Happy to pay $900 Fed tax

Just to clarify, you got:

But I did buy one in December and got [an additional rjw] $4500 of [to rjw] my withholdings back as a refund.​

Understand if you did, good on you. My tax man treated it as a non-refundable tax credit. Whether refundable or non-refundable doesn't matter to me because I got the full benefit of the tax credit. This is the kind of 'splitting hairs' only the IRS and tax preparers, not my area of expertise, could love. I'm just happy that is not a tax mine field I'll have to face.

Bob Wilson

 

Perhaps it may help to show which part of the 1040 form:



A deduction would have happened earlier on the form but the instructions are on line 56, "Subtract line 55 from line 47. If line 55 (the credits rjw) are greater than the taxes owed, enter -0-". So this explains how the non-refundable credits work. Yes, you will get the tax credit dollars back later, line 63, 64, and 78.

The tax reduction, after the credits line 63, is compared to the withholding line 64, and the difference goes on line 78 showing the pay or refund. Note that in my case, the housekeeper taxes, $896, is big part of the $860 I'll have to pay (yes I rounded it up to $900.) FYI, I don't regret the housekeeper taxes as she made it possible for me to work.

Refundable credits are treated as early tax payments. So these go directly into the refund and/or tax reduction. There is no "if greater than, enter -0-".

The only anomaly in my taxes is some part of the 'alternative minimum tax' apparently let ~$70 go to the Feds as additional taxes, I expected $1000 in tax credit for the 'refueling property credit' (form 8911) but only got $970. The other threat to the tax credits are well compensated folks may hit the minimum alternative tax.

Since I'm retiring on Friday, next year we should be in the 15% bracket instead of the 25%. We just missed the 28% bracket thanks to deductions but still high enough that alternative minimum tax had a small effect in one obscure area.

Bob Wilson