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21 votes
Accepted

Does having several kids really mean I don't pay any federal taxes?

You pay $3k in taxes now and are adding $6k in credits, so it makes sense that you'd pay no taxes. In fact, the CTC is refundable up to $1,400, so you'll probably get a significant refund instead. ...
D Stanley's user avatar
  • 136k
17 votes

How does a Child Tax Credit work to reduce my taxes?

There are two types of items that reduce your income tax: deductions and tax credits. With a deduction, you subtract the deduction from your income before the tax is calculated. The benefit to you ...
Ben Miller's user avatar
  • 116k
14 votes

Can I use a Mortgage Interest Statement Form 1098 to reduce my taxes?

This goes on your Schedule A line 8, for itemized deductions. If your total itemized deductions end up being less than the standard deduction then you get no tax benefit.
littleadv's user avatar
  • 176k
13 votes
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Can I increase value of non-refundable credit by paying less taxes?

A tax refund (or additional amount owed) is the difference between the tax you owe and what was already paid (via withholding or estimated quarterly payments). A tax credit reduces the amount of tax ...
Hart CO's user avatar
  • 70.5k
13 votes

Does having several kids really mean I don't pay any federal taxes?

If this is the case, and you have any pre-tax retirement money, now is the time to consider Roth conversions. Not all at once, of course, but just enough so you would pay perhaps 10% on some of the ...
JTP - Apologise to Monica's user avatar
11 votes
Accepted

Can you be penalized for setting an arbitrarily high number of allowances on your W-4?

You may have to pay a penalty of $500 if both of the following apply. What the IRS really cares about is you not withholding enough, so that you send them a big check (EDIT: during tax season). https:...
RonJohn's user avatar
  • 50.7k
11 votes

Does overpaying estimated taxes lead to loss of non-refundable tax credit?

You would get an $8k refund. Non-refundable tax credits don't literally mean you can't get a refund in the sense that most people think (i.e. a check or direct deposit from the IRS); it means you can'...
Craig W's user avatar
  • 15.9k
9 votes
Accepted

When do I include solar credits on my taxes if they are contracted and installed in different years?

The answer is when it actually enters service. See the instructions for form 5695: For purposes of both credits, costs are treated as being paid when the original installation of the item is ...
littleadv's user avatar
  • 176k
8 votes
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If someone could claim me as a dependent, but they will not, am I required to check the "Someone can claim me..." box on my 1040?

An interesting question. I was in fact able to find an official IRS document saying that the box must be checked. However, it is not among the normal "user-facing" IRS publications ...
BrenBarn's user avatar
  • 24k
7 votes

Can I use a Mortgage Interest Statement Form 1098 to reduce my taxes?

I received a Form 1098 Mortgage Interest Statement for 2022 from my bank. Since I'm early in the mortgage, the interest I pay is quite a large percent of the home payments, so a significant amount of ...
mhoran_psprep's user avatar
6 votes

Why don't "normal" tax credits apply towards self-employment tax?

Self-employment tax is the same as Social Security and Medicare withholdings on W2 income (commonly called FICA or payroll taxes), with W2 income employers pay half and you pay half. For those who are ...
Hart CO's user avatar
  • 70.5k
6 votes
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US taxes small mistake that doesn’t change tax or refund

Is this the kind of thing to send an amended tax return over? No. If the error didn't result in more credit, it's because you've already gotten the maximum credit/benefit available to you. The IRS ...
Hart CO's user avatar
  • 70.5k
5 votes
Accepted

USA: Can I deduct the cost of solar power that I didn't earn back in credits?

You are misunderstanding what that quote is telling you. If a taxpayer claims federal tax credits or deductions for the energy conservation property, the investment basis for the purpose of ...
mhoran_psprep's user avatar
5 votes
Accepted

MA 2015 Schedule Z line 12: "Income tax paid to another state or jurisdiction (from worksheet)" -> what worksheet are they talking about?

It's on page 21 (page 33 of the PDF) of the Form 1 instructions:
D Stanley's user avatar
  • 136k
5 votes
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Will I lose the AMT tax I paid if my startup fails?

This is a tax, not a deposit. So no, you will not get it back. You will be able to use your AMT credit, under certain conditions, see the instructions to form 8801. Obviously, the actual value of the ...
littleadv's user avatar
  • 176k
5 votes

Does the federal Investment Tax Credit for solar installations take into account upgrade costs?

