Question

Identify one major exclusion and one tax credit. Find the relevant Internal Revenue Code Section that provides for the exclusion or credit using Thomas or IRS.GOV, copy the first paragraph, including the Code Section, and paste it into your post. Please answer this question for each: Did Congress enact this exclusion or credit for a social or economic purpose? Or both? For your third post this week, identify one of your colleagues' posts and respond to their observations with a concurrence or not; either way, support your position. Discuss which provides a greater tax advantage to the taxpayer, deductions or tax credits.

Answer 1

Health Coverage Tax Credit-The Health Coverage Tax Credit is a tax credit that pays 72.5% of qualified health insurance premiums for eligible individuals and their families. This applies to certain individuals who are 55–65 years of age and are receiving benefits from PBGC. An individual is not eligible if have been claimed as a dependent on another person’s federal income tax return.

This was enacted for social purposes.

If you meet certain requirements, you may qualify for the foreign earned income and foreign housing exclusions and the foreign housing deduction. If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude from income up to an amount of your foreign earnings that is adjusted annually for inflation. The exclusion was enacted to meet economic goals.