Previous Page: Publication 17 - Your Federal Income Tax - Other Credits Next Page: Publication 17 - Your Federal Income Tax - Your Rights as a Taxpayer Use   to find additional instances of index items.

taxmap/pub17/p17-190.htm#TXMP2b32b4d8 Refundable Credits

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/p17-190.htm#TXMP4db98f99 Credit for Excess Social Security Tax or Railroad Retirement Tax Withheld

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 2006, you may have had too much social security or RRTA tax withheld from your pay. You can claim the excess social security or RRTA tier 1 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 in 2006.

Type of tax	Maximum wages subject to tax	Maximum tax that should have been withheld
Social security or RRTA tier 1	$94,200	$5,840.40
RRTA tier 2	$69,900	$3,075.60

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 RRTA tier 2 tax. See Publication 505, Tax Withholding and Estimated Tax, for details.

taxmap/pub17/p17-190.htm#TXMP60e1c037 Employer's error.

If any one employer withheld too much social security or 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/p17-190.htm#TXMP757a835d Joint return.

If you are filing a joint return, you cannot add the social security or 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/p17-190.htm#TXMP6cad5136 How to figure the credit if you did not work for a railroad.

If you did not work for a railroad during 2006, figure the credit as follows:

1.	Add all social security tax withheld (but not more than $5,840.40 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 $5,840.40 or less, stop here. You cannot take the credit
4.	Social security tax limit	5,840.40
5.	Credit. Subtract line 4 from line 3. Enter the result here and on Form 1040, line 67 (or Form 1040A, line 43)

taxmap/pub17/p17-190.htm#TXMP5b2d9b4b
Example.

You are married and file a joint return with your spouse who had no gross income in 2006. During 2006, you worked for the Brown Shoe Company and earned $58,000 in wages. Social security tax of $3,596 was withheld. You also worked for another employer in 2006 and earned $47,000 in wages. $2,914 of social security tax was withheld from these wages. Because you worked for more than one employer and your total wages were more than $94,200, you can take a credit of $669.60 for the excess social security tax withheld.

1.	Add all social security tax withheld (but not more than $5,840.40 for each employer). Enter the total here	$6,510.00
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 $5,840.40 or less, stop here. You cannot take the credit	06,510.00
4.	Social security tax limit	05,840.40
5.	Credit. Subtract line 4 from line 3. Enter the result here and on Form 1040, line 67 (or Form 1040A, line 43)	m$669.60

taxmap/pub17/p17-190.htm#TXMP32b07c17 How to figure the credit if you worked for a railroad.

If you were a railroad employee at any time during 2006, figure the credit as follows:

1.	Add all social security and tier 1 RRTA tax withheld (but not more than $5,840.40 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 $5,840.40 or less, stop here. You cannot take the credit
4.	Social security and tier 1 RRTA tax limit	5,840.40
5.	Credit. Subtract line 4 from line 3. Enter the result here and on Form 1040, line 67 (or Form 1040A, line 43)

taxmap/pub17/p17-190.htm#TXMP703b2bd1 How to take the credit.

Enter the credit on Form 1040, line 67, or include it in the total for Form 1040A, line 43.

taxmap/pub17/p17-190.htm#TXMP76487431 Credit for Tax on Undistributed Capital Gain

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 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/p17-190.htm#TXMP25ec2aca Health Coverage Tax Credit

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.
• You were not entitled to Medicare Part A or enrolled in Medicare Part B.
• You were not enrolled in Medicaid or State Children's Health Insurance Program (SCHIP).
• You were not enrolled in the Federal Employees Health Benefits 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 2006 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. 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 2006.

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 and employer-sponsored health insurance plans, see Publication 502 and the instructions for Form 8885.

taxmap/pub17/p17-190.htm#TXMP0b8aad6c TAA Recipient

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/p17-190.htm#TXMP4fbb9cdd Example.

You received a trade adjustment allowance for January 2006. You were an eligible TAA recipient on the first day of January and February.

taxmap/pub17/p17-190.htm#TXMP1f2c3cea Alternative TAA Recipient

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/p17-190.htm#TXMP133d6a43 Example.

You received benefits under an alternative trade adjustment assistance program for older workers for October 2006. 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/p17-190.htm#TXMP21bc600b PBGC Pension Recipient

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/p17-190.htm#TXMP2e193153 How To Take the Credit

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 you did not receive an advance payment. For details, see Publication 502 or Form 8885.

taxmap/pub17/p17-190.htm#TXMP79d40686 Credit for Federal Telephone Excise Tax Paid

If you were billed after February 28, 2003, and before August 1, 2006, for the federal telephone excise tax on long distance or bundled service, you may be able to request a credit for the tax paid. You had bundled service if your local and long distance service was provided under a plan that does not separately state the charge for local service.

You cannot request the credit if you have already received a credit or refund from your service provider. If you request the credit, you cannot ask your service provider for a credit or refund and must withdraw any request previously submitted to your provider.

You can request a credit for either the actual amount of tax paid or a standard amount.

It usually will be to your benefit to request the actual amount if it is larger than the standard amount.

taxmap/pub17/p17-190.htm#TXMP6966140d Actual amount.

If you request the actual amount paid, you must attach Form 8913 showing the amount paid and keep records to substantiate the amount. See the Form 8913 instructions for details.

taxmap/pub17/p17-190.htm#TXMP72f44556 Standard amount.

The standard amount depends on the number of exemptions claimed on your return. If you are not required to file a tax return, the standard amount depends on the number of exemptions you would be allowed to claim if you were required to file. See chapter 3 for information on exemptions. The standard amounts, which include both the tax paid and interest owed on that tax, are shown in the following table.

IF the number of exemptions claimed is ...	THEN the standard amount is ...
0	$ 0*
1	30
2	40
3	50
4 or more	60
* Even though your standard amount is zero, you can request the actual amount paid on Form 8913.

If you request the standard amount and you later want to change it to the actual amount, file an amended return. See Amended Returns and Claims for Refund in chapter 1 for information on amended returns.

If you request the standard amount, you do not have to include the credit in income for any tax year.

taxmap/pub17/p17-190.htm#TXMP388d423d How to request the credit.

To request this credit, enter the amount on Form 1040, line 71; Form 1040A, line 42; or Form 1040-EZ, line 9. Attach Form 8913 if requesting the actual amount. If you are not otherwise required to file a federal income tax return, you must nevertheless file Form 1040EZ-T, Request for Refund of Federal Telephone Excise Tax, to request the credit.

Previous Page:  Publication 17 - Your Federal Income Tax - Other Credits Next Page:  Publication 17 - Your Federal Income Tax - Your Rights as a Taxpayer Use     to find additional instances of index items.