Archive for Tax Credit

Are You Eligible For The Premium Tax Credit?

TaxConnections Member Milton Boothe

The Premium Tax Credit, under the Affordable Care Act, is a refundable tax credit that helps eligible people with moderate incomes afford health insurance purchased through the Health Insurance Marketplace.

If you are eligible for the credit, you can choose to:

• Get it now: Have some or all of the estimated credit paid in advance on your behalf directly to your insurance company, to lower what you pay out-of-pocket for your monthly premiums during 2015. These payments are called advance payments of the premium tax credit.

OR

• Get it later: Wait to get the credit when you file your 2015 tax return in 2016. This means, then, that no Read More

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Canada Is Checking Foreign Tax Credits

It is not uncommon for e-filed returns or paper filed returns that claim a credit for US tax for CRA to request verification.

US tax paid per Canadian withholding slips are not requested because the slips are issued  by a Canadian entity. They are looking to US tax claimed per US reporting slips such as W2s, 1099s, 1042s or from the US 1040/1040NR tax returns. US social security tax and medicare (ie., FICA) is creditable if it relates to US source wages or services performed in the US which is evident  on the W2.

Foreign tax credits claimed in respect of US computed from  the US tax return based on determination of what portion of the tax payable of the return relates to US source income that is creditable is usually supportable by submitting to CRA your schedules and copy of the federal (and state where applicable) return. Recently CRA has Read More

Written by | Posted in Canada • Tax Credit

Marketplace Insurance Checkup

If you are one of the many individuals or families who purchase their health insurance through the federal or a state government health insurance marketplace and are receiving an advance premium tax credit (subsidy of premium available to those with low to moderate income) to help you pay the cost of that insurance, you should make sure you report changes in family income and family size, as they occur, to the marketplace through which you purchased your insurance.

Changes in either family income or family size can have a significant impact on the amount of the advance premium tax credit (APTC) to which you are entitled. Reporting the changes as they occur allows the marketplace to adjust the APTC to the amount to which you are entitled. Read More

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New Legislative Proposal Introduces Comprehensive Energy Reform

On September 22 of 2015, Senate Democrats introduced a comprehensive energy reform bill entitled “The American Energy Innovation Act” that would reform current energy policy and enhance over forty tax incentives subsidizing energy production.

The legislation addresses the need for the creation of new energy based jobs in connection to both infrastructure advancements and technological innovation. As a synopsis, the bill includes programs essential to renewed economic growth in the energy sector that empower consumers; modernize infrastructure; cut carbon pollution and waste; invest in clean energy; and support research and development initiatives.

The tax aspects of the legislation would modify several energy tax incentives already in Read More

Written by | Posted in R&D Credit Services • Specialty Tax Incentives • Tax Credit

Are Lower Income Taxpayers Taking Full Advantage Of The Earned Income Credit?

The earned income credit (EIC) is a major tax credit that is specifically designed for lower income working families and individuals. The amount of the credit varies depending on your level of income and how many dependents you support. You can claim this credit with or without qualifying children, but greater tax credit is given to those who have qualifying children. This credit can be valued at over $6,000 if you have three or more qualifying children. The earned income credit is a refundable credit, which means that you will receive a tax refund whether or not you had any taxable income.

As the name implies, the earned income credit is provided as an incentive for individuals to work. Consequently, to qualify for this credit, you must have some form of earned income during the year. Earned income includes wages you get from working, and Read More

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Claiming The Credit for Child and Dependent Care Expenses

You may be able to claim a credit for child and dependent care, if you pay someone to care for your dependent child who is under the age of 13, or for your spouse or other dependent who is not able to care for himself or herself. You must have incurred this expenditure so that you (and your spouse, if you are married) could work or look for work. If you are married, both you and your spouse must have some form of earned income, unless one spouse either was a full-time student for 5 months of the tax year, or was physically or mentally incapable of self-care.

The child and dependent care credit, which is a nonrefundable credit, is generally a percentage of the amount of the work-related child and dependent care expenses you paid to a care provider. The amount of this percentage depends on your adjusted gross Read More

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Claiming The Additional Child Tax Credit

Child Tax Credit - Milton Boothe

If you cannot claim the entire amount of your child tax credit because it exceeds your tax, don’t be discouraged, because you may be able to claim the unused portion as an additional child tax credit. The additional child tax credit is a refundable credit, and is available to you whenever you cannot claim the entire amount of the child tax credit.

The amount of the refund, however, may differ depending on your total earned income. It may also be affected by the amount of Social Security and Medicare taxes that were paid.

Figuring and Claiming the Credit:

The amount of the additional child tax credit that you can claim on your income tax is the lower of: Read More

Written by | Posted in Income Tax • Tax Credit

Get Credit for Generating Your Own Home Power

Through 2016, taxpayers can get a tax credit on their federal tax return equal to 30% of the costs for installing certain power-generating systems on their homes. The credit is non-refundable, which means it can only be used to offset a taxpayer’s current tax liability, but any excess can be carried forward to offset tax through 2016.

Systems that qualify for the credit include the following:

• Solar water heating system – Qualifies if used in a dwelling unit used by the taxpayer as a main or second residence where at least half of the energy used by the property for such purposes is derived from the sun. Heating water for swimming pools or hot tubs does not qualify for the credit. The property must be certified for performance by the Solar Read More

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Claiming The Child Tax Credit

The child tax credit is a credit given for each dependent child on your tax return, who is under the age of 17 at the end of the tax year. The child tax credit is a nonrefundable credit, and is intended to provide an extra measure of tax relief for taxpayers with qualifying children.
To qualify for this credit, you must have a qualifying child on your tax return. The rules for determining if your child is a qualifying child for the purpose of this credit are as follows:

• The child must be your son, daughter, adopted child, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, or a descendant of any of them. (This includes your niece, nephew, grandchild, great-grandchild, etc.)
• The child must not provide for over half of his or her own support for the year. Read More

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