Is there an age limit on claiming my child as a dependent?

Answer: To claim your child as your dependent, your child must meet either the qualifying child test or the qualifying relative test:

  • To meet the qualifying child test, your child must be younger than you and either younger than 19 years old or be a “student” younger than 24 years old as of the end of the calendar year.
  • There’s no age limit if your child is “permanently and totally disabled” or meets the qualifying relative test.
  • In addition to meeting the qualifying child or qualifying relative test, your child must also meet all of the other tests to be your dependent:
    • Dependent taxpayer test
    • Citizen or resident test, and
    • Joint return test

If I claim my daughter who is a full-time college student as a dependent, may she claim a personal exemption when she files her return?

Answer: If you may claim an exemption for your daughter as a dependent on your income tax return, she may not claim a personal exemption on her income tax return. Your daughter should check the box on her return indicating that someone else may claim her as a dependent.

Can I receive a tax refund if I am currently making payments under an installment agreement or payment plan for another federal tax period?

Answer: No, one of the conditions of your installment agreement is that the IRS will automatically apply any refund due to you against taxes you owe. Because your refund isn’t applied toward your regular monthly payment, continue making your installment agreement payments as scheduled.

If your refund exceeds your total balance due on all outstanding liabilities including accruals, and you don’t owe certain past-due amounts, such as federal tax, state tax, a student loan, or child support, you’ll receive a refund of the amount over and above what you owe. For more information on these non-IRS refund offsets, you can call the Bureau of the Fiscal Service (BFS) at 800-304-3107 (toll-free).

To qualify for head of household filing status, do I have to claim my child as a dependent?

Answer: Generally, to qualify for head of household filing status, you must have a qualifying child or a dependent. However, a custodial parent may be eligible to claim head of household filing status based on a child even if he or she released a claim to exemption for the child.

I retired last year and started receiving social security payments. Do I have to pay taxes on my social security benefits?

Answer: Social security benefits include monthly retirement, survivor and disability benefits. They don’t include supplemental security income (SSI) payments, which aren’t taxable. The net amount of social security benefits that you receive from the Social Security Administration is reported in Box 5 of Form SSA-1099, Social Security Benefit Statement, and you report that amount on line 5a of Form 1040, U.S. Individual Income Tax Return. The taxable portion of the benefits that’s included in your income and used to calculate your income tax liability depends on the total amount of your income and benefits for the taxable year. You report the taxable portion of your social security benefits on line 5b of Form 1040.

Your benefits may be taxable if the total of (1) one-half of your benefits, plus (2) all of your other income, including tax-exempt interest, is greater than the base amount for your filing status.

The base amount for your filing status is:

  • $25,000 if you’re single, head of household, or qualifying widow(er),
  • $25,000 if you’re married filing separately and lived apart from your spouse for the entire year,
  • $32,000 if you’re married filing jointly,
  • $0 if you’re married filing separately and lived with your spouse at any time during the tax year.
  • If you’re married and file a joint return, you and your spouse must combine your incomes and social security benefits when figuring the taxable portion of your benefits. Even if your spouse didn’t receive any benefits, you must add your spouse’s income to yours when figuring on a joint return if any of your benefits are taxable.

My child was born and only lived 40 minutes. Can this child be my qualifying child for the earned income credit and the child tax credit?

Answer: Yes, if you meet the requirements, you may claim:

The Earned Income Credit:

Generally, a child must live with you in the United States for more than half of the tax year to be a qualifying child. You may treat a child who was born alive or died in 2018 as having lived with you for more than half of 2018 if your main home was the child’s main home (or would have been) for more than half of the time he or she was alive in 2018.

The earned income credit requires that you provide a valid social security number (SSN) for your qualifying child. If you meet all of the other requirements to claim this credit, and your child was born and died in 2018 and didn’t have an SSN, instead of an SSN, you may enter “DIED” on line 2 of Schedule EIC (Form 1040), Earned Income Credit and attach a copy of the child’s birth certificate or a hospital medical record showing a live birth.

The Dependency Exemption and/or Child Tax Credit

Generally, the child must live with you for more than half of the tax year to be a qualifying child. You may treat a child who was born alive or died in 2018 as having lived with you for more than half of 2018 if your main home was (or would have been) the child’s main home for more than half of the time he or she was alive in 2018. Whether your child was born alive depends on state law.

If you meet all of the other requirements to claim the child as a dependent, you usually must provide a taxpayer identifying number (TIN) for the child. If your child was born and died in 2018 and didn’t have an SSN or other TIN, instead of a TIN, you may enter “DIED” in column 2 of the Form 1040, U.S. Individual Income Tax Return and attach a copy of the child’s birth certificate or a hospital record showing a live birth.

The child tax credit requires that you provide a valid SSN for your qualifying child. If you meet all of the other requirements to claim this credit and your child was born and died in 2018 and didn’t have an SSN, instead of an SSN, you may enter “DIED” on column 2 of the Form 1040, and attach a copy of the child’s birth certificate or a hospital record showing a live birth.

What’s the difference between a Form W-2 and a Form 1099-MISC?

Answer: Although both of these forms are called information returns, they serve different functions. Employers use Form W-2, Wage and Tax Statement to:

  • Report wages, tips, and other compensation paid to an employee.
  • Report the employee’s income and social security taxes withheld and other information.
  • Report wage and withholding information to the employee and the Social Security Administration. The Social Security Administration shares the information with the Internal Revenue Service.

Payers use Form 1099-MISC, Miscellaneous Income to:

  • Report payments made in the course of a trade or business to a person who’s not an employee or to an unincorporated business.
  • Report payments of $10 or more in gross royalties or $600 or more in rents or compensation. Report payment information to the IRS and the person or business that received the payment.

How do you determine if a worker is an employee or an independent contractor?

Answer: The determination can be complex and depends on the facts and circumstances of each case. The determination is based on whether the person for whom the services are performed has the right to control how the worker performs the services. It’s not based merely on how the worker is paid, how often the worker is paid, or whether the work is part-time or full-time.

There are three basic categories of factors that are relevant to determining a worker’s classification:

  • Behavioral control (whether there’s a right to direct or control how the worker does the work),
  • Financial control (whether there’s a right to direct or control the business part of the work), and
  • Relationship of the parties (how the business and worker perceive the relationship).
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