Category Archives: Tax Tips

5 Reasons to E-File Your Income Tax Return Soon!

Did you know you can e-file your income tax return to save time?

Some taxpayers go the old route of filing paper tax returns. This is a great time to implement electronic filing. Since the April tax deadline is very close, this is the as good a time as any to e-File with the IRS. This blog lists 5 reasons why you should e-file your income tax return soon. Continue reading

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Year-End Tax Strategy: Do You Have One?

Year-End is Just Around the Corner, Do You Have a Year-End Tax Strategy?

Do you have a year-end tax strategy? Year-end and the holidays are just around the corner. It is time to think about what you can do at the last-minute to improve your tax situation. Year-end tax planning is probably something you will want to deal with before the holiday season crush. Here are some tax tips and a year-end tax strategy to help you. Continue reading

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Alternative Minimum Tax

When looking over your tax return, do you notice an amount on line 45? That amount is because you are subject to the alternative minimum tax. The Alternative Minimum Tax or AMT is an income tax that does not allow some of the tax preferences and deductions that regular tax computation allows. Basically, a punitive tax. When an AMT computation results in a higher tax, the higher tax applies. The additional tax from the Alternative Minimum Tax is added on line 45 of your return. Continue reading

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Address Change? Let the IRS Know!

address change, change of addressHave you changed your address lately? You may want to keep these things in mind to make sure you receive your refunds or information from the IRS. This is true for your home or business address.

Here are 11 ways to change your address on file with the IRS.

  1. Write the new address in the correct boxes on your tax return.
  2. Inform your employer of your new address, this will ensure that you get your W-2 forms on time.
  3. Send the IRS your new address in writing when you file your return. Include your full name, old and new addresses, Social Security Number or Employer Identification Number and your signature. If you filed a joint return, make sure you include the both taxpayers information. If since filing, you and your spouse or partner have moved to separate address, both of you should notify the IRS of your new information.
  4. Use a Change of Address Form, Form 8822, to submit a name or address change. You can do this any time.
  5. Should an IRS employee contact you about your account for another reason, they will do so in writing and will provide phone number to call. You may be able to verbally provide a change of address by phone while handling that other business.
  6. Notify the post office of your address change. This will help you if you changed your address after you filed your return. Your mail can be forwarded. This is especially true if you file quarterly estimated payments.
  7. You can find the address of the IRS center where you file your tax return or download Form 8822 and Change of Address information. The form is also available by calling 800-TAX-FORM (800-829-3676).
  8. Complete your change of address online. If for some reason you think your check was returned to the IRS, you can access  Where’s My Refund? on the IRS website. You will be required to provide your social security number, filing status, and the amount of your refund. For more information, read Understanding your CP31 Notice.
  9. The IRS does use the Postal Service’s change of address files to update taxpayer addresses, but it is still wise to notify the IRS directly.
  10. If you use the mailing label that comes with your tax package, make sure the correction of the address is readable.
  11. Taxpayers who make estimated payments throughout the year should mail a completed Form 8822, Change of Address, or write the IRS center where you file your return. You may continue to use your old pre-printed payment vouchers until the IRS sends you new ones with your new address. However, do not correct the address on the old voucher.

Address Change or Other Tax Information

Alex Franch, can give you excellent advise on address changes and other important tax topics. Worthtax will prepare the notices needed for the Internal Revenue Service and your state tax information. You can reach Alex at 781.849.7200. In addition to our guaranteed pricing, we are giving $50 American Express gift cards to any new clients who have their taxes completed and filed by WorthTax. Worthtax provides ultra-convenient service and triple check accuracy. We have locations in Quincy, Weymouth and Dedham.

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Unpaid Debt Can Take Your Tax Refund

Do you have unpaid debt?

Unpaid DebtAs the tax season approaches, you may be get excited about your potential tax refund. But you never thought your unpaid debt would take a chunk out your tax refund. That excitement may be premature if you have outstanding federal or state debts. The Treasury Department’s Bureau of the Fiscal Service (BFS) issues federal tax refunds, and Congress authorizes BFS to reduce your refund through its Treasury Offset Program (TOP) to pay:

  • Past-due child and parent support;
  • Federal agency non-tax debts;
  • Unpaid debt for a student loan
  • State income tax obligations; or
  • Certain unemployment compensation debts owed to a state.

So, if you owe a debt that is past-due, it can reduce your federal tax refund. All or part of your refund may go to pay your outstanding federal or state debt. That is if it has been submitted for tax refund offset by an agency of the federal or state government.

