Income Taxation Ch. 9- Individual
Income Tax Credits Questions And
Answers With Verified Solutions Already
Passed!!!
Tax credit vs tax deduction - ANSWER✔✔ Tax credit- dollar for dollar reductions
on actual tax owed to the gov't
Tax deduction- only reduces the amount of income that is subject to taxation... For
example a taxpayer whose marginal rate is 37% would receive a benefit equal to
37 cents for each deductible dollar
4 important tax credits - ANSWER✔✔ -credit for children and qualifying relatives
- the adoption credit
-the dependent care credit
-credits for higher education expenses (2, the American Opportunity and Lifetime
learning)
Tax credit for children - ANSWER✔✔ the law provides an annual tax credit that
may be claimed against an individuals tax liability for each qualifying child of the
taxpayer. For years 2018-2025 the credit is $2000 per qualifying child
Qualifying Child - ANSWER✔✔ must be under the age of 17 at close of the tax
year, must generlly be younger than the person claiming the credit, and be a
dependent of the taxpayer, be unmarried
, Qualifying dependent credit - ANSWER✔✔ a taxpayer may claim a nonrefundable
credit of $500 for each dependent who is NOT a qualifying child, and IS a
qualifying relative
Child Tax Credit phaseout - ANSWER✔✔ Filing Joint- $400k of Modified AGI
Filing Separately- $200k of Modified AGI
Unmarried Taxpayers- $200k of modified AGI
The credit is phased out by $50 for each $1000 by which modified AGI exceeds
the threshold amount
The credit is phasedout sequentially, more children, larger the phaseout
Tax credit for Adoption Expenses (amount) - ANSWER✔✔ An adoption tax credit
of up to $13,840 per eligible child is available for qualified expenses paid in the
course of adopting a child.
Additional credits can be claimed for more than one child.
You CANNOT exceed the limit for any one child no matter how many years of
qualified expenses
An eligible child with regards to adoption tax credit - ANSWER✔✔ a person who
is either under the age of 18 or is physically or mentally incapable of self-care
Income Tax Credits Questions And
Answers With Verified Solutions Already
Passed!!!
Tax credit vs tax deduction - ANSWER✔✔ Tax credit- dollar for dollar reductions
on actual tax owed to the gov't
Tax deduction- only reduces the amount of income that is subject to taxation... For
example a taxpayer whose marginal rate is 37% would receive a benefit equal to
37 cents for each deductible dollar
4 important tax credits - ANSWER✔✔ -credit for children and qualifying relatives
- the adoption credit
-the dependent care credit
-credits for higher education expenses (2, the American Opportunity and Lifetime
learning)
Tax credit for children - ANSWER✔✔ the law provides an annual tax credit that
may be claimed against an individuals tax liability for each qualifying child of the
taxpayer. For years 2018-2025 the credit is $2000 per qualifying child
Qualifying Child - ANSWER✔✔ must be under the age of 17 at close of the tax
year, must generlly be younger than the person claiming the credit, and be a
dependent of the taxpayer, be unmarried
, Qualifying dependent credit - ANSWER✔✔ a taxpayer may claim a nonrefundable
credit of $500 for each dependent who is NOT a qualifying child, and IS a
qualifying relative
Child Tax Credit phaseout - ANSWER✔✔ Filing Joint- $400k of Modified AGI
Filing Separately- $200k of Modified AGI
Unmarried Taxpayers- $200k of modified AGI
The credit is phased out by $50 for each $1000 by which modified AGI exceeds
the threshold amount
The credit is phasedout sequentially, more children, larger the phaseout
Tax credit for Adoption Expenses (amount) - ANSWER✔✔ An adoption tax credit
of up to $13,840 per eligible child is available for qualified expenses paid in the
course of adopting a child.
Additional credits can be claimed for more than one child.
You CANNOT exceed the limit for any one child no matter how many years of
qualified expenses
An eligible child with regards to adoption tax credit - ANSWER✔✔ a person who
is either under the age of 18 or is physically or mentally incapable of self-care
