Qualifying Child Age Citizenship Relationship Support Residency
Child Tax Credit Exception to “Time-Lived-With- You” Requirement –Child born/died in 2013 –Kidnapped Child –Special Rules for Children of Divorced or Separated Parents.
Review Tax Withholding The child tax credit decreases the tax liability dollar for dollar, but not below zero. The taxpayer may want to adjust his or her withholding, if he or she is having too much tax withheld.
Nonbusiness energy efficient property credit Must be installed on main home Examples: exterior doors and windows storm windows skylights metal roofs insulation central air conditioning and heating water heaters
ENERGY STAR products Not all EnergyStar products qualify for the credit. See Department of Energy’s EnergyStar Web site and the EnergyStar Frequently Asked Questions site.
Schedule R Few qualify TaxWise automatically calculates 1040, Line 53 Box C Credit for the Elderly and Disabled
Other Taxes Additional Taxes on IRAs and Qualified Plans First Time Homebuyer’s Credit repayment
Who Can Claim EITC General Eligibility Rules Earned income and adjusted gross income is limited Have valid SSN No MFS filing status A US citizen or resident alien (ITIN)
Who Can Claim The EITC General Requirements - continued Not file Form 2555 or 2555-EZ Cannot be qualifying child of another person Investment income limitation $3,300
Investment Income Includes: –Taxable interest –Tax-exempt interest –Ordinary dividends –Capital gain net income
Is this Earned Income? Review Pub 4012, I-1 –While an inmate? –While a household employee? –Disability benefits Below minimum retirement age? Retirement age ? –Disability insurance payments?
24 Earned Income Tax Credit Earned Income is less than: $46,227 ($51,567 if MFJ) “3 or more” qualifying children -$43,038 ($48,378 if MFJ) “2” qualifying children -$37,870 ($43,210 if MFJ) “1” qualifying child -$14,340 (19,680 if MFJ) with “no” qualifying children
25 Earned Income Tax Credit Maximum Credits –“3 or more” qualifying children - $6,044 –“2” qualifying children - $5,372 –“1” qualifying child - $3,250 –“No” qualifying children - $487
EITC Interview Tips EITC General Eligibility Rules Pub 4012
27 EITC Assistant EITC Assistant: Online tool for determining EITC eligibility. In English and Spanish. At www.irs.gov, 24 hours a day 7 days a week.
Who Can Claim The Credit With A Qualifying Children Must meet all 3 tests –Relationship Test –Age Test –Residency Test
Two new definitions A “qualifying child” must Be younger than the person claiming the child Not have filed a joint return other than to claim a refund
Additional Definitions Eligible foster child Adopted child Permanently and totally disabled Child who was kidnapped
Qualifying Child of More than One Taxpayer Cannot be used by more than one person EITC Tie-Breaker Rule
Who Can Claim the EITC Without a Child Lived in the United States more than half the tax year. At least 25 but under age 65 on Dec. 31. Not qualify as the dependent of another person.
EITC Eligibility Requirements - Summary Rules for Everyone Rules If You Have a Qualifying Child Rules If You Do Not Have a Qualifying Child Earned Income and AGI Limitations
TaxWise and EITC By ALWAYS marking that the taxpayer’s dependent is eligible for EITC on the main info page... TaxWise brings up the EITC worksheet and you MUST answer questions for each potentially eligible dependent
EITC – General Information Common EITC Return Errors Disallowed Earned Income Credit