Having two or more children, there is a maximum amount of qualifying expenses is $6,000. That amount should be reduced by $1,800, since Martha received $1,800 for dependent care assistance. The total expenses are $4,200. Tim and Martha’s AGI is over $43,000 they are entitled to a credit of 20% of their expenses, or $840. ($4,200 x .20 = $840) If Tim and Martha had an AGI of $36,000 earned only by Tim, the credit would be zero. That is because there would be no child care expenses. Since Martha didn’t work there would be no credit allowed.
The AOTC is equal to 100% of the first $2,000 and then 25% of the next $2,000 paid for qualified tuition and related expenses for a maximum of $2,500 per student per year. Qualified expenses include amounts paid for course materials, for example, …show more content…
He can however participate with a Keogh plan, Roth IRA or a Simple plan. He can choose Keogh plan because he is self-employed and it allows self-employed individuals to contribute the same amount and have same benefit limits as profit sharing plans.
Yes
Yes he is required to cover his employees under the plan because they have worked for him for at least four years. SEP rules all employees who have reached age 21, who also worked for the employer for at least 3 of the preceding 5 years, and who receives at least $550 in compensation. (Cruz)
The max amount can’t be over the lower 25% of the employee’s compensation (with a max of 245,000) or the 49,000 limit for defined contribution plans.
He would not be able to contribute anything for himself, since he is not qualified to have a SEP plan.
Office assistant- 30,000*.25=7,500
Drafter- 40,000*.25=10,000*2=20,000
310,000-7500-20,000=282,500
The AOTC is equal to 100% of the first $2,000 and then 25% of the next $2,000 paid for qualified tuition and related expenses for a maximum of $2,500 per student per year. Qualified expenses include amounts paid for course materials, for example, …show more content…
He can however participate with a Keogh plan, Roth IRA or a Simple plan. He can choose Keogh plan because he is self-employed and it allows self-employed individuals to contribute the same amount and have same benefit limits as profit sharing plans.
Yes
Yes he is required to cover his employees under the plan because they have worked for him for at least four years. SEP rules all employees who have reached age 21, who also worked for the employer for at least 3 of the preceding 5 years, and who receives at least $550 in compensation. (Cruz)
The max amount can’t be over the lower 25% of the employee’s compensation (with a max of 245,000) or the 49,000 limit for defined contribution plans.
He would not be able to contribute anything for himself, since he is not qualified to have a SEP plan.
Office assistant- 30,000*.25=7,500
Drafter- 40,000*.25=10,000*2=20,000
310,000-7500-20,000=282,500