1. Who can I claim as a dependent?
- Citizenship status, marital status, relationship to the dependent and the amount of support provided
- Basic income information such as your adjusted gross income
- If no person supplied more than half of the potential dependent’s support, the terms of any multiple support agreement you may have
2. What is the earned income tax credit and how do I claim it?
EITC, the Earned Income Tax Credit, sometimes called EIC is a tax credit to help you keep more of what you earned. It is a refundable federal income tax credit for low to moderate income working individuals and families. Congress originally approved the tax credit legislation in 1975 in part to offset the burden of social security taxes and to provide an incentive to work. When EITC exceeds the amount of taxes owed, it results in a tax refund to those who claim and qualify for the credit.
To qualify, you must meet certain requirements and file a tax return, even if you do not owe any tax or are not required to file.
3. Are moving expenses for my new job tax-deductible?
Qualifying for the deduction
In order to deduct moving expenses, your relocation must meet the following three tests:
1. Your move must be due to, or closely related to, the start of work.
2. You must meet the distance test.
3. You must meet the time test.
Moving expenses generally can be deducted if they are incurred within one year from the date you first started your new employment. If more than a year has passed, you must establish that circumstances existed that prevented you from moving within the previous 12 months.
The distance test requires you to do some math. According to IRS rules, the distance test is met if your new job location is at least 50 miles farther from your former home than your old main job location was from your former home.
Dependents & Exemptions
4. Question: Is there an age limit on claiming my child as a dependent?
To be claimed as your dependent, your child must meet the qualifying child test or the qualifying relative test. While the child’s age is a factor in the qualifying child test, it is not in the qualifying relative test. An individual meeting the qualifying relative test may be of any age.
As long as all of the following tests are met, you may claim a dependency exemption for your child:
- Qualifying child or qualifying relative test,
- Dependent taxpayer test,
- Citizen or resident test, and
- Joint return test.
5. Question: Can I receive a tax refund if I am currently making payments under an installment agreement or payment plan for a prior year’s federal taxes?
No. As a condition of your installment agreement, any refund due to you in a future year will be applied against the amount that you owe.
- The IRS will automatically apply the refund to the taxes owed.
- You must continue making your installment agreement payments as scheduled and in full because your refund is not applied toward your regular monthly payment; therefore any payments due under the installment agreement must still be made in full.
- Regardless of whether you are participating in an installment agreement or other payment arrangement with the IRS, you may not get all of your refund if you owe certain past-due amounts, such as federal tax, state tax, a student loan, or child support. For more information on these non-IRS refund offsets, you can contact Financial Management Service (FMS) at a toll-free number 800-304-3107.
Itemized Deductions, Standard Deductions
6. Top Frequently Asked Questions for Itemized Deductions, Standard Deductions
- My university required each incoming freshman to come to school with their own computer. Is there any way to deduct the cost of the computer from my tax liability?
- May I claim both my job-related education expenses (minus 2% of AGI) and one of the education credits on my tax return?
- Last year, my parents took out a student loan for me in their name and I also took out a student loan. My parents received Form 1098-E for their loan and I also received Form 1098-E for my loan. Can we both claim the interest from the loans on our tax returns? Last year, I was not their dependent.
- I donated a used car to a qualified charity that the charity sold immediately after I donated it. I itemize my deductions, and I would like to take a charitable contribution deduction for the donation. Do I need to attach any special forms to my return? What records do I need to keep?
- Is the interest amount that we paid to the IRS deductible?
- My father is in a nursing home and I pay for the entire cost. Can I deduct the expenses on my tax return?
- Is interest on a home equity line of credit deductible as a second mortgage?
- Is the mortgage interest and property tax on a second residence deductible?
- If I must deduct points over the life of my mortgage, and I have a 30 year mortgage, does this mean that I divide the points paid by 30 and enter that amount on Schedule A?
- My spouse and I are filing separate returns. How do we split our itemized deductions?