Section 1341 Credit

AAA

DEFINITION of 'Section 1341 Credit'

A tax credit available for taxpayers who are repaid in a later year more than $3,000 in wages from a prior year. Section 1341 allows taxpayers to claim a credit for taxes paid on wages not received from the previous year. The Section 1341 credit thus allows taxpayers to avoid filing an amended return for the previous tax year.

INVESTOPEDIA EXPLAINS 'Section 1341 Credit'

The Section 1341 credit is on line 70 of Form 1040. The taxpayer must write "IRC 1341" in the blank space next to the box. The credit is computed by refiguring the tax return from the previous year as if the wages had not been paid. Then the difference in tax is claimed as a credit on the current year's return. The taxpayer also has the option of either claiming the credit or deducting the repayment as a miscellaneous itemized deduction, whichever provides the greater benefit.

RELATED TERMS
  1. Orphan Drug Credit

    A federal tax credit that provides an incentive for pharmaceutical ...
  2. Research Activities Credit

    A nonrefundable federal tax credit implemented in 1981 as an ...
  3. Amended Return

    A return filed in order to make corrections to a tax return from ...
  4. Tax Credit

    An amount of money that a taxpayer is able to subtract from the ...
  5. Refundable Credit

    A tax credit that is not limited by the amount of an individual's ...
  6. Non-Refundable Tax Credit

    A tax credit that can't reduce the amount of tax owed to less ...
Related Articles
  1. Tax Credit For Plan Expenses Incurred ...
    Entrepreneurship

    Tax Credit For Plan Expenses Incurred ...

  2. Saver's Tax Credit: A Retirement Savings ...
    Savings

    Saver's Tax Credit: A Retirement Savings ...

  3. Avoid The Social Security Tax Trap
    Taxes

    Avoid The Social Security Tax Trap

  4. An Overview Of Itemized Deductions
    Taxes

    An Overview Of Itemized Deductions

Hot Definitions
  1. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  2. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  3. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  4. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  5. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
  6. Parity Price

    When the price of an asset is directly linked to another price. Examples of parity price are: 1. Convertibles - the price ...
Trading Center