If you have an outstanding debt and want to be proactive, contact the agency with which you have a debt. They can help you figure out if your debt was submitted for a tax refund offset. You may call BFS’s TOP call center at 800-304-3107 or TDD 866-297-0517, Monday through Friday, 8:30 a.m. to 6 p.m. ET.

If your debt was submitted for offset, BFS will reduce your refund as needed to pay off the debt and send it to the agency you owe. Any portion of your remaining refund after offset is issued in a check or direct deposited as originally requested on the return.

What if I wait to see what happens with my unpaid debt?

If you choose to wait and see what happens when you file your return, BFS will send you a notice if an offset occurs. If you wish to dispute the amount taken from your refund, you will have to contact the agency that submitted the offset claim. It will show on the notice you receive from the BFS.

What if I have unpaid debt and filed a joint return?

If you filed a joint tax return, and only one spouse is responsible for the debt, the other spouse may be entitled to part of or all the refund. To request the refund of the spouse that is not responsible for the offset, you can file Form 8379, Injured Spouse Allocation. The benefits provided under the injured spouse allocation will generally not apply if you reside in a community property state.

Please contact this office if have you have questions about refund offsets.

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9 Tax Tips for Disabled Taxpayers

disabled, disability, wheelchair, wheelchair race, disabled taxpayersDisabled Taxpayers may qualify for a number of tax credits and benefits. Parents of children with disabilities may also qualify. Listed below are several tax credits and other benefits that are available if you are disabled and listed on the federal tax return. This applies to any other dependent in your household who is listed on the tax return as well. Oh, and do not minimize any disability, as you may be surprised what qualifies an individual as a disabled taxpayer.

1. Increased Standard Deduction

If a tax return filer and/or spouse are legally blind, they are entitled to a higher standard deduction on their tax return.

2. Exclusions from Gross Income

Certain disability-related payments, Veterans Administration disability benefits, and Supplemental Security Income are excluded from gross income.

3. Impairment-Related Work Expenses

Employees, who have a physical or mental disability limiting their employment, may be able to claim business expenses in connection with their workplace. The expenses must be necessary for the taxpayer to work.

4. Credit for the Elderly or Disabled

This credit is generally available to certain taxpayers who are 65 and older. It is also available to certain disabled taxpayers who are younger than 65 and are retired on permanent and total disability.

5. Earned Income Tax Credit

EITC is available to disabled taxpayers as well as to the parents of a child with a disability. If you retired on disability, taxable benefits that were received under your employer’s disability retirement plan are considered earned income. This is until a minimum retirement age is reached. The EITC is a tax credit that not only reduces a taxpayer’s tax liability but may also result in a refund.

Many working individuals with a disability who have no qualifying children, but are older than 25 and younger than 65, may qualify for EITC. Additionally, if the taxpayer’s child is disabled, the age limitation for the EITC is waived. The EITC has no effect on certain public benefits. Any refund that is received because of the EITC will not be considered income when determining whether a taxpayer is eligible for benefit programs, such as Supplemental Security Income and Medicaid.

6. Child or Dependent Care Credit

Taxpayers who pay someone to come to their home and care for their dependent or disabled spouse may be entitled to claim this credit. For children this credit is usually limited to the care expenses paid only until age 13. However, there is no age limit if the child is unable to care for him or herself.

7. Special Medical Deductions

In addition to conventional medical deductions, the tax code provides special medical deductions related to disabled taxpayers and dependents. They include:

– Impairment-Related Expenses

Amounts paid for special equipment installed in the home, or for improvements, may be included in medical expenses. However, their main purpose must be for medical care for the taxpayer, the spouse, or a dependent. The cost of permanent improvements that increase the value of the property may only be partly included as a medical expense.

– Learning Disability

Tuition fees paid to a special school for a child who has severe learning disabilities caused by mental or physical impairments. These include nervous system disorders, and can be included in medical expenses. A doctor must recommend that the child attend the school. Tutoring fees recommended by a doctor for the child’s tutoring by a teacher who is specially trained and qualified to work with children who have severe learning disabilities may also be included.

– Drug Addiction

Amounts paid by a taxpayer to maintain a dependent in a therapeutic center for drug addicts. This includes the cost of the dependent’s meals and lodging, and are considered medical expenses.

