The Federal Tax Credits Blog

Posts Tagged ‘income’

Question: Does the EIC Tax Credit Increase yearly if so how much does it usually increase? ?

Is the new EIC tax Table out yet?

Answer: Debbie,

Per the IRS web site:

The maximum earned income tax credit for low and moderate income workers and working families with two or more children is $4,824, up from $4,716. The income limit for the credit for joint return filers with two or more children is $41,646, up from $39,783.

Woman Hurt in Hit and Run Accident

A woman from Putnam County has been flown to the hospital after she was hit by a car.

Question: Flexible spending (cafetieria plan) option: Good or bad?

I signed up for a dependent care FSA this year. The total amount available per calendar year is $5000.00 and I chose the whole amount. I get paid weekly, so, I have $96.15 taken out of each paycheck.

My son’s daycare is $145 per week. I know that I will use the $5000 prior to year end so am not worried about “using it or losing it”. However, I was wondering if this is a good plan and how it will affect my child tax credits when I do my tax return next year? Also want to know if this account can also be used for my son’s medical prescriptions & Dr. visits? I heard that you may not be able to if you have only a dependent care plan set up.

Do you ultimately feel the FSA is a good advantage and why?

Thanks

Answer: You cannot use FSA-Dependant Daycare for Unreimbursed Medical Expenses (UME). However, if your employer offers an FSA for daycare, they probably also offer a similar program for UME (either a cafeteria plan or a Health Savings Acct).

This program will not effect your child tax credit, but it will effect your Dependant Daycare tax credit (you probably lost it). But the benefits you see from using the 125 plan, usually far outweigh the Dependant Daycare tax credit. Because you did the 125 plan, your tax refund will be smaller, however, you probably saved more than that throughout the year.

With the Daycare tax credit, you probably would have saved $600-$1050 (depending on your income level, higher your income, the lower the credit). With the 125 plan, you probably saved $950-$1950 over the course of the year, higher the tax bracket, higher the savings. Even though your tax refund may be smaller, you are getting larger paychecks.

To know for sure if this is a good plan for you, I would have to know a bit more information about your taxable income, but for a vast majority of taxpayers, the Cafeteria plan that you are doing is a good deal.

Robert Peston

The retail bank set up by men who’ve not run one before

Question: 10% Homebuyer Tax Credit?

So I just read that yesterday that the Senate passed a tax credit for homebuyers for 10% of the total cost, up to $15,000. My question is, does this need to be approved by the House too before final approval? I close on a home purchase on February 27th and am really hoping that this will be in place by then so that I can qualify.

Thanks!!

Answer: It has not been signed into law yet.

I have heard rumors that people who received the $7500 may not have to pay it back under the new bill but that is still rumor. The details are changing everyday on this bill and I would not be sure of anything until it is signed.

It is my understanding that the $15000 it is NOT retro active. The new bill will be active from the day the bill is signed and for a year thereafter. Also this is not the same as the $7500 tax credit already in place. The $7500 you have to pay back, the $15000 you do not.

HOWEVER this is what a lot of people don’t understand. Just because you buy a home for $150,000 doesn’t mean you will get a check for 15,000. You will only get back what your tax liability is for the year you claim it.

For example if you paid the government $5000 in taxes in 08 and you break even (they don’t owe you, you don’t owe them) then they will give you that $5000. You can do that for 08, 09 or 09,10. If your taxes end up the same for the following year, then total you will get $10,000 dollars. For people like myself who are single and don’t make a lot of money I would only get about $4000 total.

It is very deceiving so be careful where you get your information from.

Dozens Of Tax Breaks Set To Expire

Dozens of individual and corporate tax breaks are set to expire on New Year’s Eve. The tax breaks were left in limbo when members of the U.S. Senate headed home last week without renewing them.

37 – First-time homebuyer tax credit passes House and Senate.wmv

Question: Tax homework help, please?

Super confused so if anyone could spare a minute I would greatly appreciate it.

Sam is unmarried and has one young daughter, Sue. Sam qualifies as a head of household for tax purposes. Sue is his dependent. Sam has $15,000 of earned income and has no other income. Income tax of $500 was withheld from his wages by his employer. Assuming no inflation adjustments, what are Jean’s tax consequences for the current year? In making this calculation, assume that Jean does not itemize deductions and that no tax credits apply other than the credits under section 24, 31, and 32. To calculate his initial tax liability, use the table from Revenue Procedure 2006-53.

I don’t get where the $500 comes in. Also, does 32(c)(B)(vi)(II) come into play in this problem? Would Sue be under the Dependent Care Credit or the child tax credit? How are you supposed to put the Credit for Witholding on Wages and Earned Income Credit into the equation? Any insight would be appreciated.

Answer: Who is Jean? She just suddenly appeared in your question out of nowhere. Before that, there were Sam and Sue.

If your question is about SAM’s tax, he wouldn’t have any, so would get the whole $500 refunded if it was federal income tax. He’d also be eligible for an earned income credit – from the info that he qualifies as head of household, that says that Sue must be living with him for over half the year.

Take steps to increase income tax refund

With the economy still struggling and holiday bills piling up, everyone could use a little extra cash.

Excel Magic Trick #43: PMT & Amortization Table

Question: Do I still qualify for the Child Tax and the Earned Income Credit if my daughter died shortly after birth?

I gave birth to my daughter in July, but she only lived for 34 hours, I was just wondering if I can still claim her on my taxes and get the child tax credit and the earned income tax credit?

Answer: Yes you can… God Bless…

CENTRAL JERSEY: Towns get back withheld aid from state

Municipalitiesâ frozen December payments of state aid have been restored and the checks are expected to be in the hands of local officials in the coming days.

Ohio Treasurer’s Earned Income Tax Credit PSA