What is a tax credit?
A tax credit is an amount of money that taxpayers can subtract directly from the taxes they owe to the government.
True or False: Tax credits reduce the amount of taxable income.
False. Tax credits reduce the tax owed, not the taxable income.
What is the difference between a refundable and a non-refundable tax credit?
A refundable tax credit can result in a refund if it exceeds the tax owed, while a non-refundable tax credit can only reduce the tax owed to zero.
Fill in the blank: The _____ tax credit is designed to assist low to moderate-income working individuals and families.
Earned Income
Name a tax credit available for educational expenses?
1) American Opportunity Tax Credit (AOTC)
2) Lifetime Learning Credit
True or False: Tax credits can be claimed for child care expenses.
True.
Criteria:
-Must have earned income credit
(some of the criteria is the same)
-Needed childcare to attend work or look
for work
-Provider must not be another dependent, spouse, or parent unless the child is over 13 and disabled.
-Child must be 0-12 all year
What is the maximum amount of the Child Tax Credit per qualifying child for the tax year 2025?
Taxslayer will calculate.
Taxpayer must have at least $2500 in earned income to qualify for the Additional Child Tax Credit. How much credit can they receive?
Basic Child Tax Credit in 2025- $2,200 per child is non-refundable.
The Additional Child Tax Credit is calculated on the amount of earned income over $2500. That amount is multiplied by 15%. The limit of this refundable credit is $1700 per child.
What is the purpose of the Adoption Tax Credit?
To help offset the costs associated with adopting a child. Maximum credit of $17,280 per child with $ 5000 being the refundable portion. Form 8839 to claim.
What is the Lifetime Learning Credit?
A tax credit for qualified tuition and related expenses for eligible students enrolled in higher education.
Expenses for the future year paid in the current tax year qualify if the class or program begins within the first three months of the new year .
Tax payers with a dependent in school can claim this credit if they pay more than 50% of their living expenses.
True or False: The amount of tax credits you can claim is unlimited.
False. There are specific limits on various tax credits.
Multiple choice: Which tax credit is specifically for low-income working families? A) Child Tax Credit B) Earned Income Tax Credit C) Adoption Tax Credit D) None of the above
B) Earned Income Tax Credit
What are the eligibility requirements for the American Opportunity Tax Credit?
Must be enrolled at least half-time in a degree or certificate program and have qualified education expenses.
Materials can be purchased outside of the institution
This credit is 40% refundable
This credit is available for four school years
Halftime or more enrollment required
No felony history
Max credit is $2500
True or False: Tax credits can be carried forward to future tax years.
True, but only for certain types of credits—
adoption tax credit, the charitable contribution itemized deduction, 529 plan deductions at the state level, and capital losses.
Regarding charitable cash donations, a person is limited to claim up to 60% of their AGI in a year. Excess can be applied to the next five years. This is for itemizing purposes
True or False: You can claim multiple tax credits in the same tax year.
True.
What is the maximum amount of the Lifetime Learning Credit per tax return?
$2,000
Multiple choice: Which tax credit is designed to help offset the costs of higher education? A) Child Tax Credit B) American Opportunity Tax Credit C) Earned Income Tax Credit D) All of the above
B) American Opportunity Tax Credit
What is the Child and Dependent Care Credit?
A tax credit available to taxpayers who incur expenses for the care of qualifying individuals while they work or look for work. A family member sitter doesn’t
qualify.
List criteria to receive the American opportunity, education credit.
No felony
Phased out at AGI of 80K or $160 joint
Must be halftime student or more
Supplies can be purchased anywhere
Max credit is $2500
Is scholarship money taxed?
Scholarship money is tax-free as long as it’s used for qualified expenses.
Educator Expense Credit
How much can be claimed Federally and State? # Teacher Supplies
Federal - $ 300
State- $250
Federal guidelines state that the educator must have worked at least 900 hours.
Enter into federal:
Deductions
- Adjustments - Educator Expenses
Enter into State:
Main State Menu
- Credits - “ teacher purchases of school and classroom supplies”
Saver’s Credit
- Which box 12 code on a W-2 indicate a voluntary contributions to an IRA?
2) What retirement tax forms would indicate that contributions were involuntary?
1) Boxes D E F G H
2) KPERS
DFAS. In such case, check the box:
“Does not carry forward to form 8880”
Saver’s Credit is calculated behind the scenes
However, if the taxpayer indicates that they contributed to their Roth IRA, enter /complete form 8880 SaversCredit. Do not enter IRA contributions that were already entered when you entered the W-2 information.
Credit percentage is calculated based in income. Higher income, smaller % multiplied by the contribution.
Max income limits are:
39,500-Single
79,000-MFJ
59,250 - HOH
FOR THIS REASON, DO This last as the may not qualify. Also,
Misc Box 12 Codes (on W-2)
W- employer contributions to health savings account. Involuntary.
G- Roll over within 60 days reinvested so not taxed
J - Non Taxable Combat Pay
D- Elective deferrals to 403 b
DD - Employer sponsored health coverage
Not taxed
P- Moving Expense Reimbursement
Not taxed
C- Group Life Insurance premiums paid by employer IS taxed
AA- Roth IRA contributions under a 401 plan.
Taxable but qualifies for Saver’s Credit.
Since this has been entered with the W-2, no need to reenter on form 8880.
When a taxpayer makes a direct deposit into a Roth IRA, you will need to bring up Form 8880 to get the Saver’s Credit.
BB AND EE are also Roth Contribution
KANSAS First time Home Buyers
Contributions to first time home owners savings account entered on KS schedule S
This will be subtracted from income.
Unqualified withdraws from this savings account should be added via KS Schedule S
Max contributions per year:
3000 per person / 6000 per couple
Ultimate Max= 24,000 and 48,000 per couple
Grows tax free up to $50,000
Voluntary Contributions to an IRA may earn the taxpayer a “Saver’s Credit”. What are the income limits to receive this credit?
The Saver’s Credit can be claimed by: Married couples filing jointly with adjusted gross incomes up to $76,500. Heads of household with adjusted gross incomes up to $57,375. Married individuals filing seperately and singles with adjusted gross incomes up to $38,250.
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Tax Credits30
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Itemizing18
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IRA / Pension Distributions34
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Retired public Service Safety Officer7
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Exceptions To Early IRA Distributions (10% penalty Waved)28
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Health Savings Account5
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Schedule C And Self Employment13
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Kansas Misc17
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Random Stuff23
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Homestead18
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Energy Credits7
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Ottawa Homestead2
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FORMS4
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Interest, Dividends And Capital Gains3
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W-2’s5
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Quality Review (QR)8
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Entering Tip Income1
