Earned Income Credit
Although, combat pay is not included in income when calculating your federal income tax, you have the option of including combat pay as earned income when calculating the Earned Income Credit (EIC). You should calculate your return both ways (including and not including combat pay as earned income for EIC purposes) to determine which way gives you the more advantageous result.
You will not be eligible for the Earned Income Credit if the IRS has determined that you have previously claimed the credit fraudulently or recklessly. A fraudulent claim results in a 10-year loss of eligibility. A reckless claim results in a two-year loss of eligibility.
The Earned Income Credit is a refundable credit for low-income workers with earned income. The credit is available for taxpayers with or without children. For 2013, the maximum credit if you have not qualifying children is $487.
The Earned Income Credit is a refundable credit for low-income workers with earned income. The credit is available for taxpayers with or without children. For 2013, the maximum credit if you have one qualifying child is $3,250.
The earned income credit is a refundable credit for low-income workers with earned income. The credit is available for taxpayers with or without children. For 2013, the maximum credit if you have three or more qualifying children $6,044.
The earned income credit is a refundable credit for low-income workers with earned income. The credit is available for taxpayers with or without children. For 2013, the maximum credit if you have two qualifying children is $5,372.
An education savings account, Coverdell ESA, can be established for a child under he age of 18. Any individual (including the child) can contribute to the account during the year if they meet certain income limitations. The total annual contributions per beneficiary are limited to $2,000. Withdrawals will be tax-free when used to pay education costs (elementary school, secondary school, or a post-secondary school such as a college) for the beneficiary.
Students attending eligible higher education institutions need more than Form 1098-T, Tuition Payments Statement, if challenged to prove paid educational expenses. Receipts from the educational institution showing the amount actually paid for tuition and fees are adequate for verification. Canceled checks or bank statements are also good records. If payments included amounts for charges other than tuition and fees, you should save a copy of billing documents from the school that break down the charges individually.
A Qualified Tuition Program (QTP) allows you to prepay a student's college tuition or contribute to a higher education savings account. Contributions are not tax deductible, but distributions will be tax-free if the distributions are used to pay for qualified higher education expenses.
Who is required to file?
Income tax codes are ever changing and can be quite daunting to delve into. ATC tax preparation pros use three key tax rules to determine if you are required to file a personal tax return. By using our tax preparation services, you’ll be able to simplify and speed up your tax filing process.
First, let’s look at the three key pointers that determine whether or not you are required to file for your return.
If your gross income is above a certain level you are required to file a federal tax return. Depending on your filing status, your age, and type of income you’re reporting that level can vary quite a bit. Your gross income includes all income that you receive in the form of money, goods, property, and services.
If you are age 65 or older on the last day of the tax year, you are allowed a higher amount of gross income than other taxpayers before you are required to file a return. By visiting your nearest ATC center and talking to our tax preparation service pros, you can learn more about the different exemptions based on the age bracket you fall under.
Figuring out your filing status is the first step in determining your filing requirement and your standard deduction. There are distinct differences in the filing criteria that come with each filing status. Our skilled teams of tax preparation professionals are ready to help you understand the subtleties.