I researched this same thing last year and found no satisfactory guidance from the IRS or examples of cases where this issue was challenged. One of the companies I spoke with said that any upgrades ...
Hart CO's user avatar
  • 70.5k
5 votes

If someone could claim me as a dependent, but they will not, am I required to check the "Someone can claim me..." box on my 1040?

I think, legally speaking, it is clear that the person is not eligible for the Recovery Rebate Credit. 26 USC 6428(d) (as well as the corresponding section from 26 USC 6428A for the second round ...
user102008's user avatar
  • 17.2k
5 votes
Accepted

If I defer the 2021 child tax credit can I base it on my 2021 income?

The advance child tax credit payments that will be paid out in 6 monthly payments from July-December 2021 will be based on the information on your 2020 tax return. However, the payments are really a ...
Ben Miller's user avatar
  • 116k
5 votes
Accepted

Why does the credit for prior year AMT exist?

The 10-year revenue impact needs to be estimated for tax legislation, and AMT (Alternative Minimum Tax) on ISOs (Incentive Stock Options) addresses this by reducing the 10-year revenue loss by ...
Stan H's user avatar
  • 7,551
5 votes

Is there a child credit refund for tax year 2022, or is it just a reduction in tax liability? (IRS 1040)

This is somewhat correct. The Child Tax Credit reverted back in 2022, so it's now only partially refundable. Up to $1,500, if you qualify, can be refundable, and is based on earned income. There are ...
Stan H's user avatar
  • 7,551
4 votes

Foreign Tax Deduction vs Credit

Since you don't have passive income - you cannot use passive tax credit. If you expect to sell the property within the next 10 years, you can accumulate the credit. Otherwise - it will be lost and you ...
littleadv's user avatar
  • 176k
4 votes
Accepted

Is there any program American can take advantage of to help offset childcare costs during Covid-19?

Some employers have waived some open enrollment deadlines for applying for a Dependent Care Inflexible Savings Account (a "DC FSA"). This is implemented as a deduction from your income, ...
Bryce's user avatar
  • 2,550
4 votes

Foreign tax credit does not seem to prevent double taxation

There is nothing unreasonable about your result. Person Y has a higher global income than person X, so should have a higher US effective tax rate, since the US has progressive tax brackets. In this ...
user102008's user avatar
  • 17.2k
4 votes
Accepted

Why don't students get the savers' credit?

This is only a guess, as tax laws do not normally come with official reasons behind the regulations. First, students already have education credits available to them, and perhaps the lawmakers thought ...
Ben Miller's user avatar
  • 116k
4 votes

Can I somehow convert a tax credit for solar into cash?

There are both federal and (in some states) state tax credits that can be claimed to help offset the cost of installing a photovoltaic system. You do have to file an explicit form in order to claim ...
keshlam's user avatar
  • 47.4k
4 votes

Does “sales price” include sales tax for the IRS Used Clean Vehicle Credit?

In the US, sales price doesn't include taxes or fees. When you get your purchase paperwork from the dealership, you'll see the sales price of the car, and all the fees and taxes listed separately. The ...
littleadv's user avatar
  • 176k
3 votes

Can I increase value of non-refundable credit by paying less taxes?

Your eligibility for tax credit has nothing to do with how much you have prepaid or withheld. There are two completely separate ledgers or "tabs" rolling here. Ledger #1 is your prepayment ledger: ...
Harper - Reinstate Monica's user avatar
3 votes

Why don't "normal" tax credits apply towards self-employment tax?

Suppose first that you have no self-employment income and so your taxable income is entirely due to salary, wages, interest, dividends, capital gains etc.. Lines 48-54 are tax credits that reduce the ...
Dilip Sarwate's user avatar
3 votes
Accepted

Why don't "normal" tax credits apply towards self-employment tax?

Self-employment tax is actually a completely separate tax from income tax. It is only included on the income tax form for convenience.
prl's user avatar
  • 2,818
3 votes
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Does the increase in the Child Tax credit affect the Empire State child credit as well?

I had wondered this ever since late 2017, when the Federal tax reform law passed. Unfortunately, the budget just passed in New York state includes provisions that restore the child tax credit to its ...
William MacDonald's user avatar

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