How to Avoid Tax Time Problems

Are you looking for ways to avoid the last-minute rush for doing your taxes? Here are some stress-relieving ideas to help you.

• Don’t Procrastinate Resist the temptation to put off your taxes until the very last minute. Your haste to meet the filing deadline may cause you to overlook potential sources of tax savings and will likely increase your risk of making an error.

• Visit the IRS Online In fiscal year 2007, there were more than 214 million visits to IRS.gov and 1.35 billion page views. Anyone with Internet access can find tax law information and answers to frequently asked tax questions.

• File Your Return Electronically Nearly 80 million taxpayers filed their returns electronically in fiscal year 2007. Aside from ease of filing, IRS e-file is the fastest and most accurate way to file a tax return. If you’re due a refund, the waiting time for e-filers is half that of paper filers.

• Don’t Panic if You Can’t Pay If you can’t immediately pay the taxes you owe, consider some stress-reducing alternatives. You can apply for an IRS installment agreement, using our new Web-based Online Payment Agreement application on IRS.gov. The Web-based application allows eligible taxpayers or their authorized representatives to self-qualify, apply for, and receive immediate notification of approval. You also have various options for charging your balance on a credit or debit card. There is no IRS fee for credit or debit card payments, but the processing companies charge a convenience fee. Electronic filers with a balance due can also file early and pay their taxes directly from their checking or savings account on the April due date with no service fee.

• Request an Extension of Time to File – But Pay on Time If the clock runs out, you can get an automatic six month extension of time to file to October 15. However, this extension of time to file does not give you more time to pay any taxes due. You will owe interest on any amount not paid by the April deadline, plus a late payment penalty if you have not paid at least 90 percent of your total tax by that date. See IRS Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return for a variety of easy ways to apply for an extension. Form 4868 is available at IRS.gov or by calling 800-TAX-FORM (800-829-3676). Taxpayers needing Form 4868 should act soon to be sure they have the item in time to meet the April deadline.

Remember that for the genuine IRS Web site be sure to use .gov. Don't be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is www.irs.gov .

Links:

• Official Payments Corporation
• Link2Gov Corporation
• Electronic filing
• Free File
• Electronic payment options
• Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return (PDF)

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Volunteer Tax Return Preparation

Are you puzzled by the tax law and which credits and deductions you can take? If so, then why not look into the free, IRS-sponsored, volunteer tax return preparation services?

Note: Many low-income individuals receiving Social Security, Railroad Retirement, certain veterans benefits, or a small amount of earned income who usually do not file a tax return may want to utilize IRS free services this year. Individuals who might not otherwise be required to file a 2007 tax return will need to file a return this year to receive an economic stimulus payment. For more information see IRS Fact Sheet FS 2008-16 Stimulus Payments: Instructions for Low-Income Workers and Recipients of Social Security and Certain Veterans'' Benefits. IRS Fact Sheet 2008-16

For quick refunds, most sites also offer free electronic filing of your tax return. The IRS offers:

• Volunteer Income Tax Assistance (VITA) offers free tax help to people whose incomes are $40,000 or less. Volunteers sponsored by various organizations receive training to prepare basic tax returns in communities across the country. VITA sites are generally located at community and neighborhood centers, libraries, schools, shopping malls and other convenient locations.
• Tax Counseling for the Elderly (TCE) provides free tax help to people aged 60 and older. Trained volunteers from non-profit organizations provide free tax counseling and basic income tax return preparation for senior citizens. Volunteers who provide tax counseling are often retired individuals associated with non-profit organizations that receive grants from the IRS.
• AARP Tax-Aide counseling, part of the IRS-Sponsored TCE Program, AARP offers the Tax-Aide counseling program at thousands of sites nationwide during the filing season. Trained and certified AARP Tax-Aide volunteer counselors help people of low-to-middle income with special attention to those aged 60 and older. To locate the nearest AARP Tax-Aide site in your community, call 888-227-7669 (888-AARPNOW) or visit AARP's Web site at www .aarp.org.

Filing your taxes can be easy and free. Take advantage of a volunteer assistance program in your area to receive free income tax preparation assistance. Locations and hours of operation are often available through city information hotlines and local community organizations. Local volunteer tax preparation site information is also available by calling the IRS toll-free number 1-800-829-1040.

Remember that for the genuine IRS Web site be sure to use .gov. Don't be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is www .irs.gov.

Links:

• Volunteer assistance program
• Tax-Aide Program

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FREE TAX SERVICES

The IRS provides free publications, forms and other tax material and information to help taxpayers meet their tax obligations. Free help is available on the IRS website, by phone, at local IRS offices and at many community locations.

