Tax Hacks, Part 2: more credits
Qualified Retirement Savings Contributions Credit aka “saver’s credit” (reimbursable, a percentage of up to 000 in eligible fees). To get this one, you must have been at least 18 years old on 12/31/08 and have an AGI (adjusted gross income) of less than 500 (again, assuming you’re single). You may not have been a full-time student for five or more months of 2008.
Qualified contributions include them into an IRA (traditional or Roth), a 401 (k) or 403 (b), a 501 (c) (18) (D), or a governmental 457, September or simple. You may not include this amount no “rollover” contributions. The amount of your credit calculated by multiplying your total contribution from the rate that corresponds to your AGI. You can find this percentage on Form 8880, you will need to fill in to claim this credit.Limitations nonrefundable personal credits
All three of the loans we have covered so far are different types of nonrefundable “personal credit.” For 2008, the limit for nonrefundable personal credits your regular tax plus your AMT. That’s good. This means that your nonrefundable personal credits can offset both your regular tax and your AMT (Alternative Minimum Tax)
earned income credit (refundable, max: 8).
Assuming you are single and have no children, the qualifications required to claim this credit are as follows:
You must be at least 25 years gammal.Din Total investment income must be less than 950.Din AGI must be less than 880th
EIC is completely dependent on income. You can figure your EIC using the worksheet in the instructions for Forms 1040 or 1040A, depending on which you are filing.
For more information on EIC, see IRS Publication 596thAlternative Minimum Tax
What is this minimum tax on business? Basically, the AMT laws exist so that high income individuals do not get away with not paying their share of taxes, even if they find a way to adjust their tax liability for next to nothing. Fortunately, no AMT does not affect most of us because it only applies if your AMTI (see below) is over, the 500th When you calculate your regular income tax, then you should expect your tax liability under the AMT system, this amount is called your Preliminary Minimum Tax (TMT). Your TMT is determined by a series of calculations (addition / subtraction of certain allowable exemptions, credits, etc.) on your taxable income to find your Alternative Minimum taxable income (AMTI). If you are concerned you may be subject to AMT, the IRS a practical AMT calculator that does all the calculations for you. (You must already have filled out your 1040th)
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-Wren from TiredofBeingPoor.net