Question

1. Not all taxpayers have health insurance.

1. Is there a potential penalty for not having health insurance coverage in 2019?
2. Was there a potential penalty for not having health insurance coverage in 2018?

2. Some taxpayers are entitled to an education credit.

1. Is any part of an education credit potentially refundable?
2. Who claims an education credit; the taxpayer or the dependent student?

3. The highest marginal income tax bracket for 2019 is 37%, yet some taxpayers (individuals) pay an even higher rate.

1. What is the name of the 3.8% additional tax?
2. What type of taxpayer pays this additional tax?

4. Some taxpayers are considered injured spouses.

1. What is an injured spouse?
2. What form is filed for an injured spouse?

5. Some taxpayers may be considered an innocent spouse.

1. What is an innocent spouse?
2. What form is filed for an innocent spouse?

6. There is a doctrine in law known as claim of right.

1. What causes a claim of right for income taxes?
2. Will a claim of right result in a refund or additional money owed?
3. Is the amount from claim of right claimed as a credit or a deduction or is either possible?

7. The highest marginal income tax bracket for 2019 is 37%, yet some taxpayers (individuals) pay an even higher rate.

3. What is the name of the 0.9% additional tax?
4. What type of taxpayer pays this additional tax?

Answer 1

A) If you don’t have coverage during 2019, the fee no longer applies. You don’t need an exemption in order to avoid the penalty.

B) For plan years through 2018, if you can afford health insurance but choose not to buy it, you may pay a fee called the individual Shared Responsibility Payment when you file your federal taxes.

C) Education tax credits can either be refundable or nonrefundable. This only refers to whether the credit reduces the amount you owe on your taxes or if it is an amount the government owes you. A refundable tax credit allows you to get money back from the government even if you owed nothing in taxes: If your tax liability is zero or even if you didn't earn any income, you may get money from the Internal Revenue Service if you qualify for a refundable tax credit. A nonrefundable tax credit can reduce the amount of tax you owe to zero but does not pay anything beyond this amount. You must owe tax to benefit from a nonrefundable tax credit, and the amount cannot exceed your tax burden.

D) If the student is being claimed as a dependent on the parent’s tax return, then the parents are the only ones eligible for the education credit. This is true regardless of who actually paid the expenses. If the student is not being claimed as a dependent on someone else’s tax return, then the student is the only one eligible for the education credit. This is true regardless of who actually paid the expenses

E) The NIIT applies at a rate of 3.8% to certain net investment income of individuals, estates and trusts that have income above the statutory threshold amounts

F) If the rules for contributions and distributions are not followed, additional taxes may be due. For example, the taxpayer must pay income tax plus an additional tax if any of the following apply:    • A distribution is taken before the individual reaches the age of 59½ and is not rolled                                  over into another qualified plan or IRA and no other exception applies

• Minimum distributions are not withdrawn when required

• Excess contributions are not withdrawn by the due date of the return including extensions.

G) You can qualify as an Injured Spouse if both of the following are true:

- You are not personally required to pay the past-due debt.

- During the year in question, you had earned income that was reported on a Form 1040, or had income taxes withheld from your pay, or made estimated tax payments.

H) If you believe you qualify as an Injured Spouse, you must file Form 8379, Injured Spouse Allocation. You can prepare Form 8379 online and e-file it with your tax return using eFile.com, but you may need to paper file this form with your return if you attach any additional documentation.

I) if your spouse or ex-spouse, on a past joint tax return, lied about their income or underpaid taxes without your knowledge, and now you are being held responsible for someone else's tax debt in that case you are Innocent Spouse

J) Form 8857: Request for Innocent Spouse Relief is an Internal Revenue Service (IRS) tax form used by taxpayers to request relief from a tax liability involving a spouse or former spouse.

K) If the taxpayer had to repay more than $3,000 that was included in their income in an earlier year because at the time they thought they had an un-restricted right to it, the taxpayer may be able to deduct the amount they repaid or take a credit against their tax in the year that they repaid it.

L) When a repayment occurs the taxpayer ( discussed below),

a) reduce their income in the current year,

b) deduct the amount repaid as a miscellaneous deduction on Schedule A, Form 1040 in the year in which it is repaid, or

c) take a refundable credit against tax on Form 1040 for the year that repayment occurs.

M) Whether the repayment is deemed a reduction in income, a miscellaneous itemized deduction, or a tax credit depends upon the amount of the repayment and the type of income that was included in the previous year.

N) The additional Medicare tax rate of 0.9% is applied to an individual's wages, compensation, or self-employment income

O) If the rules for contributions and distributions are not followed, additional taxes may be due. For example, the taxpayer must pay income tax plus an additional tax if any of the following apply:    • A distribution is taken before the individual reaches the age of 59½ and is not rolled                                  over into another qualified plan or IRA and no other exception applies

• Minimum distributions are not withdrawn when required

• Excess contributions are not withdrawn by the due date of the return including extensions.