• IRS.gov You can access free tax information at IRS.gov. At 1040 Central on the Individuals page, you can obtain forms, instructions and publications, learn about IRS e-file, determine your eligibility for the Earned Income Tax Credit, read about the latest tax changes and find answers to Frequently Asked Questions. Most taxpayers can use Free File, available only through the IRS.gov Web site, to electronically prepare and file their federal tax return – for free! You can also check the status of your refund at IRS.gov by clicking on Where’s My Refund, a service available 24 hours a day, seven days a week.
• Telephone Call the IRS Tax Help Line for Individuals, 800-829-1040, to get answers to your federal tax questions. To order free forms, instructions and publications call 800-829-3676. To hear pre-recorded messages covering various tax topics or check on the status of your refund, call 800-829-4477. TTY/TDD users may call 800-829-4059 to ask tax questions or to order forms and publications.
• Community Resources Free tax preparation is available through the Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs in many communities. Volunteer return preparation programs provided through IRS and its partners offer free help in preparing simple tax returns for low- to moderate-income taxpayers. Call 800-829-1040 to find the VITA or TCE site nearest you. You may also call AARP — the largest TCE participant — at 888-227-7669 (888-AARPNOW) or access www.aarp.org to find the nearest Tax-Aide site.
• Taxpayer Assistance Centers When you believe your tax issue cannot be handled online or by phone, and you want face-to-face assistance, you can find help at a local Taxpayer Assistance Center. Locations, business hours and an overview of services are at IRS.gov.

For more information about services provided by the IRS, review Publication 910, IRS Guide to Free Tax Services available at IRS.gov or by calling 800-829-3676.

Remember that for the genuine IRS Web site be sure to use .gov. Don't be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is www.irs.gov.

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Tax Facts About Capital Games And Losses

Almost everything you own and use for personal purposes, pleasure or investment is a capital asset. When you sell a capital asset, the difference between the amounts you sell it for and your basis, which is usually what you paid for it, is a capital gain or a capital loss. While you must report all capital gains, you may deduct only capital losses on investment property, not personal property.

Here are a few tax facts about capital gains and losses:

• Capital gains and losses are reported on Schedule D, Capital Gains and Losses, and then transferred to line 13 of Form 1040.
• Capital gains and losses are classified as long-term or short-term, depending on how long you hold the property before you sell it. If you hold it more than one year, your capital gain or loss is long-term. If you hold it one year or less, your capital gain or loss is short-term.
• Net capital gain is the amount by which your net long-term capital gain is more than your net short-term capital loss.
• The tax rates that apply to net capital gain are generally lower than the tax rates that apply to other income and are called the maximum capital gains rates. For 2007, the maximum capital gains rates are 5%, 15%, 25% or 28%.
• If your capital losses exceed your capital gains, the excess is subtracted from other income on your tax return, up to an annual limit of $3,000 ($1,500 if you are married filing separately).

For more information about reporting capital gains and losses, get Publication 17, Your Federal Income Tax, and Publication 550, Investment Income and Expenses, available on the IRS Web site at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Remember that for the genuine IRS Web site be sure to use .gov. Don't be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is www.irs.gov.

Links:

• Publication 17, Your Federal Income Tax (PDF 2015.9K)
• Publication 550, Investment Income and Expenses (PDF 516K)
• Publication 544, Sales and Other Dispositions of Assets (PDF 321K)
• Publication 505, Tax Withholding and Estimated Tax (PDF 367K)
• Publication 564, Mutual Fund Distributions (PDF 178K)
• Publication 547, Casualties, Disasters, and Thefts (PDF 133K)
• Publication 527, Residential Rental Property (Including Rental of Vacation Homes) (PDF 187K)

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Special Guidelines for Recipients of Certain Social Security, Veterans and Railroad Benefits

Special Guidelines for Recipients of Certain Social Security, Veterans and Railroad Benefits

Certain people who normally are not required to file but who are eligible for the stimulus payment will have to file a 2007 tax return. This includes low-income workers or those who receive Social Security benefits or veterans’ disability compensation, pension or survivors’ benefits from the Department of Veterans Affairs in 2007. These taxpayers will be eligible to receive a payment of $300 ($600 on a joint return) if they had at least $3,000 of qualifying income.

Qualifying income includes Social Security benefits, certain Railroad Retirement benefits, certain veterans’ benefits and earned income, such as income from wages, salaries, tips and self-employment. For taxpayers filing joint tax returns, only a total of $3,000 of qualifying income from both spouses is required to be eligible for a payment.

The special version of the Form 1040A unveiled today on IRS.gov shows taxpayers in these groups the specific sections of the form they need to fill out to qualify for the stimulus payment. The mock-up is designed to be used as a guide for filling out an actual Form 1040A.

“People who don’t normally need to file have a roadmap on how to fill out the Form 1040A quickly and easily,” Stiff said. “We encourage recipients of Social Security and veterans’ benefits who don’t normally need to file a tax return to use this mock-up of the form as a guide to help them get their stimulus payment.”

The Form 1040A illustration on IRS.gov shows the limited number of lines that will need to be filled out for recipients of Social Security, certain Railroad Retirement and certain veterans’ benefits. A key line is reporting their 2007 benefits on Line 14a of Form 1040A. The IRS reminds taxpayers they can also use Line 20a on Form 1040 to report these same benefits.

In addition, taxpayers in these groups should write the words “Stimulus Payment” at the top of the 1040A or 1040.

