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taxmap/pub17/p17-192.htm#TXMP2b32b4d8 Refundable Credits(p249)

The credits discussed in this part of the chapter are treated as payments of tax. If the total of these credits, withheld federal income tax, and estimated tax payments is more than your total tax, the excess can be refunded to you.

taxmap/pub17/p17-192.htm#TXMP76487431 Credit for Tax on Undistributed Capital Gain(p249)

You must include in your income any amounts that regulated investment companies (commonly called mutual funds) or real estate investment trusts (REITs) allocated to you as capital gain distributions, even if you did not actually receive them. If the mutual fund or REIT paid a tax on the capital gain, you are allowed a credit for the tax since it is considered paid by you. The mutual fund or REIT will send you Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains, showing your share of the undistributed capital gains and the tax paid, if any. Take the credit for the tax paid by entering the amount on Form 1040, line 70, and checking box a. Attach Copy B of Form 2439 to your return. See Capital Gain Distributions in chapter 8 for more information on undistributed capital gains.

taxmap/pub17/p17-192.htm#TXMP25ec2aca Health Coverage Tax Credit(p249)

You may be able to take this credit for any month in which all the following statements were true on the first day of the month.

• You were an eligible trade adjustment assistance (TAA) recipient, alternative TAA recipient, or Pension Benefit Guaranty Corporation (PBGC) pension recipient (defined later).
• You were covered by a qualified health insurance plan for which you paid the premiums directly to your health plan.
• You were not entitled to Medicare Part A or enrolled in Medicare Part B.
• You were not enrolled in Medicaid or the State Children's Health Insurance Program (SCHIP).
• You were not enrolled in the Federal Employees Health Benefits (FEHB) program or eligible to receive benefits under the U.S. military health system (TRICARE).
• You were not covered by, or eligible for coverage under, any employer-sponsored health insurance plan (including any employer-sponsored health insurance plan of your spouse).
• You were not imprisoned under federal, state, or local authority.

But, you cannot take the credit if you can be claimed as a dependent on someone else's 2007 tax return. If you meet all of these conditions, you may be able to take a credit of up to 65% of the amount you paid for qualified health insurance coverage for you and any qualifying family members. The amount you paid for qualified health insurance coverage must be reduced by any (a) Archer MSA and health savings account distributions used to pay for the coverage, and (b) National Emergency Grants you received for health insurance in 2007.

You can take this credit on your tax return or have it paid on your behalf in advance to your insurance company. If the credit is paid on your behalf in advance, that amount will reduce the amount of the credit you can take on your tax return.

For definitions and special rules, including those relating to qualified health insurance plans, qualifying family members, and employer-sponsored health insurance plans, see Publication 502 and the instructions for Form 8885.

taxmap/pub17/p17-192.htm#TXMP0b8aad6c TAA Recipient(p249)

You were an eligible TAA recipient on the first day of the month if, for any day in that month or the prior month, you:

• Received a trade readjustment allowance, or
• Would have been entitled to receive such an allowance except that you had not exhausted all rights to any unemployment insurance (except additional compensation that is funded by a state and is not reimbursed from any federal funds) to which you were entitled (or would be entitled if you applied).

taxmap/pub17/p17-192.htm#TXMP03aba076 Example.(p249)

You received a trade adjustment allowance for January 2007. You were an eligible TAA recipient on the first day of January and February.

taxmap/pub17/p17-192.htm#TXMP1f2c3cea Alternative TAA Recipient(p249)

You were an eligible alternative TAA recipient on the first day of the month if, for that month or the prior month, you received benefits under an alternative trade adjustment assistance program for older workers established by the Department of Labor.

taxmap/pub17/p17-192.htm#TXMP50a2d491 Example.(p249)

You received benefits under an alternative trade adjustment assistance program for older workers for October 2007. The program was established by the Department of Labor. You were an eligible alternative TAA recipient on the first day of October and November.

taxmap/pub17/p17-192.htm#TXMP21bc600b PBGC Pension Recipient(p250)

You were an eligible PBGC pension recipient on the first day of the month, if both of the following apply.

1. You were age 55 or older on the first day of the month.
2. You received a benefit for that month that was paid by the PBGC under title IV of the Employee Retirement Income Security Act of 1974 (ERISA).

If you received a lump-sum payment from the PBGC after August 5, 2002, you meet item (2) above for any month that you would have received a PBGC benefit if you had not received the lump-sum payment.

taxmap/pub17/p17-192.htm#TXMP2e193153 How To Take the Credit(p250)

To take the credit, complete Form 8885 and attach it to your Form 1040. Include your credit in the total for Form 1040, line 70, and check box c.

