cpabsd Posted February 23, 2008 Report Share Posted February 23, 2008 My client has a carryforward of a General Business Credit of $2800. They also have 3 children which qualifies for Child Tax Credit. The total tax before credits is 1498. They do have 9,000 in SE tax. The program is applying the Child tax credit first which leaves them with no tax therefore unable to use any of Genera Business Credit. Is this correct? Obviously, they need to use all the credits available to help offset such a large liability. I'm trying to help reduce the liability and utilize some of that carryforward. At this rate, the General business credit will expire and they will receive no benefit. Please help. The IRS instructions were not very useful. Quote Link to comment Share on other sites More sharing options...
lbbwest Posted February 23, 2008 Report Share Posted February 23, 2008 My client has a carryforward of a General Business Credit of $2800. They also have 3 children which qualifies for Child Tax Credit. The total tax before credits is 1498. They do have 9,000 in SE tax. The program is applying the Child tax credit first which leaves them with no tax therefore unable to use any of Genera Business Credit. Is this correct? Obviously, they need to use all the credits available to help offset such a large liability. I'm trying to help reduce the liability and utilize some of that carryforward. At this rate, the General business credit will expire and they will receive no benefit. Please help. The IRS instructions were not very useful. The child tax credit can only be used to offset federal tax liability; not SE, it CAN NOT be carried forward at all; and is NOT refundable unless it "becomes" the ADDITIONAL child tax credit which IS refundable; and there for offsets the SE. The general business credit IS carried forward but can only offset federal tax. IF your clients have $9,000 in SE they would have about $60K in SE income; didn't they make any estimates? I put your scenario in a return (I'm bored or that's right, I'm brain damaged;) and $60K se generates $8,476 of SE and $3,429 federal tax; I'm missing something. lbb Quote Link to comment Share on other sites More sharing options...
cpabsd Posted February 23, 2008 Author Report Share Posted February 23, 2008 I'm confused also - that's why I posted this problem. ATX is calculating child tax credit of 1498 to offset all income tax. It is not allowing the 2800 in General Business Credits to be used. The client then qualifies for the remainder of the Child tax credit on Form 8812. My question is whether that is the correct order to use the credits. It appears per the schedules that ATX is correct but was hoping the client could use the Carryforward of General Business Credits to offset the 1498 in income tax and then still get the 3000 on the Form 8812. Yes, my client had 60,000 in SE income. They were advised to make estimates, but did not. Now, they are unhappy with the amount of taxes owed. They also received a 21,000 refund of prior year expense and did not tell me until 2008. Still, I am trying to educate this client. I beleive they will pay the 2008 estimates I have advised. Quote Link to comment Share on other sites More sharing options...
lbbwest Posted February 23, 2008 Report Share Posted February 23, 2008 I'm confused also - that's why I posted this problem. ATX is calculating child tax credit of 1498 to offset all income tax. It is not allowing the 2800 in General Business Credits to be used. The client then qualifies for the remainder of the Child tax credit on Form 8812. My question is whether that is the correct order to use the credits. It appears per the schedules that ATX is correct but was hoping the client could use the Carryforward of General Business Credits to offset the 1498 in income tax and then still get the 3000 on the Form 8812. Yes, my client had 60,000 in SE income. They were advised to make estimates, but did not. Now, they are unhappy with the amount of taxes owed. They also received a 21,000 refund of prior year expense and did not tell me until 2008. Still, I am trying to educate this client. I beleive they will pay the 2008 estimates I have advised. It appears per the schedules that ATX is correct but was hoping the client could use the Carryforward of General Business Credits to offset the 1498 in income tax and then still get the 3000 on the Form 8812. I always hope clients will make their estimates, it doesn't happen that way either. lbb Quote Link to comment Share on other sites More sharing options...
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