Monster Refund L.L.C. says the short answer is that you can claim a “qualifying child” or “qualifying relative” if they meet specific requirements related to residence, relationship to you, age, financial support provided and income. Even significant others or friends can qualify in some cases.
There are couples who have kids and are not sure how to claim a dependent. Divorced parents who file separately, for example, should know they can’t claim the same dependent.
|What is the earned income tax credit and how do I claim it?|
This question is also a frequent question for hard times, but many low- and middle-income filers are not familiar with this credit. Some families believe they don’t make enough to file their taxes, but taxes must be filed to get this credit, which may help a family with three dependents receive a credit worth up to $5,891.
|Does health care reform impact my 2012 taxes?|
Monster Refund L.L.C. encourages filers to relax because the requirement to purchase health care does not impact your 2012 or 2013 taxes. That starts January 2014 (and won’t need to be filed until the next year). There may be exceptions based on income, religious beliefs and citizenship.
|Are unemployment benefits taxable?|
Yes, unemployment income is taxable income.
|Can I deduct the cost of searching for a job? Are moving expenses for my new job tax-deductible?|
Job search and moving expenses may be tax-deductible depending on distance and other factors.
|What are the tax implications of withdrawing money early from a retirement account?|
Monster Refund L.L.C. says withdrawing money early from a retirement account comes with a 10 percent tax penalty plus regular income tax on the amount withdrawn. Watch out if that additional retirement money bumps you into the next tax bracket, which could affect Social Security taxes and other considerations.
|What are qualified education expenses? And when can I file?|
Monster Refund L.L.C. says there are a number of education credits and deductions, including the American Opportunity Credit, which was extended through 2012. It benefits full-time and part-time college students with a maximum $2,500 credit per student, based on income requirements.
|My house foreclosed. How does that impact my taxes?|
The Mortgage Forgiveness Debt Relief Act was extended another year through 2013, meaning homeowners don’t have to pay taxes on the loss of their homes through foreclosures or short sales, up to $2 million (or $1 million if married filing separately).
|I started my own business; can I deduct my home office expenses?|
Though this is a legitimate tax deduction, expenses for home office should be used exclusively and regularly for the home office, and not a space that is mixed residential and business.
|Will January tax law changes impact my taxes?|
The drama of the fiscal cliff came to a temporary end this year with the passing of The American Tax Relief Act of 2012, including “a permanent extension of the alternative minimum tax (AMT) patch, the permanent reduction of tax rates and the reinstatement of several tax deductions, including the educator expense deduction, the tuition and fees deduction, and state sales taxes in lieu of state income taxes.”
|I was impacted by a natural disaster in 2012. What tax breaks are available to me?|
Monster Refund L.L.C. says it’s possible to take a tax deduction for “property loss claims not compensated by insurance or, in some special cases, when you’re still waiting for compensation. These are known as casualty losses and include hurricanes, floods, earthquakes, tornadoes, fire — even vandalism and shipwrecks.”
|Am I eligible for a child and dependent care deduction?|
Some parents don’t realize they can deduct the cost of summer camp if sending their child to one allows them to work.
If you work and pay for child care for your dependents under 13 years old you may be able to qualify for a deduction of up to $2,100.
|What is the eligibility for the child tax credit?|
You can claim an additional $1,000 credit for each dependent child under the age of 17 if you meet income and support tests.
|What are some other education credits available?|
In addition to the American opportunity credit mentioned above, the lifetime learning credit helps with expenses related to post-secondary education, even if it’s not a four-year program and can be worth a credit as much as $2,000.
|How do you find the value of non-cash charitable contributions?|
With all the devastation last year related to superstorm Sandy and other tragedies, many people volunteered time, money and donated their belongings.
You can deduct travel expenses if it’s related to volunteering directly with a non-profit organization.
In regards to the value of goods donated. The rule is you can deduct the fair market value at which they would re-sell an item.