INDIVIDUALS

  • Filing Status
  • Dependents
  • Mileage Deductions
  • Individual Retirement Arrangement "IRA"
  • Taxable - nontaxable Income
  • Tax Changes
  • Rental Income and Expenses
  • From birth through death the Live changes and have tax consequences

 

Filing Status:

  • Single
  • Married Filing Jointly
  • Married Filing Separately
  • Head of Household
  • Qualifying Window

Dependents:

 

Relationship Test To meet this test, a child must be:

  • Your son, daughter, stepchild, foster child, or a descendant (for example, your grandchild) of any of them; or
  • Your brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant (for example, your niece or nephew) of any of them. Adopted child. An adopted child is always treated as your own child. The term “adopted child” includes a child who was lawfully placed with you for legal adoption. Foster child. A foster child is an individual who is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction.

 

Age Test To meet this test, a child must be:

  • Under age 19 at the end of the year and younger than you (or your spouse, if filing jointly);
  • A student under age 24 at the end of the year and younger than you (or your spouse, if filing jointly); or
  • Permanently and totally disabled at any time during the year, regardless of age. 

 

Residency Test To meet this test:

  • Your child must have lived with you for more than half the year. There are exceptions for temporary absences, children who were born or died during the year, kidnapped children, and children of divorced or separated parents.

 

Total Support Test:

  • To figure if you provided more than half of a person's support, you must first determine the total support provided for that person. Total support includes amounts spent to provide food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities. Generally, the amount of an item of support is the amount of the expense incurred in providing that item. For lodging, the amount of support is the fair rental value of the lodging. Expenses not directly related to any one member of a household, such as the cost of food for the household, must be divided among the members of the household.

 

Joint Return Test:

  • (To Be a Qualifying Child) To meet this test, the child can’t file a joint return for the year.

 

  • Example 1—Child files joint return. You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. He earned $25,000 for the year. The couple files a joint return. Because your daughter and her husband file a joint return, she isn't your qualifying child.
  • Example 2—Child files joint return only as a claim for refund of withheld tax. Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. They lived with you all year. Neither is required to file a tax return. They don’t have a child. Taxes were taken out of their pay so they filed a joint return only to get a refund of the withheld taxes. The exception to the joint return test applies, so your son may be your qualifying child if all the other tests are met.
  • Example 3—Child files joint return to claim American opportunity credit. The facts are the same as in Example 2, except no taxes were taken out of your son's pay or his wife's pay. However, they file a joint return to claim an American opportunity credit of $124 and get a refund of that amount. Because claiming the American opportunity credit is their reason for filing the return, they aren't filing it only to get a refund of income tax withheld or estimated tax paid. The exception to the joint return test doesn't apply, so your son isn't your qualifying child

 

2021 Standard Mileage Rates for Business, Medical and Moving Announced

 

WASHINGTON — The Internal Revenue Service today issued the 2021 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, 2021, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

 

  • 56 cents per mile driven for business use, down 1.5 cents from the rate for 2020,
  • 16 cents per mile driven for medical or moving purposes for qualified active duty members of the Armed      Forces, down 1 cent from the rate for 2020, and
  • 14 cents per mile driven in service of charitable organizations, the rate is set by statute and remains unchanged from 2020.

The standard mileage rate for business use 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 can use the standard mileage rate but must opt to use it in the first year the car is available for business use. Then, in later years, they can choose either the standard mileage rate or actual expenses. Leased vehicles must use the standard mileage rate method for the entire lease period (including renewals) if the standard mileage rate is chosen.

 

Contains the optional 2021 standard mileage rates, as well as the maximum automobile cost used to calculate the allowance under a fixed and variable rate (FAVR) plan. In addition, the notice provides the maximum fair market value of employer-provided automobiles first made available to employees for personal use in calendar year 2021 for which employers may use the fleet-average valuation rule in or the vehicle cents-per-mile valuation rule.