Taxpayers with modified adjusted gross incomes
of between 100 and 400 percent of the federal poverty guideline may be eligible for the credit.
They file jointly and their modified adjusted gross income
The credit phases out for modified adjusted gross income
from $75,000 to $95,000 ($150,000 to $170,000 for a joint return).
Even though the Wilsons' modified adjusted gross income
is $17,360, they do not qualify for the earned income credit because their total earned income is not less than $32,121.
While most clients will have one or more of the traditional types of retirement assets -- taxable investments, tax-deferred contribution, or tax-advantaged investments that generate tax-free income like Roth IRAs -- the living benefits of IUL policies may provide a supplemental cash source that can help clients enjoy retirement as intended without the worries of impacting modified adjusted gross income
, tax brackets, capital gains or access to government programs.
In other words, taxpayers are subject to the tax on all of their investment income only if their modified adjusted gross income
exceeds the applicable amount by at least the amount of their net investment income.
The phase out for the Child Tax Credit begins at a modified adjusted gross income
(32) for joint filers at $110,000, single filers and head of household at $75,000, and $55,000 for married filing separately.
The full credit is available to individuals whose modified adjusted gross income
is $80,000 or less or $160,000 for married taxpayers.
A single person or head of household qualifies for the maximum Roth IRA contribution when 2010 modified adjusted gross income
is $105,000 or less.
A Roth IRA offers the following potential advantages: (1) distributions are not required at age 70 1/2; (2) contributions may continue after reaching age 70 1/2; (3) phaseout limits are higher than those for deductible contributions to a Traditional IRA; and (4) tax-free retirement distributions will not push modified adjusted gross income
above the threshold that triggers taxation of Social Security benefits (page 435).
The tax credit amount is phased out for buyers with higher modified adjusted gross income
and zeroes out at $95,000 (single) or $170,000 (married).
The credit will continue to be phased out for high-income taxpayers when modified adjusted gross income
exceeds $75,000 for single tax payers and $110,000 for married taxpayers filing a joint return.