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SEA |
Volunteer Tax Assistance Office |
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Building
9475 Legal
Assistance
Monday - Friday Hours: 9 a.m. - 4 p.m. (803) 751-4287 (DEN) 734-4287 Claims
Please Read The Security, Privacy and Disclaimer Statements
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Information
Papers
Click Below for Information on: CHILD TAX CREDIT CHILD (and DEPENDENT) CARE CREDIT COMBAT ZONE / QUALIFIED HAZARDOUS DUTY AREA DEPENDENTS EARNED INCOME CREDIT FILING STATUS A. A $1000
credit for each child of the taxpayer. 1. The child must not have reached the age of 17 during the year of 2005 and must be a citizen or resident of the United States. 2. The taxpayer must be allowed to claim the child as a dependent on his/her taxes.. 3. The child must be the taxpayer’s child, or other dependent such as: brother, sister, stepbrother, stepsister, stepchild, or foster child. C. How computed / reported: 1. Worksheet is in Form 1040 instructions; credit is reported on line 51 of Form 1040. CHILD (and DEPENDENT) CARE CREDIT A. A credit for the expenses associated with day care for your child (or disabled adults.) B. Eligibility: 1. Both parents work (if parents are married) or dependent or spouse who is physically or mentally incapable to care for themselves. 2. Child is under the age of 13 3. Married taxpayers must file Jointly to get credit C. Amount of credit: 1. Amount is a percentage of out of pocket expenses. The percentage used is determined by amount of income (the more money you make, the less credit you get.) 2. Maximum is $3,000 for one child or $6,000 for two or more children D. Where it goes: 1. Form 2441, or Schedule 2 for Form 1040A filers 2. After Form 2441 is completed, final credit amount goes on line 48 of the Form 1040. COMBAT ZONE / QUALIFIED HAZARDOUS DUTY AREA A. Income is exempt for entire month if spent at least 1 day of month in CZ / HAD 1. Exempt income is already removed from W-2 2. WE DO NOT REVISE W-2s! If the combat pay is not taken out by finance, the customer must straighten it out with finance. a. The incorrect amount on the W-2 is what is reported to the IRS. If we change that amount, no matter how obvious the mistake is, the taxpayer will get audited. B. Filing extensions 1. From return from CZ / HAD, taxpayer gets a 180 day extension, plus a day for each day of the tax season (1 January 2006 to 15 April 2006) the taxpayer was in the CZ / HAD. 2. Total possible extension: 285 days from 15 April 2006. 180 day extension
+ 105
days for all of tax season 285 days 3. Filing deadline, payment deadline, and collections are extended 4.
Service member’s spouse is entitled to same extension A. In order for the taxpayer to claim another as a dependent and get an exemption for that person, that person (the dependent) must meet 5 requirements: 1. Member of household / relationship requirement a. Must be taxpayer’s child, stepchild, adopted child, foster child, sibling, parent, or grandparent -OR- b. Must have lived with the taxpayer for the entire year (2005) 2. Citizenship requirement a. Must be a citizen or national of the U.S. -or- b. Must be a resident or national of the U.S., Canada, or Mexico (Exception for legally adopted non-U.S. citizen who lived with the taxpayer for the entire year) 3. No joint return requirement a. Dependent cannot file a joint return with another (cannot file jointly with spouse) 4. Income requirement a. If dependent is age 19 or over (or 24 or over if a full-time student), that dependent must have earned less than $3,100 5. Support requirement a. Taxpayer must have provided over ½ dependent’s support b. All sources of support are considered B. Children of divorced / separated parents 1. Custodial parent is generally entitled to the exemption, or the court order says who will take the exemption 2. If custody is unclear, the parent who had physical custody for the greater part of the year is considered the custodial parent a. Taxpayer must count days A. Refundable tax credit for low-income workers. Taxpayer can get refund even if they owe no tax. B. Eligibility: 1. Married taxpayers who file jointly and can claim a child as a dependent 2. Surviving spouse (with or without dependents) 3. Head of household who maintains a home for the child -or- 4. Individual between 25 and 65 who is not claimed as a dependent 5. Custodial parent, even if that parent agrees to allow the non-custodial parent to claim the child as a dependent C. Qualifications: 1. Taxpayer with qualifying child(ren): a. 1 child: Earned income under $31,030 b. 2 or more children: Earned income under $35,263 c. Child lived with taxpayer in taxpayer’s main home for more than 6 months of the year d. Filing a joint return if married -and- e.
Complete Schedule EIC a. Adjusted earned income (AGI) and earned income of under $11,750 b. Between ages of 25 and 65 c. Filing a joint return if married -and- d. Taxpayer does not qualify as a dependent of another e. Have a main home in the U.S. for more than 6 months of the year, or be a member of the armed forces stationed overseas f. Must not be a dependent or qualifying child of another taxpayer D. Amount of credit: 1. Percentage based on income, maximum credit is $2,547 for one child, $4204 for 2 or more kids, and $350 if no kids. E. Where it goes: complete Schedule EIC and enter on line 53 of Form 8839 F. Definitions: 1. Earned Income: does not include military income that is not taxable: BAH, BAS, combat pay. Also does not include veteran’s benefits, social security, pensions. 2. Qualifying child: a. Son, daughter, grandchild, adopted child, eligible foster child or step-child, sibling or descendent of a sibling b. Under the age of 19 at end of 2005, or under 24 if a student, or any age if totally disabled -and- c. Lived in taxpayer’s main home for more than 6 months in 2005 A. Married filing jointly (best) 1. Married before or at some point during 2005 2. Required filing status for some benefits if married (a married taxpayer cannot take advantage of the following benefits unless the couple files jointly): a. Child (and dependent) care credit b. Earned income credit c. Hope scholarship or Lifetime learning credit d. Full child tax credit 3. Disadvantages: a. Joint liability B. Head of Household (good) 1. Unmarried at the end of the year, or considered unmarried according to the "abandoned spouse rule" 2. Be a U.S. citizen or resident during the year 2005 3. Paid more than ½ the cost of maintaining a home for the year -and- 4. Had a qualifying person live with them for more than ½ of the year a. Qualifying person is: 1) A relative that taxpayer can claim as a dependent -or- 2) An unmarried child, grandchild, foster child, or adopted child 3) Taxpayer does not have to have legal custody of the child, but the child must actually spend more than ½ of the year with this taxpayer. C. Single (ok) 1. Anyone who is unmarried for all of 2005 -or- 2. Has a final divorce decree or legal separation before end of 2005 3. A voluntary separation agreement is not a legal separation for these purposes D. Married filing separately (worst) 1. Taxpayer is married, but is filing a separate return (usually couple is separated, but not yet divorced) 2. Cannot take advantage of some benefits: a. Child (and dependent) care credit b. Earned income credit c. Hope scholarship or Lifetime learning credit d. Child tax credit is reduced |
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