HDF 322 1st Edition Lecture 12 Outline of Last Lecture I Taxes and Financial Planning Outline of Current Lecture II FSA III Tax Computation IV Dependent Care Expenses V Child Tax Credit VI Education Credits VII American Opportunity Tax Credit VIII Lifetime Learning Credit IX Coverdell Education Savings Account X Earned Income Credit XI Filing Extension Form 4868 XII Statute of Limitations XIII Audits Current Lecture I FSA if your employer offers you medical FSA she would advise you to take it DOWNSIDE you have to guesstimate your out of pocket costs These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute II Tax Computation Once you have 6100 for itemized deductions from 53 063 gross income and then you get EXEMPTIONS 3 900 dollars each if you have Dividends take taxable income and subtract 300 and depending on what tax bracket he is in he will have to pay a certain amount the special money slide in capital gains III Dependent Care Expenses there is a maximum you can take 3 000 but two or more qualifying children are max of 6 000 this 6 000 can be larger than FSA Rules are a child who is under 13 no teenagers unless disability has to be from birth through age 12 NO ONE 13 AND OVER caregiver can be anyone except the PARENTS could be older sibling as long as they are over 18 and out of highschool can be grandparent child care giver during summer can be a day camp no overnight camp And then you times that by percent credit you are entitled to based no your income QUESTION 4 IV Child Tax Credit 1 000 PER CHILD to be an eligible have to be under 26 for child care credit Thomas will save 2 000 dollars for tax credit no limit as long as 16 and under and are dependents V Education Credits we wont have this on project now called opportunity tax credit something your parents or you could take more valuable for parents to take VI American Opportunity Tax Credit first 2500 out of pocket for tuition and related don t need to know much other than that it is American opportunity credit and its all 4 years you can take it used to be 2 it has been increased if you have too much money you don t get it high income but helped college students go back to school during recession VII Lifetime Learning Credit anything other than 4 years of continuing education 20 of first 10 000 this is after 4 years so may be graduate school VIII Coverdell Education Savings Account any 1 student someone parent grandparent aunt any 1 individual can have no more than 2 000 set aside in Coverdell savings it is after tax money no tax benefit to person who makes contribution but all earnings are tax exemptchanged it so now just not on college can qualify for any level of schooling Kcollege for private and public schools made it more attractive for children going to private special schools if you don t use by 30 goes away and you are taxed IX Earned Income Credit credit where you have such low income you can get money back helps for military people it s a refund even if you don t owe taxes X Filing Extension Form 4868 extension is simple to complete Rule is now 4 months today October 15 is last day to file you have to pay and you have to estimate 90 accurate this extension is now 4 months XI Statue of Limitations FOR NEGLIGENCE little error unintentional wrong math screwed up table is 3 years they could audit you if you underreport they double to 6 years 2007 and on from today XII Audits odds of having audit are very small there are certain characteristics if you live in oil producing state that means you get royalties bonuses and that s a high if you live in gambling state that s a higher one but there are certain things that will trigger more audits than the general population general pop is less than 1 lots of audits are kicked out they take care of it write you letter but are sometimes where you have to go to office visit they give you time and date but you can change this date and time when you get audited normally on 1 thing salary gains etc so when you go only take what they are going to audit you on don t take everything