Who Really Qualifies as a Dependent for Taxes?
How many dependents do you really have? Who can really be counted as a dependent? These are some of the most common questions that all taxpayers have. Can you count all of your children, live-in help, or perhaps a dog or other family pet? What about a friend who decides to crash at your place and basically mooch off you the entire year; can he or she be counted as a dependent?
As far as the IRS is concerned, there are two different kinds of dependents but there are dozens of scenarios that can fall under these two categories. There are also different rules for each type. The first type of dependent is classified as a qualifying child. The second type is a qualifying relative.
A qualifying child must be related to you, either by birth or adoption, or be a step or foster child. You must also provide more than half of the child’s total financial support and you can be the only person claiming that child on your return. To be a dependent the child must also be 18-years-old or younger, or if he or she is a full-time student, younger than 24-years-old.
The rules for being counted as a qualifying relative are much different. First, if your relative is a blood relative then he or she does not have to live with you in order to be counted. However, he or she must not provide more than half of his or her own support and that person cannot make more than $4000.
For a person who is not a blood relative to qualify as a dependent – like a lifelong friend who is down on his/her luck, or just plain lazy, or even your significant other – that person must live with you the entire year and their income must be less than $4,000 for the entire year. No one else can claim the person and you have to provide more than half of his or her financial support.
The Skinny on Tax-Deferred Retirement Accounts
Just about anyone could benefit from a tax-differed retirement account. These accounts, most commonly known as 401Ks or IRAs, are a great way to save for retirement and in many cases save on taxes. The real question is when do you plan on cashing out that retirement fund? While you will always see immediate savings…
Now Is the Time to Fix California’s Messed up Tax Code
The California tax code is about as healthy as the federal tax code. In other words, it needs a lot of work. Of course, there are many interested parties that are all hard at work trying to create plans that will help improve the state’s economy and tax revenue while helping those from the lower…
Why Taxing the Rich to Help the Poor Doesn’t Work
How many of you remember the Comedy Central game show: “Win Ben Stein’s Money?” The host, Mr. Stein, would challenge his opponents in answering trivia questions and actually give away his own money to those who beat him. That show has long been off the air, but the game show host, turned conservative commentator is…
Toshiba Adds More Units to Accounting Probe After Overstated Profits
Toshiba added more units to accounting probe after overstating their profits. Accounting can be much like taxes and when it comes to businesses the two go hand-in-hand. Getting your accounting right is extremely important. That’s why we recommend using a qualified accounting firm to handle your books. That includes: preparing financial statements, certifying audits, compilations…