Download - Tax Credits (1)
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8/7/2019 Tax Credits (1)
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By:
Ashton Khanchandani
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What is a Tax Credit?y Tax Credits are a direct reduction from a taxpayers tax
liability.
y May be granted for various types of taxes, Such as:y Taxes already paid
y To encourage investment & other behaviors
y
Subsidy Form of financial assistance paid to a business oreconomic sector.
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Tax Credit V. Deductiony Tax deductions reduce how much you owe in taxes by
decreasing your income. This can put you down into a
lower tax bracket, and that means that you will oweless in terms of taxes.
y Difference from Tax Credits:
y Figured after you determine your tax brackety Actual dollar for dollar reduction in the tax you owe
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Types of Tax Creditsy Education Credit:
y The American Opportunity Credit: Allows 100% of $2,000.00
and then 25% of next $2,000.00, up to $2,500.00y Lifetime Learning credit: 20% of $10,000.00
y Credits available To: Taxpayer, Taxpayers spouse anddependents
y Child Tax Credit:y $1000.00 credit is available for each qualifying child under 17
y Phased out at $50 to every $1,000 of AGI in excess of $110,000
Ex: 2 children AGI 124,000; Need to reduce the 2000 700
(124,000-110,000)/1000x50 = $1,300
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Types of Tax Credits Conty If neccesary
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True/False: Review Question?y Shane is a 17 year old US citizen who lives with his
mother and is supported by her. Shane qualifies for the
child tax credit.
y A. True
y B. False
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True/False: Review Question?y Shane is a 17 year old US citizen who lives with his
mother and is supported by her. Shane qualifies for the
child tax credit.
y A. True
y B. False (Correct.)
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Credits to encourage energy
efficiencyy There are various energy taxes available:
y Home energy efficiency. People who purchase andinstall certain products
y Energy efficient windows
y Insulation
y
Doors, roofs and heating/cooling equipmenty Allowing up to 30% or $1,500 tax credit for improvements
y Placed in service, January 1, 2009.
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Credits to encourage energy
efficiency conty Residential renewable tax:
y People who install solar energy systemsy Including solar water systems on your pool or house
y Installing small wind systems
y This will allow 30% tax credit to everyone involved
y
In order to be eligible for this tax credit all installments needto be in place by December 31, 2016
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Credits to encourage energy
efficiency conty Automobile Tax Credits:y Hybrid and Alternative fuel vehicles:
y Business/Person who buys or leases a hybrid gas-electric car is
eligible for an income tax credity Need to have vehicle before December 31, 2010
y Energy Stary A joint program with US department ofEnergy and U.S.Environmental Protection Agency
y Helps Businesses and families save money and protect the
environment through efficient practices and productsy At home they are allowing us to save up to 1/3 on our energy billy Companies are able to save up to twice the amount of savings
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Multiple Choice: Review Question?y You can get aTax Credit for?
y A. Installing a solar panel system to power your pool andhot tub
y B. Installing a solar panel to power your home.
y C. Installing a solar water heater
y D. All of the Above
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Multiple Choice: Review Question?y You can get aTax Credit for?
y A. Installing a solar panel system to power your pool andhot tub
y B. Installing a solar panel to power your home.
y C. Installing a solar water heater
y D. All of the Above (Correct)