does this pass reasonability test?

Posted by jake on January 29, 2009, 4:06 pm

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hello all,

in going over the family finances, came across what at 1st glance looks like
an anomaly, but perhaps it's not.

a fulltime student, total income 2008 of $16,000 paid federal taxes $220.00

student paid $15,000 out of savings for university terms and had no other
income.

taxcut online calculated return of federal taxes at $560.00 (refund)

how can that be?

there is only a $2000.00 credit allowed for the university costs (no hope
credit, lifetime learning credit allowed) and no other deductions other than
standard deduction allowed was taken to offset income calculation. student
did not get economic stimulus payment in 2008 so is the $560 including a
$300 for that purpose?

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Posted by Bill on January 29, 2009, 5:28 pm

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jake@dot.dz (jake) posted:

>hello all,

>in going over the family finances, came across

>what at 1st glance looks like an anomaly, but

>perhaps it's not.

>a fulltime student, total income 2008 of

>$16,000 paid federal taxes $220.00

>student paid $15,000 out of savings for

>university terms and had no other income.

>taxcut online calculated return of federal taxes

>at $560.00 (refund)

>how can that be?

>there is only a $2000.00 credit allowed for the

>university costs (no hope credit, lifetime

>learning credit allowed) and no other

>deductions other than standard deduction

>allowed was taken to offset income

>calculation. student did not get economic

>stimulus payment in 2008 so is the $560

>including a $300 for that purpose?

Yes, anyone who did not receive the stimulus payment associated with
2007 returns, and files for 2008 is qualified to receive it.

Bill

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Posted by jake on January 29, 2009, 9:20 pm

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Bill wrote:

> Yes, anyone who did not receive the stimulus payment associated with

> 2007 returns, and files for 2008 is qualified to receive it.

thank you for the reply but if you noticed, I was *really* more concerned
over the unusual refund amount which does not appear to match the taxes
paid - ie. how can one get more back than what was paid.

========================================= MODERATOR'S COMMENT:
This Rebate Credit is known as a refundable credit. That allows
you get get back more than was withheld.

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<< The foregoing was not intended or written to be used, >>
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<< that may be imposed upon the taxpayer. >>
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Posted by Alan on January 29, 2009, 7:10 pm

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jake wrote:

> hello all,

> in going over the family finances, came across what at 1st glance looks

> like an anomaly, but perhaps it's not.

> a fulltime student, total income 2008 of $16,000 paid federal taxes $220.00

> student paid $15,000 out of savings for university terms and had no

> other income.

> taxcut online calculated return of federal taxes at $560.00 (refund)

> how can that be?

> there is only a $2000.00 credit allowed for the university costs (no

> hope credit, lifetime learning credit allowed) and no other deductions

> other than standard deduction allowed was taken to offset income

> calculation. student did not get economic stimulus payment in 2008 so is

> the $560 including a $300 for that purpose?

No it doesn't sound right. $16000 of earnings less $4000 tuition
deduction is an AGI of $12000. Less the std deduction & pers.
exemption for a single person, you get taxable income of $3050.
The tax on that is $308. The RRC will be $308 leaving no tax
liabiity. The refund would be the tax withheld of $220.

I have no idea why you would state "only a $2000 credit allowed
for university costs. I assume you meant to say "deduction" as
you said there was no education credit. The maximum deduction is
$4000 not $2000.

So.. something else is going on.

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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
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Posted by Arthur Kamlet on January 29, 2009, 9:35 pm

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>jake wrote:

>> hello all,

>> in going over the family finances, came across what at 1st glance looks

>> like an anomaly, but perhaps it's not.

>> a fulltime student, total income 2008 of $16,000 paid federal taxes $220.00

>> student paid $15,000 out of savings for university terms and had no

>> other income.

>> taxcut online calculated return of federal taxes at $560.00 (refund)

>> how can that be?

>> there is only a $2000.00 credit allowed for the university costs (no

>> hope credit, lifetime learning credit allowed) and no other deductions

>> other than standard deduction allowed was taken to offset income

>> calculation. student did not get economic stimulus payment in 2008 so is

>> the $560 including a $300 for that purpose?

>No it doesn't sound right. $16000 of earnings less $4000 tuition

>deduction is an AGI of $12000. Less the std deduction & pers.

>exemption for a single person, you get taxable income of $3050.

>The tax on that is $308. The RRC will be $308 leaving no tax

>liabiity. The refund would be the tax withheld of $220.

>I have no idea why you would state "only a $2000 credit allowed

>for university costs. I assume you meant to say "deduction" as

>you said there was no education credit. The maximum deduction is

>$4000 not $2000.

>So.. something else is going on.

OP said Hope and Lifetime Learning credits are not available.

If LLC is not available, this might be due to high AGI.

High AGI taxpayers could be limited to 2000 instead of 4000.
--

ArtKamlet at a o l dot c o m Columbus OH K2PZH

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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>