Credits

Retirement Savings Contribution Credit

Asked Tuesday, February 21, 2012 by an anonymous user

CPA Answer:

An individual may be able to take a tax credit of up to $1,000 ($2,000 if filing jointly) for making eligible contributions to an IRA or employer-sponsored retirement plan.
The amount of the credit you can get is based on the contributions you make and your credit rate. Your credit rate can be as low as 10% or as high as 50%.
Your credit rate depends on your income and your filing status.
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Credits

Child Tax Credit

Asked Tuesday, February 21, 2012 by an anonymous user

CPA Answer:

Taxpayers who make under the $110,000 / year are currently still allowed to claim $1,000 per child as their Child Tax Credit. Families making between $110,000 and $130,000 receive a reduced credit (specifically $50 per $1,000 made over $110,000).
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Energy Credit

Energy Credit

Asked Tuesday, February 21, 2012 by an anonymous user

CPA Answer:

In 2013, A taxpayer is allowed a 10-percent nonbusiness energy property credit for the purchase of qualified energy efficiency improvements to existing homes
There is a limitation of $500 on the total amount of nonbusiness energy property credit that may be claimed. This limitation is a lifetime limitation, not an annual limitation.
This credit was to expire with respect to any property placed in service after December 31, 2011. ATRA, Sec. 401, extends the availability of the credit to property placed in service before January 1, 2014.
In 2013 are 30% tax credits on large energy installation projects that are geared towards environmental aware taxpayers. They include geothermal heat pumps (no upper limit, both principal residences & second homes apply). Solar energy systems (no upper limit, both principal residences & second homes apply). Small wind turbines (no upper limit, both principal residences & second homes apply). Fuel cells (up to $500 per .5 kW of power capacity and for Principal residences only).
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Credits

Energy Credit

Asked Tuesday, February 21, 2012 by an anonymous user

CPA Answer:

In 2013, A taxpayer is allowed a 10-percent nonbusiness energy property credit for the purchase of qualified energy efficiency improvements to existing homes
There is a limitation of $500 on the total amount of nonbusiness energy property credit that may be claimed. This limitation is a lifetime limitation, not an annual limitation.
This credit was to expire with respect to any property placed in service after December 31, 2011. ATRA, Sec. 401, extends the availability of the credit to property placed in service before January 1, 2014.
In 2013 are 30% tax credits on large energy installation projects that are geared towards environmental aware taxpayers. They include geothermal heat pumps (no upper limit, both principal residences & second homes apply). Solar energy systems (no upper limit, both principal residences & second homes apply). Small wind turbines (no upper limit, both principal residences & second homes apply). Fuel cells (up to $500 per .5 kW of power capacity and for Principal residences only).
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Credits

Child and Dependent Care Credit

Asked Tuesday, February 21, 2012 by an anonymous user

CPA Answer:

If you pay someone to watch your child(ren)under age 13 to enable you (and your spouse if you are filing a joint tax return)to work, then you will be able to claim a Child Care Credit for the costs you pay subject to certain limitations on Form 2441.
You will have to supply to the IRS on Form 2441 the care provider's name, address and social security or EIN number.
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Credits

Additional Child Tax Credit

Asked Tuesday, February 21, 2012 by an anonymous user

CPA Answer:

This credit is for certain individuals who get less than the full amount of the child tax credit. The additional child tax credit may give you a refund even if you do not owe any tax.
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Credits

American Opportunity Credit

Asked Tuesday, February 21, 2012 by an anonymous user

CPA Answer:

A credit is available up to $2,500 per student for the first 4 years of higher education for tuition, course related books, activity fees and any equipment that must be purchased from the educational institution as a condition of enrollment. Room & Board expenses do not qualify.
The credit begins to phase out for single taxpayers who have adjusted gross income between $80,000 and $90,000 and for joint tax filers when adjusted gross income is between $160,000 and $180,000. The credit is unavailable to taxpayers whose adjusted gross income exceeds the $90,000 and $180,000 thresholds.
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Credits

Credits - Refundable

Asked Tuesday, February 21, 2012 by an anonymous user

CPA Answer:

Refundable tax credits include:
Earned Income Credit
Excess Social Security Credit
Additional Child Tax Credit
American Opportunity Credit - partially refundable
Adoption Credit First-time Homebuyer Credit
Health Coverage Tax Credit
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Credits

Credits - Nonrefundable

Asked Tuesday, February 21, 2012 by an anonymous user

CPA Answer:

Nonrefundable tax credits include:
Child and Dependent Care Credit
Education credits (American Opportunity Credit is also partially refundable)
Residential Energy Credits
Credit for the Elderly or Disabled
Child Tax Credit
Foreign Income Tax Credit
Retirement Savings Contribution Credit
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Credits

Credits - Overview

Asked Tuesday, February 21, 2012 by an anonymous user

CPA Answer:

A tax credit reduces the amount of tax for which you are liable. Unlike a deduction, which reduces the amount of income subject to tax, a tax credit directly reduces your tax liability, dollar for dollar.
A tax credit is usually more valuable than a tax deduction of the same dollar amount. There are two categories of tax credits, refundable and nonrefundable.
A nonrefundable credit can reduce your tax liability to zero (0), but not below.
A refundable tax credit is a tax credit that can reduce your tax liability below zero and the amount in excess of the liability is refunded to you.
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