Taking care of an aging parent or relative can be hard, not to mention expensive. The good news is that you may be able to claim them on your tax return and get a bigger refund.
Supporting a relative can impact many areas of your life. The most obvious are the changes to your living situation, amount of free time you have, and your finances.
To help relieve the financial strain of caring for a relative, you can report these relatives as dependents on your tax return. Doing so can save you thousands of dollars in taxes, because for every qualified dependent you claim your taxable income is reduced by $3,950.
Your dependent will belong to either one of the two following categories:
- qualifying child
- qualifying relative
To learn more about claiming a qualifying child, refer to this RapidTax post.
Who Can I Claim as a Qualifying Relative Dependent?
The term “relative” may be unclear. For example, is your cousin’s wife considered your relative? How about his ex-wife? Continue reading “What You Need to Know About Claiming Your Dependent Relative”
Here’s what you should know about claiming a dependent child on your taxes…
When filing your taxes, you’ll want to report the expenses that come along with the responsibilities of raising a child.
One way to do this is by claiming your child as a dependent. Each dependent you claim on your tax return will lower your total taxable income by one exemption. That means you’ll end up receiving a larger tax refund!
Keep in mind, however, each dependent can only be claimed by one tax filer. Additionally, the dependent you’re claiming must qualify as either of the following:
- a qualifying child
- a qualifying relative
Who is considered a Qualifying Child Dependent?
In order to claim someone as your qualifying child, he or she must meet the following criteria:
- Be your biological or adopted child, stepchild, foster child, sibling, half-sibling, stepsibling, or a descendant of one of these
- They are under the age of 19, or if a full-time student, under age 24 (There is no age limit if the child is permanently disabled.)
- Be a U.S. citizen or U.S. resident, or a resident of Canada or Mexico
- Unmarried, or married but not filing a joint return
- Have lived with you for at least half the year, unless absent due to illness, education, business, vacation, or military service
- Have not provided more than half of his or her own support Continue reading “What You Need to Know About Claiming Your Dependent Child”
To take the standard deduction or to itemize deductions- that is the question.
If you usually take the standard tax deduction and debating on itemizing your deductions this year, then you might find yourself unsure on what deduction amount to take when filing your taxes. The answer; whatever results in a higher deduction amount.
Before creating an account to file your 2013 taxes, you can first read our guide to help decide if itemizing your deductions or taking the standard deduction is right for you;
1st: Understand if you can take the standard deduction.
Those who don’t qualify for the standard deduction include married couples file separately with one spouse itemizing deductions. In other words, if you are married filing separately and your spouse is itemizing, then you must itemize your deductions.
2nd: Learn your standard deduction amount based on your filing status.
The IRS standard deduction amounts are as follows for those under the age of 65;
- Single: $6,100
- Married Filing Jointly: $12,200
- Head of Household: $8,950
- Married Filing Separately: $6,100
- Qualifying Widow(er): $12,200.
Continue reading “How To Choose Between Itemizing Deductions or Standard Deduction”