My daughter, grad student, files as single, I don't claim her as a dependent. Her earned income in 2007 is 5000, cap gains = 20000, takes std deduction. She ends up with zero tax for 2007 because of tuition and credits for education. Questions:
does she qualify for 300 rebate?
can she/should she not take all the education life time credit this year, use it next year, thus pay some tax this year to get the 300 rebate. is it feasible and how do I trick the TurboTax tax to take less than the TurboTax optimizes for?
Yes, because she has at least $3,000 of compensation.
If she has sufficient tax liability in 2008, she will be eligible to offset her tax with up to $300 of unused credit. Go ahead and claim everything she is eligible for on her 2007 tax return.
The fact that she earned more than $3,000 qualifies her for the rebate. The basic credit is as follows:
Basic credit All eligible individuals are entitled to the basic credit (for the first taxable year beginning) in 2008 of $500 ($1,000 in the case of a joint return) if they satisfy at least one of the following two criteria:
(1) The sum of an eligible individual's: (1) earned income (as defined for purposes of the earned income credit); and (2) social security benefits must be at least $3,000; or
(2) The eligible individual has a net income tax liability of at least $1. For these purposes, "net income tax liability" means the excess of the sum of the individual's regular tax liability and alternative minimum tax over the sum of all nonrefundable credits (other than the child credit). Net income tax liability as determined for these purposes is not reduced by the credit added by this provision or any credit which is refundable under present law.
One clarification here. It's not "earned income" that matters, but "qualified income." Meaning of course social security benefits and veteran's administration payments.
Allan, you need to download a copy of the bill as passed by both House and Senate. For example, the amounts are 600/1200$. And in the case of the daughter referred to by OP, her minimum will be 300$.
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