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Paying back the premium tax credit due to increase in income
Contributed by: Henry, FreeTaxUSA Agent, Tax Pro Many Americans who obtain health insurance through the federal or state exchanges may be eligible for a government subsidy known as the Premium Tax Credit (PTC). This subsidy is designed to assist with premium payments. If you qualify, you can choose to have all or part of…
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Which parent can claim the child and dependent care credit?
Contributed by: PhillipB, FreeTaxUSA Agent, Tax Pro As with other child-related tax benefits, the child and dependent care credit aims to ease the financial cost of raising children or caring for disabled dependents. However, determining which parent can claim the child and dependent care credit can be challenging.…
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What is the difference between the child tax credit and the additional child tax credit?
Contributed by KristineS, FreeTaxUSA Agent, Tax Pro Congress is very aware raising children costs a lot of money. Over the years, they've passed various tax laws to benefit families with children. One of the most beneficial of these laws is the Child Tax Credit. Child Tax Credit is split into two parts The non-refundable…
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What is an IRA Recharacterization
Contributed by: CoryF FreeTaxUSA Agent, Tax Pro Did you ever contribute to an individual retirement account (IRA) and later realize it might have been better to choose a different type of IRA? Or perhaps your Roth IRA contribution is facing penalties due to high income? If either situation applies to you, recharacterizing…
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What is a Claim of Right Repayment Credit?
Contributed by: PhillipB, FreeTaxUSA Agent, Tax Pro There are a few rare situations where you may be forced to repay income from a prior year. Some examples of this may include Social Security benefits repayments, overpaid vacation or sick pay from an employer, overpaid unemployment benefits, and potentially many other…
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Can I Deduct My Motor Vehicle Fees as Personal Property Tax?
Contributed by: PhillipB TaxPro FreeTaxUSA Team Personal property tax on any of your vehicles is deductible if the tax is based on the value only, and the tax is imposed on a yearly basis. In some cases, the state may collect personal property tax with your motor vehicle registration fee, so you may need to determine what…
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Advance Payment of the Premium Tax Credit – Alternative Calculation for the Year of Marriage
If you need to repay some of the advanced payment of the Premium Tax Credit you received, then the alternative marriage calculation may lower the amount you must repay. It allocates 50% of your household income to each spouse and calculates the allowable credit for your pre-marriage months of that amount. NOTE: The…
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How Do I Report a Backdoor Roth?
Contributed by: RachelR, FreeTaxUSA Agent, Tax Pro There are two different types of Individual Retirement Accounts (IRAs) – Traditional and Roth. With a Traditional IRA, you will usually qualify to get a tax deduction in the current year for any IRA contributions you make during the year. When you retire and begin using…
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Reporting a Backdoor Roth – Basic Scenario (2023 or earlier)
Contributed by: RachelR, FreeTaxUSA Agent, Tax Pro This article applies to 2023 and prior years. The basic reporting of a backdoor Roth involves the following scenario: 1. You contribute to a Traditional IRA before the end of the tax year (December 31st). You make too much money for the contribution to be deducted from…
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Reporting a Backdoor Roth – Conversion After December 31st (2023 or earlier)
Contributed by: RachelR, FreeTaxUSA Agent, Tax Pro This article applies to 2023 and prior years. The basic example assumed both the Traditional IRA contribution and the Roth conversion step happened in the same year (for example, both events happened during 2023, for the 2023 tax year). However, it’s possible that both of…