Lesson 9
Miscellaneous Credits
Objectives
• Determine eligibility for the Credit for the Elderly or the Disabled
• Calculate the Credit for the Elderly or the Disabled
• Calculate the Credit for Qualified Retirement Savings Contributions Form 8880
• Calculate the Residential Energy Credits for nonbusiness energy property
and residential energy efficient property using Form 5695.
• Calculate the Qualified Electric Vehicle Credit using Form 8834.
• Calculate the Alternative Motor Vehicle Credit using Form 8910.
• Accurately report the Foreign Tax Credit if Form 1116 is not required
• Be aware of the Mortgage Interest Credit
Intake/Interview Process
Form 13614 – Intake and Interview Sheet Credits Section
Credit - Elderly/Disabled
Qualifications
• U.S. Citizen or resident
• At least age 65 or retired on permanent
and total disability
• AGI is less than:
• Single, Head of Household, or Qualifying
Widow(er) $17,500
• MFJ (both spouses qualified) $25,000
• MFJ (one spouse qualified) $20,000
• MFS (didn’t live together) $12,500
Credit – Elderly/Disabled
Computation
• Nontaxable Social Security or nontaxable
pension(s) must be less than:
• Single, Head of Household, or Qualifying Widow(er)
$5,000
• MFJ (both spouses qualify) $7,500
• MFJ (one spouse qualifies) $5,000
• MFS (didn’t live together) $3,750
• Use Schedule 3 if filing Form 1040A, use
Schedule R if filing Form 1040
• Substantial Gainful Activity
Credit for Qualified Retirement
Savings Contributions
• Contributions to a retirement plan or IRA
may be eligible for a tax credit
• Non-refundable credit
• Maximum credit is $1,000
• Limitations based on:
• Filing status
• Adjusted Gross Income
• Qualified contributions
Credit for Qualified Retirement
Savings Contributions
• Form 8880 is used to calculate the credit
• Chart for the applicable percentage is part
of the form
• If the taxpayer has received any
distributions from a retirement plan, you
may need to complete line 4 on the Form
8880
Residential Energy Credits
• Nonbusiness Energy Property Credit
• Residential Energy Efficient Property
Credit
• Form 5695
Qualified Electric Vehicle
Credit
• Qualified Electric Vehicle
• Form 8834
Alternative Motor Vehicle
Credit
• Requirements - Alternative Motor
Vehicle
• Form 8910
Foreign Tax Credit
• Created to avoid double taxation
• If the Taxpayer paid income, war profits,
excess profit taxes to any:
• Foreign country, U.S. possession, political
subdivision or agency of the country or
possession.
• May need to consult paid tax preparer to
determine if the tax paid is eligible for the
foreign tax credit.
Foreign Tax Credit
• If all of the following requirements are
met, Form 1116 is not required:
• Foreign-source income is from interest and
dividends only
• The total of the foreign taxes does not exceed
$300 ($600 for MFJ)
• All of the foreign taxes were legally owed and
paid to countries recognized by the U.S. as
eligible for the credit
Mortgage Interest
Credit
• Hold a qualified Mortgage Interest Credit
Certificate on main home
• Must reduce mortgage interest deduction on
Schedule A (if itemizing)
• Use Form 8396 to figure credit on mortgage
interest paid
• May carry forward unused credit for up to
three years
Quality Review (QR)
Form 8158 – Quality Review Checklist
Adjustments, Deductions and Credits Section
Lesson Summary
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Credit for the Elderly or the Disabled
Credit for Qualified Retirement Savings Contributions
Residential Energy Credits
Qualified Electric Vehicle Credit
Alternative Motor Vehicle Credit
Foreign Tax Credit
Mortgage Interest Credit
Lesson 9
International Segment
Foreign Tax Credit
Objectives
• Determine which taxes are eligible for the Foreign
Tax Credit
• Apply the criteria for claiming the Foreign Tax
Credit
• Accurately compute the foreign tax credit using
Form 1116 or tax preparation software
• Assist taxpayer in compiling the documents
necessary for a paid tax preparer to complete the
return
Intake/Interview Process
Form 13614 – Intake and Interview Sheet Credits Section
What Taxes Qualify
• Foreign Source Income – Taxed by Foreign
Country
• The following are the basic requirements:
- Tax imposed must be similar to income tax
imposed in the US
- Taxpayer must not receive any kind of specific
economic benefit from the payment of the tax
- Tax must be imposed by “eligible foreign
country”
Types of Income
• Passive Income
• High Withholding Tax Interest
• General Limitation Income
Form 1116
• Part I – Used to report the taxable income or
loss from sources outside the United States
• Part II – Used to report foreign taxes paid or
accrued
• Part III – Used to compute the amount of the
Foreign Tax Credit
Quality Review (QR)
Form 8158 – Quality Review Checklist
Adjustments, Deductions and Credits Section
International Summary
• To be eligible for the Foreign Tax Credit,
foreign taxes must be:
- Based on foreign sourced income
- Similar to US income tax
- Free of any specific economic benefit
- Paid to an “eligible foreign country”
• The Foreign Tax Credit is computed using Form
1116