8. Exclusion Of Qualified Medicaid Waiver Payments

Payments made to care providers caring for related individuals in the provider’s home are excluded from the care provider’s income. Qualified foster care payments are amounts paid under the foster care program of a state (or political subdivision of a state or a qualified foster care placement agency). You may want to call Alex Franch, BS EA at our office, 781-849-7200 for more details regarding this waiver, as it does get complicated.

9. ABLE Accounts

Qualified ABLE programs provide the means for individuals and families to contribute and save for the purpose of supporting individuals with disabilities in maintaining their health, independence, and quality of life.

Federal law enacted in 2014 authorizes the States to establish and operate an ABLE program. ABLE is an acronym for Achieving a Better Life Experience. Under the ABLE program, an ABLE account may be set up for any eligible state resident, which would generally be the only person who could take distributions from the account. ABLE accounts are very similar in function to Sec 529 plans. However, they should not be considered as estate planning devices, as is sometimes the case with 529 plans. The main purpose of ABLE accounts is to shelter assets from means testing required by government benefit programs. Individuals can contribute to ABLE accounts subject to Gift Tax limitations. Distributions to the disabled individual are tax free if the funds are used for qualified expenses of the disabled individual. These accounts are new and must be established at the state level before taxpayers can start making contributions to them. Call Alex Franch, BS EA, at 781-849-7200 for more information. For more information, you can read the March 23, 2015 letter about the Qualified Able Program published here.

Would You Like More Information About Disabled Taxpayers?

For more information on tax credits and benefits available to disabled taxpayers, please call Alex Franch, BS EA at 781-849-7200. Or you may visit one of our locations.

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Installment Sale is a Useful Tool to Minimize Taxes

Selling a property one has owned for a long period of time will frequently result in a large capital gain. And reporting all of the gain in one year will generally expose the gain to higher than normal capital gains rates. This is and subjects the gain to the 3.8% surtax on net investment income added by Obamacare.

2015_03_26 Installment SaleCapital Gain Rates

Long-term capital gains can be taxed at 0%, 15%, or 20% depending upon the taxpayer’s regular tax bracket for the year. At the low end, if your regular tax bracket is 15% or less, the capital gains rate is zero. If your regular tax bracket is 25% to 35%, then the top capital gains rate is 15%. However, if your regular tax bracket is 39.6%, the capital gains rate is 20%. As you can see, larger gains push the taxpayer into higher capital gains rates.

Surtax On Net Investment Income

Tax law treats capital gains as investment income. Upon which higher-income taxpayers are subject to a 3.8% surtax on net investment income. The exception to this is those capital gains derived from a trade or business. A large gain generally pushes a taxpayer’s income over the threshold for this tax. For individuals, the surtax is 3.8% of the lesser of:

  1. The taxpayer’s net investment income or
  2. The excess of the taxpayer’s modified adjusted gross income (MAGI) over the threshold amount for his or her filing status.

The threshold amounts are:

  • $125,000 for married taxpayers filing separately.
  • $200,000 for taxpayers filing as single or head of household.
  • $250,000 for married taxpayers filing jointly or as a surviving spouse.

This is where an installment sale could fend off these additional taxes by spreading the income over multiple years.

How does an installment sale work?

If you sell your property for a reasonable down payment and carry the note on the property yourself, you only pay income taxes on the portion of the down payment that represents taxable gain. In addition, any other principal payments received in the year of sale will also be subject to capital gain. You can then collect interest on the note balance at rates near what a bank charges. For a sale to qualify as an Installment Sale, at least one payment must be received after the year in which the sale occurs. Installment sales are mostly used when the property that is sold is real estate, That real estate cannot be used to report the sale of publicly traded stock or securities.

Example of How An Installment Sale Works

Example: You own a lot for which you originally paid $10,000. You paid it off some time ago. This left you with no outstanding mortgage on the lot. You sell the property for $300,000 with 20% down and carry a $240,000 first trust deed at 3% interest using the installment sale method. No additional payment is received in the year of sale. The sales costs are $9,000.

Computation of Gain
Sale Price $300,000
Cost < $10,000>
Sales costs < $9,000>
Net Profit $281,000
Profit % = $281,000/$300,000 = 93.67%

Of your $60,000 down payment, $9,000 went to pay the selling costs. This leaves you with $51,000 cash. The 20% down payment is 93.67% taxable, making $56,202 ($60,000 x .9367) taxable the first year. The amount of principal received and reported each subsequent year will be based upon the terms of the installment agreement. In addition, the interest payments on the note are taxable and also subject to the investment surtax.

