Chapter 7: Earned Income Tax Credit

Front 1

What are nonrefundable credits?

Back 1

Credits whose combined amounts can’t reduce the tax liability below zero

Front 2

What are refundable credits?

Back 2

Credits that can reduce the tax liability to less than zero, allowing the taxpayer to get a refund of the excess

Front 3

At what income level is the allowable CTC phased out for higher income taxpayers?

Back 3

Credit will be disallowed in part or in full when MAGI exceeds:
$75,000 (S, HH, QW)
$110,000 (MFJ)
$55,000 (MFS)

Front 4

Is the CTC refundable or nonrefundable?

Back 4

The child tax credit is a nonrefundable credit. However, certain taxpayers may qualify for the additional child tax credit, which is refundable

Front 5

Who may qualify for the Additional Child Tax Credit?

Back 5

Taxpayers with earned income in excess of $3,000 for 2009, and those with three or more qualifying children for child tax credit purposes, whose child tax credit was limited by their tax liabilities

Front 6

How is the ACTC computed?

Back 6

The credit is 15% of the amount by which taxable income exceeds $3,000 and/or

Taxpayers with three or more qualifying children may claim the greater of the above amount or the amount by which their net social security and Medicare taxes paid exceeds their earned income tax credit

Front 7

What are the four qualifications specific to taxpayers without qualifying children to receive the EIC?

Back 7

The four qualifications are:
Be at least 25 but younger than 65 on January 1, 2010
Not be able to be claimed as a dependent
Live in the U.S. for more than half the year
Have earned income and AGI less than $13,440 ($18,440 MFJ)

Front 8

What are the four qualifications specific to taxpayers with qualifying children to receive the EIC?

Back 8

The four qualifications are:
Have a qualifying child who meets the relationship, age and residency tests
Have a qualifying child who is not used by more than one person to claim EIC
Not be the qualifying child of another person
Have earned income and AGI of less than:
$35,463 ($40,463 MFJ) with one qualifying child
$40,295 ($45,295 MFJ) with two qualifying children
$43,297 ($48,297 MFJ) with three or more children

Front 9

What are the six qualifications that apply to all taxpayers to qualify for EIC?

Back 9

The six qualifications are:
Must have earned income
Have a valid SSN
Not using the filing status MFS
Be a U.S. citizen or resident alien all year
Not filing a Form 2555 or Form 2555-EZ
Have investment income of $3,100 or less

Front 10

Kris (26) has an earned income and AGI of $9,256. He has no other income. He lived in the U.S. all year and is no one’s dependent. He has a valid SSN and is filing as single. He is a U.S. citizen. Does he qualify for EIC?

Back 10

Yes

Front 11

Marla (29) has an earned income of $20,200. She received $2,000 in interest and $1,115 of dividend income. She has no other income. Her daughter Kayla (6) lived with her all year. No one else lived with them during 2009. They both have valid SSNs and Marla will file as head of household. Both are U.S. citizens and lived in the U.S. all year. Does Marla qualify for EIC?

Back 11

No, she has over $3,100 investment income. Even $1 over will disqualify taxpayers from EIC

Front 12

What is the exception to the rule requiring that a taxpayer live in the United States?

Back 12

Active duty military personnel are considered to live in the U.S. when they are stationed outside the U.S.

Front 13

What are the four requirements of EIC due diligence?

Back 13

The four requirements are:
Complete an eligibility checklist
Compute the amount of the credit
Comply with the knowledge requirement
Retain records

Front 14

What is the possible penalty for failure to comply with the EIC due diligence rules?

Back 14

Tax professional is subject to a $100 penalty per occurrence

Front 15

A taxpayer who was denied earned income credit because of an error that was due to reckless or intentional disregard of the EIC rules cannot claim the EIC for the next how many years?

Back 15

Two years. If a taxpayer’s EIC was denied for any year after 1996 and it was determined that your error was due to reckless or intentional disregard of the EIC rules, they could not claim the EIC for the next two years.

Front 16

What percentage of the federal EIC is the Oregon EIC?

Back 16

6%

Front 17

Is the Oregon EIC a refundable or nonrefundable credit?

Back 17

Refundable

Front 18

What is the maximum political contribution credit on an Oregon return?

Back 18

$50 single or $100 joint return

Front 19

What type of political contribution is NOT a qualifying contribution?

Back 19

Contributions to newsletters

Front 20

Oregon residents would not claim a credit for mutually taxed income on their Oregon return if the income was also taxed by which four states?

Back 20

Arizona, California, Indiana and Virginia

Front 21

What is the maximum credit for B99 or E85 biofuels?

Back 21

$200 per year based on 400 gallons per vehicle

Front 22

What is the maximum credit for pellet stove users?

Back 22

$200 per taxpayer per year based on $10 per bone dry ton of pellets

Front 23

What types of devices qualify for the residential energy credit?

Back 23

Including, but not limited to: Energy-efficient appliances, alternative fuel vehicles, pellet stoves, systems that use solar energy for space or water heating, geothermal and wind-powered systems, and alternative fuel cell systems

Front 24

Who issues the residential energy credit amount?

Back 24

Oregon Department of Energy

Front 25

Who qualifies for the credit for the loss of use of limbs?

Back 25

Taxpayers who have permanent and complete loss of the use of two or more limbs are entitled to the $50 per year credit

Front 26

If you qualify for the credit for the loss of use of limbs, what other credit do you automatically qualify for on the Oregon return?

Back 26

Severely disabled exemption credit