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How to File Taxes When You and Your Spouse Move to New York at Different Times

You and your spouse will probably have to file separate returns, but New York does give you the option of filing a joint return – as long as you let it tax all your money

The following is a slightly modified question from one of our readers:

My wife lived and worked in New York City for all of 2012. I lived and worked in Maryland for one month and then lived and worked in NYC for eleven months. I have already filed in MD as a part-time resident. For New York State, though, I am a bit confused. I have filled out a resident return for my wife and a part-time resident return for myself (including a part-time NYC resident worksheet for myself). Do we file jointly as we did for our federal return or do we each file separately? Does this affect our standard deduction? It seems like the two forms we filled out (IT-201 and IT-203) should be filed separately.

This is precisely of the sort of question that boggles taxpayers across the country. State tax residency is such a popular topic on this blog precisely because it is so complicated.

Every taxpayer is responsible for filing a resident return in the state where they live, unless that state happens to be one of the nine that don’t have an income tax. Continue reading “How to File Taxes When You and Your Spouse Move to New York at Different Times”

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Do Dependents Have to File Taxes?

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?”

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Is Income from Solar Panels Taxable?

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?”