Thus in the example, by using the installment method the income for the year was reduced by $224,798 ($281,000 – $56,202). How that helps the taxpayer’s overall tax liability depends on the taxpayer’s other income and circumstances.

Additional Considerations When Contemplating an Installment Sale

Existing Mortgages

If the property you are considering to sell is currently mortgaged, that mortgage would need to be paid off during the sale. Even if you do not have the financial resources available to pay off the existing loan. However, there might be ways to work out an installment sale by taking a secondary lending position or wrapping the existing loan into the new loan.

Tying Up Your Funds

Tying up your funds into a mortgage may not fit your long-term financial plans, even though you might receive a higher return on your investment and potentially avoid a higher tax rate and the net investment income surtax. Shorter periods can be obtained by establishing a note due date that is shorter than the amortization period. For example, the note may be amortized over 30 years, which produces a lower payment for the buyer but becomes due and payable in 5 years. However, a large lump sum payment at the end of the 5 years could cause the higher tax rate and surtax to apply to the seller in that year. Therefore, close attention needs to be paid to the tax consequences when structuring the installment agreement.

Early Payoff of the Note

The buyer of your property may decide to pay off the installment note early or sell the property, in which case your installment plan would be defeated. The balance of the taxable portion would be taxable in the year the note is paid off early or when the property is sold. The exception would be unless the new buyer assumes the note.

Tax Law Changes

Income from an installment sale is taxable under the laws in effect when the installment payments are received. If the tax laws are changed, the tax on the installment income could increase or decrease. Based on recent history, it would probably increase.

Does an installment sale work in all situations?

Not always. To determine whether an installment sale will fit your particular needs and set of circumstances, please contact Alex Franch, BS EA at 781.849.7200 for assistance in planning your real-estate transactions. Worthtax has locations in Quincy, Weymouth and Dedham..

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Tax Tips for the Well-traveled Businessperson

Tax Tips for the Well-traveled Businessperson
Article Highlights:
Acceptable Records
Meals
Spouse Expenses
Food and lodging expenses are generally deductible when away from home for business purposes. This may be particularly beneficial for self-employed individuals who travel extensively. Like everything involving taxes, there are rules to follow.
The IRS requires that lodging expenses (and other expenses of $75 or more) be substantiated by records or other evidence. Acceptable records include diaries, logs, receipts, paid bills and expense reports. The records should disclose the amount, date, place and essential character of each expense. Diaries and logs should be notated close to the time of the expense; newly created diary, log and calendar entries made months (or years) later when the IRS requests documentation in an audit are less likely to pass muster than those that were prepared when the travel and expenses occurred.
Keep good records of your travel expenses.
Document the business purpose and the expected business benefit.
Retain your travel itinerary to document the business activity while away.
Travel expenses are deductible only if the individual is away from his or her “tax home” for more than one business day. “Tax home” usually means the individual’s regular place of business.
Meal expenses are only deductible if the trip is overnight or long enough that there is a need to stop for sleep or rest in order to properly perform one’s duties. The amount of the meal expenses must be substantiated, but instead of keeping records of the actual cost of meal expenses, a “standard meal allowance” ranging from $46 to $71 per day can generally be used, depending on where and when the individual travels. Generally, the deduction for unreimbursed business meals is limited to 50% of the cost that would otherwise be deductible.
Lodging expenses must be substantiated with actual receipts and are 100% deductible. Meals included in lodging expenses, such as room service or dining costs charged to a hotel room, must be separately identified, since meals have the 50% limitation noted above.
Taking the Spouse Along? – Generally, deductions are denied for travel expenses paid or incurred for a spouse, dependent or employee of the taxpayer on business unless the:
(1) The spouse or dependent is an employee of the taxpayer, and
(2) The travel of the spouse, dependent or employee is for a bona fide business purpose, and
(3) The expenses would otherwise be deductible by the spouse, dependent or employee.
Strategy – The law allows a deduction for the single rate for lodging, and there is frequently no rate difference between one and two occupants for a room. Thus, virtually the entire lodging expenses for an accompanying spouse will be deductible. When traveling by car, the law does not require any allocation because the spouse is also traveling in the vehicle. Thus, if traveling by vehicle, the entire cost of the transportation would be deductible. This generally also applies to taxis at the destination. The only substantial cost that is not allowed is the costs of the spouse’s meals that, even if they were deductible, would be reduced by the 50% rule. If traveling by air or rail, the cost of the spouse’s tickets is also not deductible.
Have questions about business travel expenses? Give our office a call.
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2015_03_17 Tax tips 6720951131_b89caa0d51The following tax tips may save you some headaches when it comes to filing your taxes. Food and lodging expenses are generally deductible when away from home for business purposes. This may be particularly beneficial for self-employed individuals who travel extensively. Like everything involving taxes, there are rules to follow.

