Form 1040 – Credits

Out of Scope by [IRS 1040 line]:

  • [45] Alternative minimum tax (Form 6251)
  • [48] Foreign tax paid requiring form 1116
  • [48] Foreign income from Cuba, Iran, N Korea, Sudan or Syria (requires a form 1116)
  • [50] Distributions from an Educational Savings Account not used for qualified expenses
  • [50] Education credits from a previous year that have to be repayed
  • [53] Solar, wind or geothermal residential energy credits
  • [53] Alternative fuel and plug-in electric motor vehicle credits
  • [54] Qualified Adoption Expenses (Form 8839)
  • [54] Mortgage Credit Certificate (MCC) interest credit (Form 8396)

Tax Slayer entry:

Federal Section > Deductions > Credits Menu


[48] Foreign tax credit (Form 1116):

  • Enter the amount, up to $300 ($600 joint).
  • If a form 1116 is required, (>$300/$600 or other reason) it is OUT OF SCOPE.
  • If all foreign tax is from 1099-INT, 1099-DIV or passive K-1s and > $300/$600, an alternative is to deduct all foreign tax on Schedule A line 8 as “Foreign Tax” instead of the credit (it cannot be split). If this option is chosen, enter on the Federal Section > Deductions > Itemized Deductions > Taxes You Paid TS page
  • Income from sanctioned countries (Cuba, Iran, N Korea, Sudan and Syria) require a form 1116 and is >OUT OF SCOPE.

[49] Child and Dependent Care credit (Form 2441):

  • Both TP & SP must be working, looking for work or a student
  • Caregiver cannot be a spouse , and care cannot be at an overnight camp.
  • Caregiver can be a relative if they are not the TP’s dependent and may live in the home.
  • Enter caregiver information in Form 2441
  • If the TP is itemizing and has a reduced Child and Dependent Care credit, it may be advantageous to instead, take the standard deduction to increase the Child and Dependent Care credit on the Federal return in order to gain a larger deduction on the state return. See example.

[50] Education Credit (Forms 1098-T):

See the Education options resource page.

[51] Retirement Savings Credit (Form 8880):

TBD

[52] Child Tax Credit:

Calculated from data already entered.

[53] Residential Energy Credit:

  • Link to Form 5695 and enter amounts on page 2. (Page 1 is OUT OF SCOPE)

[54] Credit for the Elderly or Disabled (Schedule R):

  • There is a small window between no taxable income and the AGI limit where this credit applies.
  • For disability, the TP or SP must submit (or have previously submitted) a signed doctor’s statement testifying to the total and permanent disability.