hi
i have been contributing to 401 k plan, it is being deducted from my salary every month, so am i eligible to take any deduction or avail any kind of tax credit, based on this retirement plan?

i am married filing a joint return

AtlantaTaxExpert

There is no need for you to do anything to show your 401K contribution.

Money contributed to your 401K is reflected as a reduced amount on your W-2 wages reflected in Box 1. The actual contribution amount is shown in Box 14 with the code "D".

mgupta_3

thank you, that was helpful.

Another question on Lifetime learning credit, i know that one individual can avail a tax credit of $2000 each year for a maximum of $10000 spending. IS there any phaseout for such credits.?

I exercised Employee stock option plan, just to confirm that only the gain recognized on the exercise will be taxed under capital gains.?

AtlantaTaxExpert

There IS a phaseout depending on your total Adjusted Gross Income and your filing status.

As for the employee stock option, the initial gain between the purchase price and the exercise price is taxed as compensation, with Social Security and Medicare taxes withheld. It should be included on your W-2 as such.

If you hold the stock after you exercise the option for one year and one day, then sell it at a profit, the difference between the exercise price and the sales price is then taxed at capital gain rates.