Irs Form 6450

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Irs Form 6450 Powered By Docstoc
					Tax Seminar for
   Students
February 8, 2001

     By Aaron Metcalf,
           MSI
          DISCLAIMER
I  am NOT a professional tax preparer.
 This is only an information session.

 If you have any questions on your tax
  return, please consult the IRS or your tax
  preparer.
 Thanks!
Taxes are due April 16, 2001
              Definitions
 Tax  Deduction - this is an amount you can
  deduct from your totalled income to give
  you your adjusted gross income (AGI).
  You use your AGI to figure your tax in the
  tax table.
 Tax Credit - After you have figured your
  tax, you may be able to subtract certain
  amounts from it. These amounts are called
  tax credits.
          Before you begin:
 Make  sure you have your W-2 form from
  each job you have worked at in the past
  year.
 Make sure you have your 1099 form if you
  have received any interest from a bank or
  savings account.
 Your form from UNTHSC showing how
  much you have paid in tuition and fees last
  year (Form 1098-T).
  Dependent on mom and dad?
-  not any more!
 In most of our cases, you will be claiming
  yourself as a dependent. Make sure that
  your parents are not planning on claiming
  you. If they do, this may EXCLUDE you
  from some of the deductions and credits
  discussed here. Example: You CANNOT
  claim the student loan interest deduction if
  you are someone else’s dependent.
Which 1040 Form should you
           use?
          1040EZ
          1040A

          1040
    You may file Form 1040EZ if:
   Single or married filing jointly w/ no dependents
   Taxpayer (and spouse) under age 65 and not blind
   Taxable income is <$50,000
   Taxable interest income <$400
   NOT reporting dividends, capital gains
    distributions, IRA distributions, annuity income,
    or social security benefits
   Taxpayer did NOT receive any advance earned
    income credit payments (EIC)
   NO itemized deductions, adjustments to income,
    or credits (other than EIC).
    You may file Form 1040A if:
   Taxable income is <$50,000
   NO itemized deductions
   Only adjustments to income are deductions for
    IRA contributions and student loan interest
    deduction.
   Only credits claimed are child and dependent care
    credit, credit for the elderly or disabled, adoption
    credit, child tax credit, education credits, and EIC.
   You may file Form 1040 if:
 Taxable  income is $50,000 or more
 Itemized deductions

 Income that cannot be reported on Form
  1040EZ or 1040A (such as gain from the
  sale of property, self-employment)
 Has an interest in a foreign bank account or
  trust
 Received nontaxable distributions
Tax Deductions
 Standard deduction
 Itemized deductions

 Student loan interest
     Standard deduction
 Single= $4,400
 Married, filing jointly = $7,350

 Married, filing separately = $3,675

 Head of Household = $6,450
            Itemized deduction
   You may want to itemize if you:
    – have high medical bills
    – pay a lot of mortgage interest
    – pay a lot of state and local income taxes (note: Texas
      does NOT have a state income tax, but you may have
      paid other state income tax prior to moving to Texas
      this year.)
    – contribute large amounts to charity
   If these expenses add up to more than the amount
    of the standard deduction, the law allows you to
    claim this higher total.
Common deductions that you might
  take if you choose to itemize:
   Real estate / property tax
   Interest paid on your home’s mortgage
   Charitable contributions (church, etc)
   Income tax from another state
   Thrift value of donated items (Goodwill, etc)
   Miscellaneous deductions of more than 2% of
    your AGI
     – These include the cost of the previous year’s
       tax preparation, certain legal fees, and some
       other deductions.
           Mortgage Interest
 In MOST cases, you will be able to deduct
  ALL of your home mortgage interest.
 Please consult IRS Publication 530 for more
  details about the mortgage interest
  deduction, as well as the deduction of
  certain points and certain real estate taxes.
Deductible Student Loan Interest
   What is deductible?
    – Interest you paid on your qualified student loan
      in 2000.
    – You can only deduct interest paid during the
      first 60 months that interest payments are
      required on the loan.
    – Paid interest on a loan taken out only to pay
      qualified higher education expenses, such as 1)
      tuition & fees, 2) room & board, 3) books,
      supplies, & equipment, 4) other necessary
      expenses (transportation)
Deductible Student Loan Interest
 Income   Restrictions
  – Single - under $40,000; with phase out from
    $40,000-$55,000.
  – Married, Filing Jointly - under $60,000; with
    phase out from $60,000-$75,000.
 CANNOT     claim if:
  – 1) Married, filing separately
  – 2) Listed as a dependent on someone else’s
    return
Deductible Student Loan Interest
 Do NOT need to itemize to claim this
  deduction.
 Maximum deduction
  – Student loan interest deduction cannot exceed
    $2000
 Consult  Publication 970, Tax Benefits for
  Higher Education for more information or
  specifics not listed here.
Deductible Student Loan Interest
 If you pay more than $600 in interest during
  the year to a single lender, you should
  receive a statement at the end of the year
  from the lender showing the amount of
  interest you paid.
         Tax Credits
 Lifetime Learning Credit
 Earned Income Credit (EIC)

 Child Tax Credit

 Child and Dependent Care Credit
      Lifetime Learning Credit
 You   can receive a 20% tax credit for the
  first $5,000 of tuition and fees paid out-of-
  pocket.
 Maximum credit is $1,000, per return, NOT
  per student.
 You will need to fill out Form 8863

 You must get Form 1098-T from UNTHSC.
  Who should you see about
  getting this 1098-T form?
 Asha Pai, Senior Accountant in Student
  Receivables
 Ph# (817)-735-2667

