Tax credit

[Clarity20]

Got $7500 tax credit for this year. Don’t think I’ll owe that much tax because my wife’s store had been closed for months due to Covid-19. What do people do to fully use this tax credit? I know it’s not refundable.

 

[Esprit1st]

It's a credit, so it only reduces your owed taxes up to a max of $7500. So I'm not sure you can "do" anything to use it, other than make extra money so you owe more taxes. [emoji2957]

I suppose you could postpone expenses into the next year, so you owe more this year, and then use the write-offs of the expenses next year.

 

[Richard_arch74]

Got $7500 tax credit for this year. Don’t think I’ll owe that much tax because my wife’s store had been closed for months due to Covid-19. What do people do to fully use this tax credit? I know it’s not refundable.

I think you could do a conversion from a traditional IRA to a Roth IRA. For instance if you converted $20,000 from a traditional to a Roth you would generate $4,400 in additional taxes (if you were in the 22% tax bracket). Of course, you should get your advice from a tax professional, which I am not.

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[Clarity20]

Yup I thought about this. It may push me in to next tax bracket, but I would do this if I feel I don’t owe much tax by around November.

I think you could do a conversion from a traditional IRA to a Roth IRA. For instance if you converted $20,000 from a traditional to a Roth you would generate $4,400 in additional taxes (if you were in the 22% tax bracket). Of course, you should get your advice from a tax professional, which I am not.

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