You must attach invoices and proof of payment for any amounts you include on Form 8885, line 2, for which an advance payment of the credit was not made on your behalf. For details, see Publication 502 or Form 8885.

taxmap/pub17/p17-192.htm#TXMP70f9e200 Refundable Credit for Prior Year Minimum Tax(p250)

If you paid the alternative minimum tax for 2006 or you had a minimum tax credit carryforward to 2007, you may be able to take a credit for prior year minimum tax. For information about the nonrefundable credit for prior year minimum tax you may be able to take, see Nonrefundable Credit for Prior Year Minimum Tax, earlier. However, for 2007, you may qualify for a refundable credit for prior year minimum tax if you have any unused minimum tax credit carryforward from 2004 or earlier years, even if the total amount of your current year credit is more than your total tax liability. To figure the amount of any 2007 refundable credit, complete Part IV of Form 8801. Include any refundable credit on Form 1040, line 71. You can carry forward any unused credit for prior year minimum tax to later years.

taxmap/pub17/p17-192.htm#TXMP4db98f99 Credit for Excess Social Security Tax or Railroad Retirement Tax Withheld(p250)

Most employers must withhold social security tax from your wages. If you work for a railroad employer, that employer must withhold tier 1 railroad retirement (RRTA) tax and tier 2 RRTA tax.

If you worked for two or more employers in 2007, you may have had too much social security or tier 1 RRTA tax withheld from your pay. You can claim the excess social security or tier 1 RRTA tax as a credit against your income tax. The following table shows the maximum amount of wages subject to tax and the maximum amount of tax that should have been withheld for 2007.

Type of tax	Maximum wages subject to tax	Maximum tax that should have been withheld
Social security or RRTA tier 1	$97,500	$6,045.00
RRTA tier 2	$72,600	$2,831.40

All wages are subject to Medicare tax withholding.  n

Use Form 843, Claim for Refund and Request for Abatement, to claim a refund of excess tier 2 RRTA tax. Be sure to attach a copy of all of your W-2 forms. See the worksheet in Publication 505, Tax Withholding and Estimated Tax, to help you figure the excess amount.

taxmap/pub17/p17-192.htm#TXMP60e1c037 Employer's error.(p250)

If any one employer withheld too much social security or tier 1 RRTA tax, you cannot take the excess as a credit against your income tax. The employer should adjust the tax for you. If the employer does not adjust the overcollection, you can file a claim for refund using Form 843.

taxmap/pub17/p17-192.htm#TXMP6aca2932 Joint return.(p250)

If you are filing a joint return, you cannot add the social security or tier 1 RRTA tax withheld from your spouse's wages to the amount withheld from your wages. Figure the withholding separately for you and your spouse to determine if either of you has excess withholding.

taxmap/pub17/p17-192.htm#TXMP6cad5136 How to figure the credit if you did not work for a railroad.(p250)

If you did not work for a railroad during 2007, figure the credit as follows:

1.	Add all social security tax withheld (but not more than $6,045.00 for each employer). Enter the total here
2.	Enter any uncollected social security tax on tips or group-term life insurance included in the total on Form 1040, line 63
3.	Add lines 1 and 2. If $6,045.00 or less, stop here. You cannot take the credit
4.	Social security tax limit	6,045.00
5.	Credit. Subtract line 4 from line 3. Enter the result here and on Form 1040, line 67 (or Form 1040A, line 42)

taxmap/pub17/p17-192.htm#TXMP486ebc05
Example.(p250)

You are married and file a joint return with your spouse who had no gross income in 2007. During 2007, you worked for the Brown Shoe Company and earned $60,000 in wages. Social security tax of $3,720 was withheld. You also worked for another employer in 2007 and earned $51,000 in wages. $3,162 of social security tax was withheld from these wages. Because you worked for more than one employer and your total wages were more than $97,500, you can take a credit of $837.00 for the excess social security tax withheld.

1.	Add all social security tax withheld (but not more than $6,045.00 for each employer). Enter the total here	$6,882.00
2.	Enter any uncollected social security tax on tips or group-term life insurance included in the total on Form 1040, line 63	mn-0-0
3.	Add lines 1 and 2. If $6,045.00 or less, stop here. You cannot take the credit	06,882.00
4.	Social security tax limit	06,045.00
5.	Credit. Subtract line 4 from line 3. Enter the result here and on Form 1040, line 67 (or Form 1040A, line 42)	m$837.00

taxmap/pub17/p17-192.htm#TXMP32b07c17 How to figure the credit if you worked for a railroad.(p250)

If you were a railroad employee at any time during 2007, figure the credit as follows:

1.	Add all social security and tier 1 RRTA tax withheld (but not more than $6,045.00 for each employer). Enter the total here
2.	Enter any uncollected social security and tier 1 RRTA tax on tips or group-term life insurance included in the total on Form 1040, line 63
3.	Add lines 1 and 2. If $6,045.00 or less, stop here. You cannot take the credit
4.	Social security and tier 1 RRTA tax limit	6,045.00
5.	Credit. Subtract line 4 from line 3. Enter the result here and on Form 1040, line 67 (or Form 1040A, line 42)

taxmap/pub17/p17-192.htm#TXMP72923bd4 How to take the credit.(p250)

Enter the credit on Form 1040, line 67, or include it in the total for Form 1040A, line 42.

Previous Page:  Publication 17 - Your Federal Income Tax - Other Credits Next Page:  Publication 17 - Your Federal Income Tax - Tax Table Use   to find additional occurrences of topic items.