Spouse who is incapable of self-care Other dependent who is incapable of self-care

5 Form 2441 Taxpayer must have caregiver s information and exact amount paid with proof If more than each child, amounts must be separated Must also be aware that caregiver must also claim expenses taxpayer claims as income (if earned more than $400)

6 Child Tax Credit Non-refundable up to $2,000 each qualifying child (eliminates tax) then anything left (up to $1,400) is refundable How much taxpayer qualifies for depends on income level (lower AGI can mean lower credit amount back) Same rules that apply to a Qualified Child (Relationship, Residency, Support tests) EXCEPT: Age Test Child must be under age 17 Child must have valid SSN, no ITINs If data is input correctly software will determine eligibility

7 Credit for Other Dependents Up to $500 Non-refundable (eliminates tax only) For dependents not eligible for CTC Must reside (live) here in the US over half the year (183+ days) Dependents in MX no longer make a difference on Federal return but still will on State return ITINs OK for this credit To qualify Substantial presence test box in Dependent section of TaxSlayer must be checked if ITIN holder lives here

8 Education credits Qualified higher education expenses can help reduce amount of tax to pay and possibly increase refund American Opportunity Credit Lifetime Learning Credit Expenses for taxpayer, spouse and dependents, regardless of who paid. Expenses paid with loans qualify

9 Education credits Basic requirements taxpayer must meet: Cannot be dependent Cannot file as Married Filing Separately Attended eligible post-secondary educational institution during tax year (

10 Review Tuition Statement Form 1098-T Grants and Scholarships* Total Paid: 1 or Amounts billed: 2 16 Out of Scope Status Indicators: Boxes 8 and 9 *Adjust if any portion taxable NTTC Training TY

11 Lifetime Learning Credit Non-refundable credit (eliminates tax only) Available for all post secondary education and for courses to acquire or improve job skills Only course-required books, supplies, tuition and fees, and equipment qualify if paid to school as condition of enrollment Student does not need to be pursuing a degree or other recognized education credential Available for one or more courses

12 Refundable Credits

13 American Opportunity Credit Refundable! First 4 years of post secondary education, cannot be claimed more than 4 tax years Student must be pursuing undergraduate degree or other recognized education credential Student must be enrolled at least half time for at least one academic period beginning during the year No felony drug conviction on student s record

14 American Opportunity Credit Qualified tuition and related expenses include books, supplies, and equipment needed for a course of study whether or not the materials are purchased from the educational institution as a condition of enrollment or attendance Computers almost never qualify as expense Must be requirement by class or school that you have your own computer

15 Earned Income Credit Refundable tax credit for those with low income Only earned income qualifies (unearned income such as unemployment or bank interest does not) Amount of credit based on income levels and how many Qualifying Children taxpayer has Credit has income limits that depend on filing status and how many qualifying children taxpayer has There are a general set of rules for claiming this credit, for everyone, and for taxpayers with and without Qualifying Children Turn to Resource Guide 4012 Page I-2 to I-5 for rules and step-by-step interviewing

16 A Mount Credit

17 Rules for everyone: Taxpayer, spouse and any EIC Qualifying Children must have a Social Security number (not an ITIN) Cannot be Married Filing Separately Must be a US citizen, or resident alien all year (reside in US more than half the year) Cannot be Qualifying Child of another taxpayer

18 Rules if you have a Qualifying Child Child must meet four of Qualifying Child for dependency purposes test: Relationship Age Residency MUST have lived with TP over half the year Joint Return (generally cannot have filed a MFJ return) Does NOT have to meet Support test Qualifying Child for EIC purposes does NOT have to be or qualify as taxpayer s dependent examples??

19 Rules without a Qualifying Child Must be at least age 25 but under age 65 as of December 31 st For a couple filing a joint return only one taxpayer has to meet age requirement Cannot be the dependent of another person Must have lived in the United States more than half the year