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Computation of tax and credits

REG Chapter 17 · Area IV · Blueprint IV.F

Taxable income is not the bill. This chapter turns taxable income into tax: the brackets, the lower rates on capital gains and qualified dividends, the kiddie tax and the alternative minimum tax, the 3.8% net investment income tax and the 0.9% additional Medicare tax. Then come the credits, nonrefundable and refundable, and the estimated tax safe harbors that keep a taxpayer clear of penalties. The Blueprint asks you to tell refundable from nonrefundable credits, recall the safe harbors and calculate an individual's tax including the NIIT. Reggie and Sam finish the Delgados' return line by line. Figures are for tax year 2026.

In this chapter

1. From taxable income to tax
2. Capital gains and qualified dividends
3. The kiddie tax and the alternative minimum tax
4. The net investment income tax and the additional Medicare tax
5. Nonrefundable credits
6. Refundable credits
7. Business, foreign and other credits
8. Estimated tax and the safe harbors
9. Putting it together and reviewing the computation

This chapter has 9 lessons, 50 practice MCQs with explanations and 20 simulations, plus flashcards and a recall sheet.

What this chapter covers

• Tax liability, NIIT and the additional Medicare tax
• refundable and nonrefundable credits
• estimated tax safe harbors

Chapter 16: Filing status and dependents · Chapter 18: Book and tax differences