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38 Cards in this Set
- Front
- Back
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What requirements must be met for a taxpayer to be able to claim a credit for child or dependent care expenses?
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The taxpayer must:
Married taxpayers generally must file a joint return. Care must be provided so taxpayer/spouse can work or look for work. Taxpayer must have some earned income. Taxpayer and person for whom care was provided must live in the same home. Care provider must not be eligible to be claimed as a dependent by the taxpayer or the taxpayer’s child under age 19 |
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Who are qualifying persons?
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Qualifying persons include:
Dependent who is a qualifying child under age 13 when care was provided. Dependent of any age who is physically or mentally incapable of self-care who lives with the taxpayer at the time care is provided. Taxpayer’s spouse who is physically or mentally incapable of self-care who lives with the taxpayer at the time care is provided. |
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Generally, the taxpayer must be able to claim the child as a dependent in order to claim the child care credit. What is the exception to this rule?
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In the case of divorced or separated parents, the child will be considered the qualifying child of the custodial parent (for purposes of this credit) even if the noncustodial parent claims the dependency exemption.
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What is earned income for the purposes of the child and dependent care credit?
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Income received as a result of employment or self-employment. It also includes nontaxable earned income amounts such as parsonage (housing) allowances, employer-provided meals and lodging, voluntary salary deferrals, military housing and subsistence allowances and combat pay.
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What are the exceptions to the rule that, if married, both spouses must have earned income?
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If one spouse is a full-time student during at least five calendar months of the year or is physically or mentally incapable of self-care, that spouse will be considered to have some earned income for each month he holds that status.
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For the purposes of the Child and Dependent Care Credit, why is it necessary that the unemployed spouse be considered to have earned income?
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If there is no earned income, there is no allowable credit. The tentative credit is based on the earned income of the spouse who earned the least amount.
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A taxpayer’s employer paid $500 of a taxpayer’s $2,000 child care expenses for him. How will the employer’s assistance affect the child-care credit?
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The expenses eligible for the credit must be reduced by the amount of the employer-provided assistance that can be excluded from income
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Where does the employer report the amount of the assistance to the taxpayer?
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Box 10 of the W-2.
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Is the child and dependent care credit refundable or nonrefundable?
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Nonrefundable.
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What is the earned income of the unemployed spouse considered to be?
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$250 per month if there is one qualifying individual ($500 per month if there are two or more qualifying persons) for each month one spouse is a student or incapable of self-care.
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What is the maximum amount of the adoption credit and exclusion for 2009?
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$12,150 per child.
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In what year will the credit generally be claimed?
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The year after the year in which expenses are paid. However, if the adoption becomes final during or before the year the expenses are paid, the credit is claimed the year the expenses are paid. Special rules apply for adoptions of foreign and special-needs children
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What types of expenses qualify for the adoption credit?
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Qualified expenses include adoption fees, court costs, attorney fees, travel expenses (including meals and lodging), and other expenses directly related and necessary for the adoption
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What types of expenses do not qualify?
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Non-qualifying expenses include those that violate state or federal law, expenses associated with surrogate parenting arrangements, those associated with the adoption of a spouse’s child, expenses paid with funds received from any government program, and expenses allowed as a credit or deduction under any other federal income tax rule
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Which taxpayers are not entitled to claim the Saver’s Credit?
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Taxpayers who were born after January 1, 1992; claimed as a dependent on someone else’s 2009 return; full-time students during any part of five calendar months in 2009
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Which contributions qualify for the Saver’s Credit?
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Contributions to traditional and Roth IRAs and voluntary salary deferrals to most employer plans.
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What types of distributions will reduce the amount eligible for the Saver’s Credit?
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Distributions from the same types of plans made in the two tax years prior to the current year up to the due date of the return (including extensions)
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What is the maximum amount of contributions on which the Saver’s Credit may be based?
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$2,000 for 2009. If a joint return, $2,000 for each spouse.
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What are the rates for the Saver’s Credit?
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10%, 20% or 50% depending on the filing status and modified AGI
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Must the home purchased be in the United States, in order to qualify for the First-time homebuyer credit ?
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Yes, it must be the taxpayer’s principal residence in the U.S.
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What are the two classes of taxpayers who may qualify for the credit?
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First-time homebuyer and long-term resident of the same main home.
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How much is the credit for a First-Time Homebuyer?
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The smaller of 10% of the purchase price or $8,000 ($4,000 MFS)
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How much is the credit for a long-term resident of the same main home?
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The smaller of 10% of the purchase price or $6,500 ($3,250 MFS)
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May a taxpayer purchase any price home?
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No, the credit is not available if the purchase price of the home is more than $800,000
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Can a taxpayer qualify for the credit if the home is purchased on June 20, 2010?
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Yes, if they entered into a binding contract before May 1, 2010 to purchase the home
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Can a taxpayer claim a credit of $1,500 in 2009 and a credit of $1,500 in 2010 for nonbusiness energy property?
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No, the total available credit for 2009 and 2010 is $1,500
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How long is the Nonbusiness Energy Property Credit supposed to last?
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For 2009 and 2010
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How much is the credit?
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30% of the cost of the property up to a maximum $1,500
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A taxpayer is building a new home and had a solar water heater installed in 2009, but the home was not ready to be occupied until early 2010. Can they take the credit?
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Yes, on their 2010 return.
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What costs qualify for the federal Residential Energy Efficient Property credit?
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Cost include all labor allocable to on-site preparation, piping or wiring to connect the property to the home and the property itself
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Does Oregon currently have an adoption credit?
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No, it expired in 2005 with a four-year carry forward
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What does Oregon’s child and dependent care credit calculation begin with?
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Federal taxable income.
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How many years can the unused child and dependent care credit be carried forward on the OR return?
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Five years. Any credit unused within 5 years is lost.
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How does the First-Time Homebuyer Credit affect the Oregon return?
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It decreases the federal tax liability subtraction.
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What is the income threshold for the Oregon WFC qualifications?
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Must have at least $7,850 of earned income from Oregon sources
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WFC uses AGI and what else to calculate the credit?
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Qualifying expenses and household size.
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If a custodial parent releases the exemption of a child, does that child still qualify in WFC household size?
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Yes.
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What special steps must be taken when using relatives as childcare providers?
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Advise the client that he/she must provide proof that she/she paid for the care. A receipt from the relative does not constitute proof.
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