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AICPA Golden CPA Focus Review-Regulation
Chapter 6 Individual Taxation
A. The Formula Tax= Taxable income* tax rate (tax rate is generally given on exam) I. TAX CALCULATION
A. Tax Credits in General Note: tax credit is refundable or not 需要记忆 1. Personal Tax Credits: No refund Personal tax credits may reduce personal tax liability to zero, but they may not result in a cash refund. II. TAX CREDITS
A. Tax Credits in General Personal tax credits include: a. Child and dependent care credit b. Elderly and permanently disabled credit c. Education credits (1) Lifetime learning credit (2) American opportunity credit d. Adoption credit e. Retirement savings contribution credit f. Foreign tax credit g. General business credit II. TAX CREDITS
A. Tax Credits in General 2. Refundable Credits: Refund Refundable credits are subtracted from income tax liability. They may result in a cash refund when the credit exceeds tax liability owed even if no tax is withheld from wages. Note: Refundable credits 是可以从应纳税额中进行抵减 的。如果 Refundable credits 大于应纳税额,就会会产生 退税。以下 5 Refundable credits 需要记忆。 II. TAX CREDITS
A. Tax Credits in General a. Child tax credit (refund is limited) b. Earned Income credit c. Withholding taxes (W-2) d. Excess Social Security paid e. Long-Term Unused Minimum Tax Credit II. TAX CREDITS
Which of the following credits can result in a refund even if the individual had no income tax liability? Question 1
Choice "c" is correct. The earned income credit is refundable. Eligible taxpayers can get advance payments from their employers because the credit is assured. Question 1
B. Child and Dependent Care Credit A tax credit of 20% to 35% of eligible expenditures: II. TAX CREDITS 2013 Maximum Expenditures One dependent: $3,000 Two or more dependents: $6,000
B. Child and Dependent Care Credit 1. Qualified People (Kids) a. A qualifying child, under age 13, for whom an exemption may be claimed. b. Any disabled dependent c. A spouse who is disabled and not able to take care of himself or herself II. TAX CREDITS
B. Child and Dependent Care Credit 2. Qualified Expenses Qualified expenditures must be for the purpose of enabling the taxpayer to be gain employed (i.e., allowing that person to work or look for work). a. Babysitter b. Nursery School c. Day Care II. TAX CREDITS
C. Credit for the Elderly and/or Permanently Disabled 1. To be qualified This credit of 15% of qualified income is available to individuals who are: a. 65 years of age or older or b. Under 65 and retired due to permanent disability. Note: 满足这类 credit 的条件是大于 65 岁或者由于永久性残 疾而退休。 II. TAX CREDITS
D. Education Tax Incentives Assuming the requirements are met, a taxpayer has the opportunity to reduce and/or avoid taxes by taking advantage of The American Opportunity Credit The Lifetime Learning Credit A non-taxable distribution from a Coverdell Education Savings Account used to pay higher education costs II. TAX CREDITS
D. Education Tax Incentives

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