Tax Tip 1: Accurate Records and Receipts

The IRS requires that lodging expenses (and other expenses of $75 or more) be substantiated by records or other evidence. Acceptable records include diaries, logs, receipts, paid bills and expense reports. The records should disclose the amount, date, place and essential character of each expense. Diaries and logs should be notated close to the time of the expense; newly created diary, log and calendar entries made months (or years) later when the IRS requests documentation in an audit are less likely to pass an audit than those that were prepared when the travel and expenses occurred.

  • Keep good records of your travel expenses.
  • Document the business purpose and the expected business benefit.
  • Retain your travel itinerary to document the business activity while away.

Travel expenses are deductible only if the individual is away from his or her “tax home” for more than one business day. “Tax home” usually means the individual’s regular place of business.

Meal expenses are only deductible if the trip is overnight or long enough that there is a need to stop for sleep or rest in order to properly perform one’s duties. The amount of the meal expenses must be substantiated. Instead of keeping records of the actual cost of meal expenses, a “standard meal allowance” ranging from $46 to $71 per day can generally be used. This depends on where and when the individual travels. Generally, the deduction for unreimbursed business meals is limited to 50% of the cost that would otherwise be deductible.

Lodging expenses must be substantiated with actual receipts. Lodging is 100% deductible. Meals included in lodging expenses, such as room service or dining costs charged to a hotel room, must be separately identified. This is because meals have the 50% limitation as noted above.

Tax Tip 2: Taking the Spouse Along

Generally, deductions are denied for travel expenses paid or incurred for a spouse, dependent or employee of the taxpayer on business unless the:

  1. The spouse or dependent is an employee of the taxpayer, and
  2. The travel of the spouse, dependent or employee is for a bona fide business purpose, and
  3. The expenses would otherwise be deductible by the spouse, dependent or employee.

Strategy

The law allows a deduction for the single rate for lodging, and there is frequently no rate difference between one and two occupants for a room. Thus, the entire lodging expenses for an accompanying spouse will be deductible. When traveling by car, the law does not require any allocation because the spouse is also traveling in the vehicle. Therefore, if traveling by vehicle, the entire cost of the transportation would be deductible. This generally applies to taxis at the destination. The only substantial cost that is not allowed is the costs of the spouse’s meals, Even if the meals were deductible, they would be reduced by the 50% rule. Also note that if you are traveling by air or rail, the cost of the spouse’s tickets is not deductible.

Do you have questions or do you need more tax tips?

With less than one month to go, do you have questions about filing your tax refund? If you have thoughts, questions or concerns about how your taxes are filed, contact us or visit any one of our locations. We have an ultra-convenient service and can schedule an appointment for you. You may also leave your comments below or post on our FacebookGoogle+ or LinkedIn pages.

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Tax Season is Here!

Time flies – before it slips away, call Alex Franch, EA at 781-849-7200 for your appointment and learn about our client discounts here.

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The Joseph Cahill | WorthTax newsletter is available via e-mail on a free subscription basis. You can subscribe or unsubscribe at any time. For more information about – Joseph Cahill | WorthTax, go to http://worthtax.com.

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Funny Money – 4 Odd Types of Taxable Income

By: Alex Franch, BS EA

There are more ways to make money than just working or investing. If you come into some “funny money” – money won by bets, pools, gambling, illegal gains, or somehow, buried treasure – you can bet Uncle Sam still wants his share. Hey, it could happen.

Football Pool Winnings

funny money taxable incomeMy 9th place fantasy finish does not qualify me for funny money. However, if you actually won money in a fantasy football pool or league, this money is taxable income. In most cases, this would be considered gambling income and would be reported as Other Income on line 21. You could also deduct your gambling losses on Schedule A.

That is interesting, but many people are aware of this one. However, did you know that on your Massachusetts tax return, you can deduct the price of your wager? Depending on your pool or league, this can be more than a couple of bucks. You can do the same for those $30 scratch tickets. However, if that deduction happens to be greater than $20, you cannot take both the deduction and e-file your return.

