Bush Tax cut
I was claimed as a dependant by my parents in 2000 so I was ineligible to get the tax cut. It is my understanding that if I am NOT claimed as a dependant in 2001, then I can claim a credit on my return to get the tax cut. How do I go about doing this? The IRS website has been completely un-helpful and provides no specific answers. Thanks
This tax cut by the Bush Administration, to my knowledge, was a one time thing. I am not aware of this credit for the following year since it was on money earned and taxes paid on income during 2001.
I have a friend that I see regularly, that works for the IRS. Let me talk to him and see if there was something that I missed. I will get back to you shortly.
Re: Bush Tax cut
Ok Craig, here is what I found out. You may have indeed received a letter from the IRS stating that you might be eligible for a tax credit this year but only for an unusual circumstance, such as, your filing status being changed from single to married or head of household. If your filing status changed, you will have to do a credit reduction worksheet and we both feel that it would come to zero, therefore you would not be allowed any credits this year. Sorry!
Edited by: bmcper at: 2/5/02 6:20:48 pm
I think our CEO has made a slight mistake here. As I see it, the tax reduction worksheet (instructions for line 47 of form 1040), and the related worksheet if you are taken as dependant and pay taxes would allow you to take the amount as a credit.
See my Epinions review at www.epinions.com/content_2211684484 for more details, although I didn't have the full information for 2001 dependants at that time.
Re: Bush Tax cut
Well ... it is confusing. Let me think....he said he was claimed as a dependent in 2000, so he had no prebate (well, it was intended as an advance rebate of 2001 taxes -- what would you call it.) Let $nnn denote $300 if he files as single or MFS for 2001, $500 if he files as HoH, and $600 if he files as MFJ.
Well, if he (or she) is a dependent this year, he can claim a tax reduction (not credit) on the Tax Computation Worksheet for Certain Dependants -- Line 40 on page 33 of the instructions.
If he is not a dependent this year, as he states, then consider the Rate Reduction Credit Worksheet -- Line 47 on page 36 of the instructions.
Line 1: Taxable income from 1040 line 39. Line 3: The lesser of 5% of taxable income and $nnn. Line 6: Tentative tax. (Tax from 1040 line 40 + AMT from 1040 line 41, less the foreign tax credit, credit for child and dependent care expenses, credit for the elderly and disabled, and education credits) Line 7: The lesser of lines 3 and 6 above. Line 8: $0 (It says, if any.) Line 9: The same as line 7.
Although we can't take these instructions as gospel, as the credit can be taken under some circumstances even if the instructions at the top say it cannot be taken, this argument seems reasonable. It looks to me as if, on the whole, any taxpayer receives the maximum of the amount calculated on 2000 income (if not a dependent), and the amount calculated on 2001 income, even if a dependent. The only exception I can find by tracing the forms is if the taxpayer was not a dependent in 2000, but is a dependent in 2001 with more taxable income. As a possible example, he could been born between 1978 and 1981, have an income over the standard exemption amount, and return to school for at least 5 months in 2001.
Re: Bush Tax cut
Further followup. If you were not a dependent in 2000, got a partial prebate, and can be taken as a dependent in 2001, but you have a higher taxable income, some professional preparers (on misc.taxes.moderated) recommend either using a modification of the line 40 worksheet or using the line 47 worksheet, in spite of the fact it says it only applies to non-dependents.
So, in effect, they believe that my overall claim in the previous reply is correct.
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