- Child Tax Credit
- Filing Status
- Itemized Deductions
- IRS tax Information
- Home Equity Loan Tax Deductions
- Medical Expenses
- Mileage Deductions
- Address Change
Child Tax Credit- Who Qualifies as a Dependent on Taxes
This credit is for people who have a qualifying child as defined later. It is in addition to the credit for child and dependent care expenses (on Form 1040, line 49; Form 1040A, line 31; or Form 1040NR, line 47) and the earned income credit (on Form 1040, line 66a; or Form 1040A, line 42a).
The maximum amount you can claim for the credit is $1,000 for each qualifying child.
A qualifying child for purposes of the child tax credit is a child who:
The maximum amount you can claim for the credit is $1,000 for each qualifying child.
Is your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example, your grandchild, niece, or nephew),
Was under age 17 at the end of 2016,
Did not provide over half of his or her own support for 2016,
Lived with you for more than half of 2016 (see Exceptions to time lived with you , later),
Is claimed as a dependent on your return,
Does not file a joint return for the year (or files it only to claim a refund of withheld income tax or estimated tax paid), and
Was a U.S. citizen, a U.S. national, or a U.S. resident alien. For more information, see Pub. 519, U.S. Tax Guide for Aliens. If the child was adopted, see Adopted child , later.
Limits Credits: You must reduce the maximum credit amount of $1,000 for each child if either (1) or (2) applies.
The amount on Form 1040, line 47; Form 1040A, line 30; or Form 1040NR, line 45, is less than the credit. If this amount is zero, you cannot take this credit because there is no tax to reduce. But you may be able to take the additional child tax credit. See Additional Child Tax Credit , later.
Your modified adjusted gross income (AGI) is more than the amount shown below for your filing status.
Married filing jointly – $110,000.
Single, head of household, or qualifying widow(er) – $75,000.
Married filing separately – $55,000.
Additional Child Tax Credit: If the amount of your Child Tax Credit is greater than the amount of income tax you owe, you may be able to claim the Additional Child Tax Credit.
- Not a Qualifying Child. The qualifying relative cannot be the qualifying child of you or another taxpayer.
- Member of Household or Relationship. The person must either live with you for the entire year as a member of your household or be related to you. This can include a child that does not meet the qualifying child test, a relative such as a parent, grandparent, aunt, uncle, or in-law, or someone unrelated to you that is a member of your household.
- Gross Income. The qualifying relative’s gross income for the year must be less than $4,000.
- Support. You must provide more than half of the person’s total support during the calendar year.
- The standard deduction for a dependent is $4,050 for the 2016 tax year.
- A qualifying dependent must be a U.S. citizen, U.S. national, or a resident of the U.S., Canada, or Mexico.
- A spouse can never be a dependent.
- If you can be claimed as a dependent on someone else’s tax return, you cannot claim anyone as a dependent.
- If you had a child on December 31, you can claim them as an exemption for the entire year.
- You are only allowed one exemption for each person that you claim as a dependent.
- A valid Social Security Number (SSN), Individual Taxpayer Identification Number (ITIN), or Adoption Taxpayer Identification Number (ATIN) is needed to claim a dependent.
- Usually, the custodial parent, or parent who has physical custody of the child for the majority of nights during the year, is allowed to claim
the exemption. However, there are instances when someone other than the custodial parent can claim the dependent.
- If the custodial parent signs a waiver – Form 8332, Release/Revocation of Claim to Exemption for Child of Custodian – the noncustodial parent can claim the exemption. This rule also applies to parents who were never married.
- For divorces finalized after 2008, the noncustodial parent cannot attach divorce paperwork to the tax return. Instead, Form 8332 or similar form with the custodial parent’s signature must be attached, and the custodial parent must state that they are releasing claim to the child without any conditions, such as the noncustodial parent only being able to claim the child if they pay child support.
Five Filing Status:
- Married Filing Jointly,
- Married Filing Separately,
- Head of Household, and
- Qualifying Widow (er) With Dependent Child.
Dependents: A dependent is qualifying child or a qualifying relative. You are allowed one exemption for each person you can claim as a dependent.
A Qualifying child or a Qualifying relative must be a U.S. citizen. or a resident of the U.S., Canada, or Mexico. and if married, must not file a joint return unless filing only to get a refund and a tax liability does not exist for either filer. If you (or your spouse if filing jointly) can be claimed as a dependent on someone else’s return you cannot claim anyone as a dependent.
2016 Standard Mileage Rates for Business, Medical and Moving Announced.
The Internal Revenue Service today issued the 2016 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning on Jan. 1, 2016, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 54 cents per mile for business miles driven, down from 57.5 cents for 2015
- 19 cents per mile driven for medical or moving purposes, down from 23 cents for 2015
- 14 cents per mile driven in service of charitable organizations
The business mileage rate decreased 3.5 cents per mile and the medical, and moving expense rates decrease 4 cents per mile from the 2015 rates. The charitable rate is based on statute.
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
Home Equity Loan Tax Deductions: If you took the loan out to buy a second home or to improve your home. If you are able to deduct your home equity loan interest, add that amount to your Schedule-A. The interest on most home equity loans is tax deductible.
Retirement: Individual Retirement Arrangements (IRAs)
Preparing for your future may help at tax time. View our IRA Guide for more detailed information.
- You may be eligible to contribute up to $5,500 ($6,500 if age 50 or older) a year to a traditional IRA. All or part of the contribution may be deductible. This money grows tax-free until withdrawn, and then the deductible contributions and earnings are taxed. If the money is withdrawn early, it becomes taxable as income and may be subject to 10% additional tax.
- You may be eligible to contribute up to $5,500 ($6,500 if age 50 or older) a year to a Roth IRA. None of the contribution is deductible. This money grows tax-free and qualified distributions can be withdrawn tax-free. If the money is withdrawn early, the interest earned becomes taxable as income and may be subject to 10% additional tax.
- If money is withdrawn from an IRA prior to age 59½, an additional 10% tax is assessed unless certain exceptions are met (example: buying a home for a first-time home buyer, or withdrawing to pay for qualified education or medical expenses)
Address Change: You need to notify the Internal Revenue Service if you changed your home mailing address. If this change also affects the mailing address for your children who filed income tax returns.
Divorce: Many things may change after a divorce, especially when it comes to your taxes.
- For tax purposes, if you are divorced or legally separated as of December 31, you are considered to be unmarried for the entire year.
- If divorced or legally separated, your filing status is single unless you qualify to file as head of household.
- The custodial parent, or the parent with whom a dependent child lives, does not lose the head of household filing status by allowing the non-custodial parent to claim the exemption for a dependent child.
- When newly divorced, be sure to change your Form W-4, Employee’s Withholding Allowance Certificate, to reflect your new filing status. If your name has changed, be sure to notify the Social Security Administration (SSA) as well. The IRS will delay processing your tax return if the name does not match what the SSA has in their files.