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Module NJ 1.29. Tax Payments. PUB 17 CHAPTER 4 PUB 4012 TAB 6. Objectives. Amounts that can be applied against tax liability: Federal income tax withheld from W-2s, Federal income tax withheld from 1099s Estimated tax payments Amounts applied from prior year’s return

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Tax payments

Module NJ 1.29

Tax Payments

PUB 17 CHAPTER 4

PUB 4012 TAB 6

NJ Training TY 2008


Objectives
Objectives

  • Amounts that can be applied against tax liability:

    • Federal income tax withheld from W-2s,

    • Federal income tax withheld from 1099s

    • Estimated tax payments

    • Amounts applied from prior year’s return

    • Various refundable credits

    • Payments made with a request for extension

NJ Training TY 2008


Estimated payments
Estimated Payments

  • Means of payment for:

    • Self-employed

    • Those with Investment Income

    • Projected tax due with return >$1,000

  • Payments made periodically by taxpayer

    • Need to know “When” and “How Much” for each payment

NJ Training TY 2008


Estimated tax payments
Estimated Tax Payments

  • Use Tax Wise link and insert estimated payments for both Federal and State

  • Report in box “From Last year” Overpayment from prior year applied to current year Estimated taxes

  • State: Insert estimated payments and also

    • State taxes paid this year applicable to prior year(s)

    • State estimated taxes paid in January current year for prior year

    • Tax Wise includes latter two amounts in State Taxes Paid on Federal Schedule A, Itemized Deductions

NJ Training TY 2008


Estimated tax payments1
Estimated Tax Payments

NJ Training TY 2008


Overpayment from prior year
Overpayment From Prior Year

  • Can elect to have refund applied to next year’s return

  • Ask TP if prior year refund was applied to current year taxes

NJ Training TY 2008


Making work pay and government retiree credits schedule m
Making Work Pay and Government Retiree Credits (Schedule M)

  • Refundable Credit

  • Making Work Pay

    • Must have earned income

    • 6.2% of earned income – Max of $400 ($800 MFJ)

    • Phase-outs based on income

    • T/P claimed as dependent not eligible

  • Economic Recovery Payment

    • No IRS record of payment – will have to rely on TP’s memory

    • S/S, SSI, Railroad Retirement and Vets Disability $250 ($500 MFJ)

  • Govt. Retiree Credit - All govt. employees on government pension or annuity not covered by S/S

    • Get $250 ($500 MFJ) as a credit

  • Making Work Pay Credit, if any, reduced by Economic Recovery Payment and/or Govt. Retiree Credit received (See Sch M)

NJ Training TY 2008


Refundable education credit form 8863 new
Refundable Education Credit (Form 8863) (New)

  • Entitled to this credit if T/P did not get full benefit of non-refundable American Opportunity (Hope) credit

  • Refundable credit is 40% of unused portion of non-refundable credit – Max of $1,000

  • Taxwise will automatically calculate

NJ Training TY 2008


First time homebuyer credit
First-Time Homebuyer Credit

  • Refundable credit up to $8,000

  • Closing must be between 04/09/2009 and 06/30/2010 (inclusive)

    • Note: Must have binding contract by 04/30/2010

  • “First Time” means did not own principal residence in 36 months prior to purchase

  • Credit must be repaid if home ceases to be TP’s principal residence with 36 months of purchase

  • Credit for purchase made in 2009 can be claimed on 2009 or 2008 tax return

  • Credit reduced or eliminated for high income TPs

  • Form 5405 to claim credit

NJ Training TY 2008


Credit for long time homeowner buying a replacement home
Credit for Long Time Homeowner Buying a Replacement Home

  • Refundable credit up to $6,500

  • Closing must be between 04/09/2009 and 06/30/2010 (inclusive)

    • Note: Must have binding contract by 04/30/2010

  • “Long Time” means owned principal residence for any 5-year consecutive period during 8 years ending on date of replacement home purchase

  • Credit must be repaid if home ceases to be TP’s principal residence with 36 months of purchase

  • Credit for purchase made in 2009 can be claimed on 2009 or 2008 tax return

  • Credit reduced or eliminated for high income TPs

  • Form 5405 to claim credit

NJ Training TY 2008


Payments made with extension to file
Payments Made With Extension To File

  • Taxpayer requests extension to file

    • Must pay estimated Balance due with extension

  • Amount paid with Extension reported on final return, Form 1040, line 68

NJ Training TY 2008


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