 Email: apai@hsc.unt.edu

 You can have her send this form to your
  mailbox on campus
     Lifetime Learning Credit
 You   CANNOT claim this if:
  – Married, filing separately
  – Listed as a dependent on another return
  – You or spouse were a nonresident alien for any
    part of 2000
  – Certain education IRA withdrawals (please
    seek more information on specifics)
  – You can claim the Hope Credit for the same
    student
     Lifetime Learning Credit
 Adjustments   to Qualified Expenses
  – If you pay higher education expenses with
    certain tax-free funds, you CANNOT claim a
    credit for those amounts. These include
    scholarships, Pell grants, employer-provided
    educational assistance, veterans’ educational
    assistance, or any other nontaxable payments
    received for educational expenses.
 Thefollowing do NOT reduce the qualified
 expenses: earnings, loans, gifts, inheritance,
 or personal savings.
    Lifetime Learning Credit
 Income   Requirements
  – You CANNOT claim the Lifetime Learning
    Credit if your modified adjusted gross income
    is:
  – Single: $50,000 or more (phase-out is between
    $40,000 and $50,000)
  – Married, filing jointly: $100,000 or more
    (phase-out is between $80,000 and $100,000)
     Earned Income Credit (EIC)
 Please    refer to IRS publication 596 for more
    details.
   Your filing status CANNOT be “Married, filing
    separately.”
   You must be a U.S. citizen or resident alien all
    year.
   You cannot file Form 2555 or Form 2555EZ.
   Your investment income must be $2,400 or less.
   You must have earned income.
      EIC if you do NOT have a
           qualifying child
   You must be at least age 25, but under age 65.
   You CANNOT be the dependent of another
    person.
   You cannot be a qualifying child of another
    person.
   You must live in the U.S. more than half the year.
   Your earned income must be less than $10,380.
   Your modified AGI must be less than $10,380.
   EIC if you have a qualifying
              child
 Your  child must meet the relationship, age,
  and residency tests.
 Your qualifying child CANNOT be the
  qualifying child of another person with a
  higher modified AGI.
 You cannot be a qualifying child of another
  person.
   EIC if you have a qualifying
        child - income #’s
 If   you have one qualifying child
  – Earned income must be less than $27,413
  – Modified AGI must be less than $27,413
 If   you have more than one qualifying child
  – Earned income must be less than $31,152
  – Modified AGI must be less than $31,152
          Child Tax Credit
 You may be able to claim a child tax credit
 if you have a qualifying child. The credit
 can be as much as $500 for each qualifying
 child.
              Child Tax Credit
   A qualifying child is a child who:
    – Is claimed as your dependent,
    – Was under age 17 at the end of 2000,
    – Is your son, daughter, adopted child,
      descendant of a child, stepchild, or foster child,
      and
    – Is an U.S. citizen or resident.
            Child Tax Credit
 Income   limitation and phase-out begin if:
  – your tax liability is less than the credit, OR
  – your modified AGI is above the amount shown
    below
  – Single or head of household: $75,000
  – Married, filing jointly: $110,000
  – Married, filing separately: $55,000
            Child Tax Credit
    more information and details, please see
 For
 IRS Publication 17.
  – This is over 200 pages long, so access this at
    school if possible.
Child and Dependent Care Credit
 If you paid someone to care for a qualifying
  individual so you (and your spouse if you
  are married) could work or look for work,
  you may be able to claim the credit for child
  and dependent care expenses. If you are
  married, both you and your spouse must
  have earned income, unless one spouse was
  either a full-time student or was physically
  or mentally incapable of self-care.
Child and Dependent Care Credit
 The  credit is a percentage, based on your
  adjusted gross income, of the amount of
  work-related child and dependent care
  expenses you paid to a care provider. You
  may use up to $2,400 of the expenses paid
  in a year for one qualifying individual, or
  $4,800 for two or more qualifying
  individuals.
 Please see IRS Publication 503 for more
  details.
   What records should I keep?
 Copy C   of all W-2 forms
 Forms 1099 showing interest income

 Copies of any other material sent with your
  return
 Keep these records for at least 3 years from
  the date of the return.
              Helpful Hints
 File early
 File electronically
  – you get your refund in 2-3 weeks; a paper
    return will take twice as long!
  – Efile is more accurate
 Use    direct deposit if you expect a refund
         How to get tax help.
 www.irs.gov

 Call the IRS at 1-800-829-1040
 Call the Taxpayer Advocate at 1-877-777-
  4778
Some other web sites for help
     and information:
       www.irs.com

       www.taxplanet.com

       www.hrblock.com
    Where you can file online
 www.quicken.com
  – you can file for free if your income is $25,000
    or less
 www.fidelity.com

 www.hdvest.com
  – Fidelity and HDVest will allow you to file for
    free
Where you can file in person
       HR Block
       Wal-mart

       Many, many others
Where you can file electronically
 for FREE in Tarrant County
 RD  Evans Recreation Center, 3242
  Lackland Rd, FW; Tues 10a-2p and Sat
  noon-5p
 Town Center Mall, FW; Sat noon-5p

 Fellowship Baptist Church, 956 E Jefferson
  Ave, FW; Sat 10a-2p
 Woodland West Branch, Arlington Public
  Library, 2837 W Park Row Dr, Arlington;
  Wed and Fri 1p-5p
             Tax Software
 TurboTax  by Quicken, $19.95-$5 rebate
  (17.95 at Wal-mart)
 TurboTax Deluxe by Quicken, $39.95 -$10
  rebate
 Kiplinger Taxcut, $9.99

 Kiplinger Taxcut Deluxe 2000, $19.99

 Sold at Best Buy, CompUSA, Circuit City,
  Office Depot, Office Max, Staples, Wal-
  mart, and other fine retailers.
          DISCLAIMER
I  am NOT a professional tax preparer.
 This is only an information session.

 If you have any questions on your tax
  return, please consult the IRS or your tax
  preparer.
 Thanks!
The End

				
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