Video: Computation of Tax and Credits Overview

In this lesson, delve into the essentials of computing taxes and leveraging credits to optimize final tax liabilities with Nick Palazzolo, CPA. Nick breaks down the intricacies of marginal tax rates and the differences between refundable and non-refundable credits, along with determining eligibility for various tax benefits. He sets out clear objectives starting with strategies to avoid penalties through minimum federal estimated tax payments. From there, the journey continues to calculating tax liability based on taxable income and understanding how deductions and credits impact the bottom line on a 1040 tax form. While tackling these challenging topics, Nick keeps the focus on practical application, ensuring that familiarity with tax forms accompanies robust conceptual knowledge for success in taxation.

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Video Transcript

Instructor: Nick Palazzolo

Nick Palazzolo is head instructor of ExamPrep.ai CPA Review. Nick's teaching style is engaging & upbeat, combining practical Big 4 tax & assurance expertise with years of 1-on-1 coaching. His lessons are concise and emphasize what you need to know to pass. Whether you're a recent grad or working full-time, we’re confident you can conquer your CPA exams with Nick’s review.

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Computing tax and dealing with credits, we want to understand how much we're going to eventually owe as the taxpayer or the tax preparer on behalf of the taxpayer. We want to understand, again, like marginal tax rates, understanding what our tax liability is going to be, going through all the credits, those refundable and non-refundable credits that are going to be wonderful and benefit us, your eligibility for them and what those amounts are. Let's dive into our learning objectives and see what we've got for you. First off, we're going to want to recall and define the minimum requirements for individual federal estimated tax payments to avoid penalties. This is something that we'll see, obviously, and have seen and will continue to see throughout our individual income tax lessons. We want to make sure we're not going to have any penalties, so what payments do you need to make? We also want to calculate the tax liability based on an individual's taxable income for our federal income tax purposes. Lastly, we want to calculate the impact of the tax deductions and tax credits that we're going to see on our 1040. Make sure, as always, you kind of know where these are on the tax forms. You won't be asked questions about what line they're on, but it is helpful to know where you see them so you know at the end of the day where they belong or any items that you'll see on the exam above the line, below the line. What do they affect and what are they affected by? Let's see this and more. Get you those free points in the exam by memorizing and learning everything in a great way.

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Federal Taxation of Individuals: Passive Activity, & Tax Credits

Module: 2 Concepts, 28 Videos

Passive Activity Losses & Loss Limitations Overview

1:33

Introduction to Passive Activity Losses and Loss Limitations

7:43

Recourse vs. Nonrecourse Liabilities

6:01

Tax Basis vs. At-Risk Basis