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Category: District of Columbia

District of Columbia Credits

DC Low Income Credit

The Low Income Credit is a non-refundable credit, which means it can reduce the DC tax you owe, but it will not directly result in a tax refund. If you claimed the Federal Earned Income Credit, it may be better for you to take the DC Earned Income Tax Credit instead of the DC Low Income Credit as the DC Earned Income Tax Credit is a refundable credit. You CANNOT take both of these DC Credits. The DC Earned Income Tax Credit is figured automatically in your TaxSlayer account. An entry here will override that calculation.

To qualify for this credit:

  • You cannot have computed your federal AGI using the Alternative Minimum Tax (AMT) calculation.
  • The amount of your D.C. taxable income on line 21 of your D-40 or line 5 of the D-40EZ is more than zero; and
  • Your D.C. Adjusted Gross Income (AGI) is greater than the sum of D.C. personal exemptions and D.C. standard deduction and is less than or equal to the sum of your federal personal exemptions and your federal standard deduction.

DC Resident First-Time Homebuyers Credit for Certain Government Employees

This credit was originally limited to DC Police officers who are first-time homebuyers in DC. This $2,000 credit has been expanded. It is now available to all DC government employees, employees of a DC public charter school, and any person who has accepted an offer to be a DC police officer, firefighter, emergency medical technician, public school teacher at a DC public charter school. Except for DC police officers, the tax credit is limited to those employees who purchased their first principal residence in DC on or after October 1, 2007 and who are enrolled in the Employer Assisted Housing Program offered by the DC Department of Housing and Community Development. The credit is available for a 5-year period. Enter $2000.00 in the space provided.

Credit for Taxes Paid to Other State

The District of Columbia allows taxpayers to claim a credit for individual income tax paid to other state(s) if the income taxed by that state is derived from that state and is of a kind taxed by DC. If tax paid to a state is the total state tax liability shown on the state tax return. (It is not the state withholding shown on your Form W-2.) The TaxSlayer will automatically calculate this credit for your Resident return if you have a Nonresident return created in your account. If you have a Part-Year return created for DC, the calculation will need to be filled in within the DC Part-Year return.

Complete Calculation K on Page 19, to determine your out of state credit. If you paid tax to more than one state, enter the respective amounts and other state codes in the spaces provided.

No DC credit is allowed for another tax imposed by a state, including the following:

  • Corporate franchise tax;
  • License tax;
  • Excise tax;
  • Unincorporated business franchise tax; and
  • Occupation tax.

For additional information, please click here.