Gambling Winnings

My wife and I like to joke about stopping at Mohegan Sun to see an old crooner play whenever we are on I-95 in Connecticut. We might even have a go at the roulette or blackjack tables. In the event that we win, that income would be taxable at the Federal and State levels, and not just Massachusetts. If you have gambling winnings in Connecticut, Rhode Island, or virtually every other state that has casinos or a lottery, then you may be liable for income tax in that state. Depending on the amount of your winnings, you might have the privilege of filing an additional state tax return.

Illegal Gains

Any income from illegal activity is taxable income. It is recorded either on the Form 1040 as Other Income on line 21 or Schedule C income. Funny money from drugs, embezzlement, bribes, larceny, etc. are all earned income. This taxable income should be reported on your tax return, otherwise you might be charged with tax evasion in addition to whatever crime generated the income. Does the IRS rat you out to the coppers? The IRS will not comment on this. However, it is suspected that there are enough loopholes in the tax return confidentiality rules that the IRS likely does tip off other law enforcement agencies. Remember, that’s how they got Capone.

Buried Treasure

taxable-incomeMy son might be in trouble one day. He loves digging in the yard for buried treasure. I even planted a box of coins for him once. He has also found old whiskey bottles (circa 1920), farm tools, railroad track parts, and other tetanus carrying stuff in my 150 year old back yard. If he ever hits the mother lode, he would have to pay income tax on the treasure. He won’t have any taxable income when he sells it, but he will have to pay the tax when he finds it. I am hoping for a 1913 Liberty Head V Nickel to show up one of these days . . .  then he can pay for his own college.

Questions About Taxable Income?

Maybe you have funny money of your own. Well, at the very least, maybe you have income you are not quite sure how to record on your tax returns. If you have thoughts, questions or concerns regarding how your taxes are filed, WorthTax uses a triple check accuracy system. We also though great lengths to protect your information on secured servers. Please feel free to contact us, leave your comments below or post to on our FacebookGoogle+ or LinkedIn pages.

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Tax Season is Here!

Time flies – before it slips away, call Alex Franch, EA at 781-849-7200 for your appointment and learn about our client discounts here.

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Divorce: It Takes Two to Tango

By: Alex Franch, BS EA

This is the time of year when many divorced taxpayers ask themselves, who gets to claim the children as tax deductions? When unmarried or divorced parents have children, they get to experience the intersection of Federal and State law.

Parents Who Divorce

DivorceThe State typically decides who gets to claim the kids as part of the separation agreement. In this case, State law dictates Federal treatment of the dependent on your taxes. If a divorce is amicable, one parent can opt to release the dependency to the other parent. This can be beneficial because a number of credits follow the dependency. If the entitled parent makes too much money, these credits and write-offs can be lost. By releasing the dependency to the parent with lesser income, they may end up ahead. IRS rules dictate the available filing statuses that the parents can use.

Okay, so let’s say the divorce is not official. What happens then?

Separated Parents – Non-divorce

If you still live together and there is no separation agreement, legally you are not separated – you are just having a bad fight. If you actually separate, the dependency follows IRS rules of relationship, residency, and income to break the tie between two parents. Once again, IRS rules dictate the available filing statuses that the parents can use.

Shacking up

If a taxpayer is living with his or her significant other and they have a child together, the parent with the higher income is typically be entitled to the Head of Household filing status, as well as the dependency. The parents have to have joint custody of the child as dictated by State law. Once again, there exists the option to release the (Federal law) tax exemption if this is beneficial. Additionally, if one of the parents stays home or makes very little income, the taxpayer might be able to claim his or her partner as a dependent as well.

The Wisdom of King Solomon

What happens when parents can’t agree? The parent who files and claims the child first will have their tax return accepted by the IRS. The parent who files second will have their e-file rejected and they will have to paper file. If the first parent was not entitled to claim the dependent, he will have to amend his tax return after it was filed. If the parents cannot work it out, both parents will then receive a notice from the IRS with a checklist of information so that they can make a decision for you. Divorce or separation of any kind can be difficult. Read the follow the State and IRS rules to make it a little less.

Wondering how your household qualifies?

Maybe you went through a recent divorce, separation or you are in a relationship with a partner. Do you have thoughts, questions or concerns regarding how your household qualifies for tax filing? WorthTax has ultra convenient services. Feel free to contact us, leave your comments below or post to on our FacebookGoogle+ or LinkedIn pages.

Maybe you know someone who can benefit from this information, feel free to share:
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Tax Season is Here!

Time flies – before it slips away, call Alex Franch, EA at 781-849-7200 for your appointment and learn about our client discounts here.

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