Depending on how much earned and unearned income they have, dependents may have to file a tax return
Even if you are claimed as a dependent on someone else’s return, you may still have to file a return of your own.
Whether or not you have to file depends on how much income you have, specifically how much earned and unearned income.
Only Earned Income
In the chart below is the amount of earned income above which a dependent must file a tax return. As with almost everything involving the IRS, this isn’t just one simple number. The threshold changes depending on your filing status, age, and blindness. Find your situation on the chart to see how much earned income will force you to file a return.
Continue reading “Do Dependents Have to File Taxes?”
If you sell electricity or credits from your solar energy panels, you may have to report that income to the IRS.
There has not been a definitive ruling from the IRS on how exactly to treat income from solar panels on your taxes. The best course of action is to consult an accountant or tax lawyer on the details of your specific situation. Remember, if you fail to report this income correctly, the IRS could hold you responsible for back taxes, as well as penalties and interest.
That being said, there are really two distinct issues at play here: electricity and energy credits. Making money producing and selling electricity is totally separate from making money selling energy credits.
Let’s tackle the issue of electricity first. Of the two, it’s the most cut and dry. Income from electricity generated from solar panels is no different from any other income and is therefore taxable.
When asked about this issue, IRS spokesman Gregg Semanick responded, “All worldwide income is taxable unless specifically exempted by the Internal Revenue Code (IRC). In this case, it is not exempted by the IRC and is taxable income.” Continue reading “Is Income from Solar Panels Taxable?”
Six tips to lower your tax bill during the holiday season
December’s no time to forget about taxes! Follow these tips to maximize your tax savings while you celebrate.
- Plan tax deductible travel
Dreading that expensive trip to Grandma’s? Schedule a meeting with a client or vendor on the way and the travel there and back is tax deductible. Family visits are so much better when part of the trip’s on the IRS.
- Treat yourself (to a tax deductible gift)
The holidays aren’t just a great time to give to others, they’re also a great time to buy yourself that something you’ve been craving all year. And if that present is tax deductible, you save money on your taxes too!
Most tempting are tech toys such as iPads and smartphones. You can deduct electronic purchases if you are self-employed, have a hobby that generates income, or work for an employer that won’t cover business expenses.
The IRS is pretty strict with equipment purchases, so it’s important you be able to demonstrate that you use the equipment at least 50% of the time for business, and that it’s a usual and necessary expense, given your line of work.
Note that if you are an employee of a business that doesn’t cover equipment purchases, you can only deduct expenses that exceed 2% of your household’s AGI. Continue reading “A Different Sort of Tax Holiday”