ACA1 Tax Treatments for Individual Returns (Task 302.2.3)
A. Recommended Tax Filing Status The tax filing status that I would recommend is Married Filing Joint. The reason for this is that the IRS has various tax breaks for married persons that file together that are unavailable if you file married filing separate. It also affect the tax rate, they will pay a lower rate of taxes if they file together than they would if they filed separately.
A2a. Taxable and Non-Taxable Income Taxable Income for the couple would include the following items: Spouse A’s income from the partnership, Spouse A’s income from the part time job, Spouse B’s income from the electronics firm, and the dividends that were received by Spouse A from Company…show more content… A6. Tax credits
Because the couple has a dependent that is in college and living at home they may be eligible to take the American opportunity credit or the lifetime learning credit these credits are available to someone that pays college expenses for themselves or a dependent. They cannot take both however, only one education credit is allowed per year so they would want to calculate which is more beneficial. The couple has dependent children, so they might also be able to take a child tax credit of up to 1,000 per child however, their adjusted gross income may be too high which would phase the credit out to 0. Without doing all of the calculations I am not certain as to whether or not they would actually get this credit. It is also possible that they would qualify for a savers credit which is based upon contributions to a qualifying retirement plan, but again I am not sure if they would end up being over the adjusted gross income limit to receive this credit.
References
Partner's Instructions for Schedule K-1 (Form 1065) (2013 ). (n.d.). Partner's Instructions for Schedule K-1 (Form 1065) (2013 ). Retrieved March 10, 2014, from http://www.irs.gov/instructions/i1065sk1/ch02.html
Publication 523 (2013), Selling Your Home. (n.d.). Publication 523 (2013), Selling Your Home. Retrieved
