Ask a New Question
Menu

Question 5 of 20.

Eugene is an active duty member of the Armed Forces. He has a permanent change of station due to a military order and is allowed to deduct reasonable moving expenses. Which of his moving expenses would be allowed?
Expenses of buying a home (including closing costs, mortgage fees, and points).
The cost of lodging while traveling to a new home that was reimbursed.
The cost of meals purchased while traveling to a new home.
The cost of moving household goods and personal effects from a former home to a new home.

9 answers

As an active duty member of the Armed Forces who is allowed to deduct reasonable moving expenses due to a permanent change of station, the following moving expense from the options provided would typically be allowed:

  • The cost of moving household goods and personal effects from a former home to a new home.

The other options provided are generally not deductible as moving expenses:

  • Expenses of buying a home (including closing costs, mortgage fees, and points) are not considered deductible moving expenses.
  • The cost of lodging while traveling to a new home that was reimbursed is not deductible because it was reimbursed.
  • The cost of meals purchased while traveling to a new home is not deductible, as meals while traveling are not generally considered moving expenses under IRS rules.

Thus, the correct answer is the cost of moving household goods and personal effects from a former home to a new home.

During Tax Year 2023, Adam installed energy-efficient windows for his residence located in the United States for a total cost of $2,200. The new windows meet the Energy Star most efficient certification requirements. His tax liability is $1,900. What is the amount of his Energy Efficient Home Improvement Credit?
$500
$600
$660
$1,200

For the tax year 2023, the Energy Efficient Home Improvement Credit allows taxpayers to claim a credit for qualified energy efficiency improvements, including energy-efficient windows. The maximum credit available for windows is typically 30% of the cost up to the maximum limit defined by the IRS.

In Adam's case, the cost of installing the energy-efficient windows is $2,200, and since they meet the Energy Star's most efficient certification requirements, he can claim a credit of 30%:

\[ \text{Credit} = 30% \times $2,200 = 0.30 \times 2,200 = $660 \]

Since Adam's tax liability is $1,900 and the credit he can claim is $660, the credit amount does not exceed his tax liability.

Thus, the amount of his Energy Efficient Home Improvement Credit would be $660.

David is single. His modified adjusted gross income is $73,000. He purchased a previously-owned electric vehicle on January 15, 2023 for $23,000 from a dealer. The vehicle meets all the requirements for the Previously Owned Clean Vehicle Credit. What is the maximum credit available under the rules for the Credit for Previously Owned Clean Vehicles?
$1,000
$3,750
$4,000
$7,500

For the tax year 2023, the Credit for Previously Owned Clean Vehicles provides a tax credit for eligible used electric vehicles. The maximum credit available for a qualified used electric vehicle is the lesser of:

  1. $4,000, or
  2. 30% of the sale price of the vehicle.

In this case, David purchased the electric vehicle for $23,000. Let's calculate 30% of that amount:

\[ 30% \times 23,000 = 0.30 \times 23,000 = 6,900 \]

Now, we compare this amount with the maximum allowable credit of $4,000. Since $6,900 exceeds $4,000, the maximum credit David can claim under the Previously Owned Clean Vehicle Credit is $4,000.

Therefore, the maximum credit available under the rules for the Credit for Previously Owned Clean Vehicles is $4,000.

The Premium Tax Credit is a credit that helps pay the cost of health care coverage through the Health Insurance Marketplace. All the following are true, EXCEPT:
Form 8962, Premium Tax Credit, calculates the taxpayer's Premium Tax Credit and reconciles it with any Advance Premium Tax Credit (APTC) received.
Taxpayers are not required to reconcile the Premium Tax Credit.
The Premium Tax Credit is either advanced to the taxpayer or refunded through their income tax return as a refundable credit.
The tax family includes the taxpayer, spouse, and anyone who is claimed as a dependent on the tax return.

The statement that is not true regarding the Premium Tax Credit is:

"Taxpayers are not required to reconcile the Premium Tax Credit."

This statement is false because taxpayers who receive Advance Premium Tax Credits (APTC) are indeed required to reconcile the amount of APTC received with the actual Premium Tax Credit they are eligible for when they file their tax returns. This reconciliation is done using Form 8962, and any discrepancies may affect the taxpayer's tax liability or refund.

All of the other statements about the Premium Tax Credit are true:

  • Form 8962 does calculate the taxpayer's Premium Tax Credit and reconciles it with any Advance Premium Tax Credit received.
  • The Premium Tax Credit can be advanced to the taxpayer or refunded through their income tax return as a refundable credit.
  • The tax family does include the taxpayer, spouse, and anyone who is claimed as a dependent on the tax return.

Therefore, the correct choice is that taxpayers are not required to reconcile the Premium Tax Credit is the false statement.

Logan has two daughters, Paige, age 4, and Natalie, age 10. Logan paid a local day care provider $5,000 for Paige from January through December and $3,000 for Natalie from January through June. Logan's earned income is $70,000. Assuming all other requirements are met, how much expense can be used to calculate Logan's 2023 Child and Dependent Care Credit?

To determine how much expense can be used to calculate the Child and Dependent Care Credit (CDCC) for Logan, we need to analyze the care expenses for both of his daughters.

Overview of Child and Dependent Care Credit:

  • For one qualifying child under the age of 13, the maximum allowable expense is $3,000.
  • For two or more qualifying children, the maximum allowable expense is $6,000.
  • The Child and Dependent Care Credit is calculated as a percentage of the qualifying expenses, depending on the taxpayer's income.

Childcare Expenses for Logan:

  • Paige (age 4):

    • Logan paid $5,000 for Paige.

  • Natalie (age 10):

    • Logan paid $3,000 for Natalie, but since Natalie is above age 13, her expenses do not qualify for the CDCC.

Summary of Qualifying Expenses:

  • Total qualifying expenses for Paige: $5,000 (since she is under age 13).
  • Total qualifying expenses for Natalie: $0 (she is over age 13).

Maximum Allowable Expense:

Since Logan has one qualifying child (Paige) under age 13 and incurred $5,000 in expenses for her care, he can only use up to the maximum allowable expense for one child, which is $3,000.

Conclusion:

Logan can use $3,000 in expenses to calculate his 2023 Child and Dependent Care Credit.