Part 4: Credits
Mar 13 '00
Got kids? Got credits.
Line 41 / Form 2441 Child care tax credits:
A qualifying person is (a) a child under 13, living with you; (b) a disabled spouse; or (c) a disabled person who you can claim as a dependent. You can get a credit of 20-30% of the amounts spend on dependent care, with that amount limited to the least of (1) $2,400 if you have one qualifying person, and $4,800 if you have more than one; (2) the lesser of your and (if married, your spouses) earned income (defined as $200/month if disabled or a full-time student, provided that only one of you can claim the $200 in any given month); and (3) the amount actually spend on child care. You are not eligible if your file status is married filing separately
If your child-care provider receives funds from a dependent care flexible spending account, then the excludable amount is calculated in the same way, the least of (1) $5,000, (2) above, (3) the amount actually spent on dependent care, and (4) the amount the employer paid from the account. The expenses allowable for the credit are reduced by the excludable amount.
Line 42: Credit for the elderly or disabled.
This generally allows a credit against taxable disability income, if over 65 or on permanent and total disability, if Adjusted Gross Income plus non-taxable income (including non-taxable social security income) is less than $12,500-$25,000.
Line 44: Education credits
Bear with me; I know I'm dealing with these out of order
Generally, the Hope credit is 100% of the first $1,000 in qualifying expenses, and 50% of the next $1,000, for each student in the first two years of post-secondary (i.e., college) education.
The lifetime learning credit is 20% of the first $5,000, for each student NOT in the first two years of post-secondary education.
Line 59a Earned Income credit
Generally, if your earned income and modified AGI (including non-taxable interest) are both less than $10,200 (if no qualifying child), $26,928 (if one qualifying child), and $30,580 (if two or more qualifying children), then you qualify. The instructions are fairly simple.
Line 43 Child tax credit
Generally $500 per qualifying child (as defined on line 6c), if income limits are met. If there are 3 or more eligible children, and income tax is reduced to $0 by the credits on lines 41-44, then the lesser of the amount of the earned income credit (line 62 below) minus net social security taxes for the year, and the excess amount of this child tax credit, is a refundable child tax credit, placed on line 60 of the form.
Line 45 Adoption credit
This is complicated. I will only say that if you adopt or attempt to adopt a child, then there may be a credit of up to your adoption expenses, or $5,000-$6,000, whichever is less. Any unused credit because income tax has already be reduced to 0, may be carried forward to future years.
 |
|
|
|
|
|
|
Epinions.com ID:
Arthur.Rubin
|
 in Personal Finance |
 in Personal Finance |
 - Top 500 |
|
Member: Arthur Rubin
Location: Brea, CA, USA
Reviews written: 97
Trusted by: 109 members
About Me:
Expert in mathematics, computers, income tax, with a wide variety of interests.
|
|
|
© 1999-2009 Shopping.com, Inc.