Art: My name is Art Auerbach, I’m tax director with Goodman and Company, a certified public accountant and in this module, we’ll talk about credits and if you are listening to prepare your 2007 and your 2008 tax return. We’re gonna talk about the economic stimulus package and the rebates.
Male: Do I have any credits against my tax?
Art: The answer to that question is yes, depending on your circumstances, in a previous module, I mentioned the education credits, so if you are taking education courses, you might be able to get a hope credit or a lifetime learning credit. If you pay child care expenses, so if you’re a single parent, you work for a W2, you’re paying for child care cause, that can be a credit, there’s a child care credit or dependent care credit on the tax return. If you’re a child, and you have to care for an elderly parent, you got to pay for your caregiver while you're gainfully employed, then you have a potential credit, known as the dependent care credit. If you have a child whose your independent who’s under the age of 17, there is the child credit up to 1000 dollars on the return. There’s an earned income credit, in order to get the earned income credit, you cannot have earned more than generally around 37,000 dollars. If you’re earning more than that, then you’re probably not eligible. If you’re earning less than that, then that is a refundable credit that you might receive. I talked about a couple of other credits in previous modules, obviously what was withheld in federal taxes on you W2 is your credit, so we’ve already spoken about that. What you pay in estimated taxes, if you write estimated checks, that’s a credit, would be on the return. If you have excess social security withheld, we spoke about that, that’s a credit also. If you pay taxes to a foreign country, so you have some foreign dividends and they tax you on the dividend on US taxes you, there’s a foreign tax credit that would be eligible there. So there are a myriad of credits that are available. The thing you wanna remember are credits are broken down into two categories, they are refundable credits and non-refundable credits. The way you will find this on the tax return is go to page two of form 1040 and on the top part of the form, right underneath where you calculate the tax, those are the non-refundable credits. They can only reduce your tax to zero but not below. When you go down below in the 15 numbered lines, where you claim credit for your withholding and excess social security, those are the refundable credits. So even if those credits are more than your tax liability, the government will send you back the check.
Transcription by:
Scribe4you Transcription Services