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January 12, 2018

How To Qualify As A Dependent On A US 1040 Tax Return

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Other than fitting the description of a constant liability, what other qualifying attributes must one have, to be classed as a dependent, and how do you determine this for tax purposes? The following paragraphs explain the qualifying tests for determining dependency as it relates to your tax status, liability and available credits. First, we need to make you aware that there are two different types of dependents.

There are several “qualifying tests” an individual must pass, in order to be qualified as a dependent on a US 1040 tax return. The tests for dependency are centered around the actual support tests that the candidate must pass; first, the qualifying individual must be the taxpayer’s child, stepchild, foster child, sibling or stepsibling, or a descendent of one of these (such as a niece or nephew), second the qualifying individual must have the same principal residence as the taxpayer for more than half the year and there are exceptions for children of divorced parents, kidnapped children, and for children who were born or died during the year, third the qualifying individual must be under the age of 19, or 24 if a full-time student and fourth, the qualifying individual must not have provided for more than one-half of their own support during the year. There are some additional rules that a dependent must pass, that really have nothing to do with the amount of support provided, but do determine their eligibility as US citizens and the ability to be considered for dependency. First, the qualifying individual must be a US citizen or national, and their marital status must be single, unless the are married but did not file a joint return for that year, or there was no tax liability that existed for either spouse had they filed separately.

If the qualifying individual can pass all four of the above described qualifying tests, as well as the additional rules, then any of the deductions, exemptions, and credits that are available can be used. For instance, child care expenses, child tax credits, dependent care expenses, earned income credit, and any associated itemized deductions may be claimed if the qualifying individual is determined eligible.

Determining eligibility in many cases means the difference between owing tax on your return, and the eligibility to file as head of household, and receive a refund that would include earned income credit. The earned income tax credit is a negative tax, and an attempt by the government to provide lower and poverty level income families with the opportunity to receive much needed assistance with caring for and supporting their families. Today, however, the earned income credit is becoming an opportunity for some segments of the public to abuse the goodwill of their government and falsify claims of dependency qualifications.

The child and dependent care expenses cover things like daycare, after school care programs, and any other form of paid care that is necessary for the qualifying individual to receive while the taxpayer is away at work. The only thing to watch here is that all qualifying individuals for the child and dependent care expenses must be under the age of 13.

The child tax credit is comparable to the earned income credit, in that it is a straight credit, dollar for dollar deduction of your tax liability. The child tax credit may only be taken by individuals with a qualifying dependent that is under the age of 17.

As you undertake the task of determining if your dependent meets the qualifying tests, and can actually provide some benefit in tax reduction at the end of the year, remember that it may take a little work, but the potential payoff could be well worth the time it takes to determine if you are single with no dependents, or head of household with a dependent and the opportunity to claim earned income credit, child care expense deductions, as well as file for the child tax credit. The result could be amazing!

Dassana Jayalath is the author of WebSuperTips newsletter. Download Free eCourse : Newbie’s Guide To Profitable Internet Home Business

June 6, 2016

What are the benefits filing a 1040 tax return?

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Unfortunately tips are considered taxable income in the United States. A person will have to report any significant amount of tips that they receive on their tax return.An individual who receives a few cash tips probably won’t have to bother reporting tips but a person that receives a lot of tips will have to report them. If your employer records your tips there’s a good chance they will report them to the IRS. This means that a person will have to report those tips on their tax return.Tip income is subject to both the regular income tax and Social Security and Medicare tax. If tips are reported to the employer they will appear on the W-2. The W-2 will say whether Social Security and Medicare taxes have been paid on the tips.  Tips listed on the W-2 will have to be reported on the 1040.If the tips are not reported a person will have to file a Form 4137 with their tax return. These tips will also have to be listed on line 7 of form 1040. Should You Report Tip Income?If tips make up a significant portion of your income you should report them on your 1040. The IRS is increasing its scrutiny of tax returns and if there is a big discrepancy between your expenses and your reported income you could be audited. The best way to avoid this is to report tip income even if it increases your tax liability. If you have filed form 1040EZ tax return in the past, you might get benefited from the 1040A or 1040 tax return, if you had one of the few events that took place in the year 2009, due to the changes in the tax laws. You can claim for various credits that a 1040EZ does not allow you and you may be entitled to receive a larger refund then you might have otherwise entitled to.If you are studying in a college or having a child studying under the Hope education credit then the good news is that it has been increased. If you are coming under the American opportunity credits, then a part of the contribution is refundable to most of the taxpayers. One of the most important and useful advantages for filing a 1040 tax return form is the first time home buyer credit. It has increased considerably from the last financial years. Energy credits have got a major role to play when it comes to tax savings. You can easily take advantage of such credits, including residential energy efficient property credits and non business energy property credits. If you have bought energy efficient appliances in the past, then you can take the benefits of the tax credits. You can also avail for standard deduction real estate taxes or retirement savings contributions or credits for excess social security. Lastly, try to read some good material on the subject.

May 19, 2012

Efiling 1040 Tax Returns – Supported Forms And States

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Learn more about 1040 tax returns and how to file a free 1040 from our website.

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