Topic 556 – Alternative Minimum Tax
Under the tax law, certain tax benefits can significantly reduce a taxpayer’s regular tax amount. The alternative minimum tax (AMT) applies to taxpayers with high economic income by setting a limit on those benefits. It helps to ensure that those taxpayers pay at least a minimum amount of tax.

How Is the AMT…[Read more]

Topic 557 – Additional Tax on Early Distributions from Traditional and Roth IRAs
To discourage the use of IRAs distributions for purposes other than retirement, you’ll be assessed an additional 10% tax on early distributions from traditional and Roth IRAs, unless an exception applies. Generally, early distributions are those you receive from an…[Read more]

Topic 558 – Additional Tax on Early Distributions from Retirement Plans Other Than IRAs
To discourage the use of retirement funds for purposes other than normal retirement, the law imposes an additional 10% tax on certain early distributions from certain retirement plans. The additional tax is equal to 10% of the portion of the distribution that’s…[Read more]

Topic 559 – Net Investment Income Tax
A 3.8 percent Net Investment Income Tax (NIIT) applies to individuals, estates, and trusts that have net investment income above applicable threshold amounts.

Individuals
In the case of an individual, the NIIT is 3.8 percent on the lesser of:

the net investment income, or
the excess of modified adjusted…[Read more]

Topic 560 – Additional Medicare Tax
A 0.9% Additional Medicare Tax applies to Medicare wages, self-employment income, and railroad retirement (RRTA) compensation that exceeds the following threshold amounts based on filing status:

$250,000 for married filing jointly;
$125,000 for married filing separately; and
$200,000 for all other…[Read more]

Topic 561 – Individual Shared Responsibility Provision
The individual shared responsibility provision requires that, for each month during the year, you and all members of your family:

Have minimum essential coverage (MEC);
Qualify for an exemption; or
Make a shared responsibility payment when you file your 2016 federal income tax return in…[Read more]

Topic 601 – Earned Income Credit

To qualify for the credit, your adjusted gross income (AGI) must be below a certain…[Read more]

Topic 602 – Child and Dependent Care Credit
You may be able to claim the child and dependent care credit if you paid expenses for the care of a qualifying individual to enable you (and your spouse, if filing a joint return) to work or actively look for work. You may not take this credit if your filing status is married filing separately. The…[Read more]

Topic 607 – Adoption Credit and Adoption Assistance Programs
Tax benefits for adoption include both a tax credit for qualified adoption expenses paid to adopt an eligible child and an exclusion from income for employer-provided adoption assistance. The credit is nonrefundable, which means it’s limited to your tax liability for the year. However,…[Read more]

Topic 608 – Excess Social Security and RRTA Tax Withheld
Most employers must withhold social security tax from your wages. Certain government employers (some federal, state and local governments) don’t have to withhold social security tax.

If you work for a railroad employer, your employer must withhold Tier 1 Railroad Retirement Tax Act (RRTA)…[Read more]

Topic 610 – Retirement Savings Contributions Credit
If you make eligible contributions to certain eligible retirement plans or to an individual retirement arrangement (IRA), you may be able to take a tax credit. The amount of the saver’s credit you can get is generally based on the contributions you make and your credit rate. For more information,…[Read more]

Topic 611 – Repayment of the First-Time Homebuyer Credit
Repayment of the Credit

General repayment rules for 2008 purchases. If you were allowed the first-time homebuyer credit for a qualifying home purchase made between April 9, 2008, and December 31, 2008, you generally must repay the credit over 15 years. To repay the credit, you must increase…[Read more]

Topic 612 – The Premium Tax Credit
Individuals and families who purchase health insurance coverage through a Health Insurance Marketplace may be eligible for the premium tax credit. This tax credit helps make purchasing health insurance coverage more affordable for people with low to moderate incomes. The premium tax credit is refundable, so even…[Read more]

Topic 651 – Notices – What to Do
If you receive a letter or notice from the IRS, it will explain the reason for the contact and give you instructions on how to handle your problem. If you agree with the changes, there’s no need to contact us. If you owe a balance, follow the instructions for sending your payment. If you don’t agree, please r…[Read more]

Topic 652 – Notice of Underreported Income – CP-2000
The IRS compares the payment information reported to the IRS by employers, banks, businesses, and other payers on income documents (Forms W-2, 1098, 1099, etc.) to the income, credits, and deductions you report on your income tax return. The Automated Underreporter (AUR) function uses an a…[Read more]

Topic 701 – Sale of Your Home
If you have a capital gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income. You may qualify to exclude up to $500,000 of that gain if you file a joint return with your spouse. Publication 523, Selling Your Home, provides rules and worksheets. Topic 409 covers…[Read more]

Topic 703 – Basis of Assets
The basis is generally the amount of your capital investment in property for tax purposes. Use your basis to figure depreciation, amortization, depletion, casualty losses, and any gain or loss on the sale, exchange, or other disposition of the property.

In most situations, the basis of an asset is its cost to you. The…[Read more]

Topic 704 – Depreciation
You generally can’t deduct in one year the entire cost of property you acquired, produced, or improved and placed in service for use either in your trade or business or to produce income if the property is a capital expenditure. Instead, you generally must depreciate such property. Depreciation is the recovery of the cost…[Read more]

Topic 705 – Installment Sales
An installment sale is a sale of property where you’ll receive at least one payment after the tax year in which the sale occurs. You’re required to report a gain on an installment sale under the installment method unless you “elect out” on or before the due date for filing your tax return (including extensions) for…[Read more]

Topic 751 – Social Security and Medicare Withholding Rates
Taxes under the Federal Insurance Contributions Act (FICA) are composed of the old-age, survivors, and disability insurance taxes, also known as social security taxes, and the hospital insurance tax, also known as Medicare taxes. Different rates apply for these taxes.

Social Security and…[Read more]