For now, taxpayers in this group filing a tax return can only file a paper copy of the Form 1040 or Form 1040A. The IRS is working to update its systems to accept electronic versions of these limited-information returns for taxpayers who otherwise have no need to file a tax return. The IRS is also working with the software community to handle these returns electronically at a future date.

The IRS also reminded taxpayers with Social Security, Railroad Retirement or veterans’ benefits who have already filed but did not report their qualifying benefits on either Line 14a of Form 1040A or Line 20a of Form 1040 that they may need to file an amended return in some situations to receive a larger stimulus payment.

Taxpayers who already have filed but did not report these benefits can file an amended return by using Form 1040X, which can only be filed with a paper form.

The IRS reminded taxpayers who don’t have any other requirement to file a tax return that submitting a tax return to qualify for the economic stimulus payments does not create any additional tax or trigger a tax bill. In addition, the stimulus payments will not have any effect on eligibility for federal benefits.

The IRS is working with the Social Security Administration and Department of Veterans Affairs and other organizations to ensure that recipients are aware of the need to file a tax return to receive their stimulus payment in 2008.

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More Information on Stimulus Payments

WASHINGTON — The Internal Revenue Service released additional information today about the upcoming economic stimulus payments in a specially designed section for taxpayers on IRS.gov.

The new information includes an extensive set of Frequently Asked Questions about the stimulus payments, with a special emphasis on recipients of Social Security and certain veterans’ benefits. Millions of people in this group who normally don’t file a tax return will need to do so this year in order to receive a stimulus payment.

For recipients of Social Security and certain veterans’ benefits and low-income workers who don’t normally need to file, the IRS also released a special version of a Form 1040A that highlights the simple, specific sections of the return that can be filled out by people in these categories to qualify for a stimulus payment.

“Most taxpayers just need to file a 2007 tax return in order to automatically receive the stimulus payment,” said Acting IRS Commissioner Linda Stiff. “But we are especially concerned about recipients of Social Security and veterans’ benefits who may need to take special steps this year to file a tax return in order to obtain a stimulus payment. IRS.gov will help taxpayers get what they need.”

The Frequently Asked Questions section – accessible through the front page of IRS.gov -- includes an extensive set of information for all taxpayers with questions about the stimulus payments, commonly referred to as rebates. The questions and answers include important information for low-income workers and certain recipients of Social Security, Railroad Retirement benefits and veterans’ benefits.

The special IRS.gov section also features extensive examples of how much taxpayers can expect to receive in stimulus payments. The page includes more than two-dozen payment scenarios affecting different types of taxpayers.

IRS.gov will be updated frequently to provide taxpayers with all they need to understand the stimulus payments.

The IRS will begin sending taxpayers their economic stimulus payments in early May after the current tax season concludes. In most cases, the payment will equal the amount of tax liability on the tax return, with a maximum amount of $600 for individuals ($1,200 for married couples who file a joint return). Payments to more than 130 million households will continue over several weeks during the spring and summer. A payment schedule for taxpayers will be announced in the near future on IRS.gov.

The IRS reminds taxpayers when they file their 2007 tax return to use direct deposit, which is the fastest way to get both regular refunds and stimulus payments. However, taxpayers who use Refund Anticipation Loans (RALs) or enter into any other loan or financial agreement with their tax professional cannot receive their stimulus payments by direct deposit and instead will get a paper check.

The only way to receive a stimulus payment in 2008 is to file a 2007 tax return. The vast majority of taxpayers must take no extra steps to receive their stimulus payment beyond the routine filing of their tax return. No other action, extra form or call is necessary.

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IRS Successfully Processing Tax Forms Affected by AMT Legislation

The Internal Revenue Service is now processing five tax forms affected by legislation involving the Alternative Minimum Tax (AMT).

On Monday, IRS systems began to accept and process returns that include the five affected forms. After several days of processing, the IRS has confirmed all systems are working properly.

In late December, the IRS announced it would delay processing of several tax forms. For the vast majority of taxpayers, the filing season this year began on time. But for any taxpayer whose return included any of the five affected forms, filing opened on Feb. 11.

Taxpayers who use the five forms can now file their tax returns as normal.

The affected forms are:

• Form 8863, Education Credits
• Form 5695, Residential Energy Credits
• Schedule 2, Form 1040A, Child and Dependent Care Expenses for Form 1040A Filers;
• Form 8396, Mortgage Interest Credit
• Form 8859, District of Columbia First-Time Homebuyer Credit

Approximately 13.5 million taxpayers will use these forms this year. Altogether, the IRS expects to receive nearly 140 million individual tax return submissions this year.

The IRS has worked closely with the software industry and tax practitioners during the reprogramming process to minimize disruptions for taxpayers and the tax community.
For more information, see Alternative Minimum Tax –– How It Affects Filing Season 2008.

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Mortgage Workouts, Now Tax-Free for Many Homeowners

Mortgage Workouts, Now Tax-Free for Many Homeowners; Claim Relief on Newly-Revised IRS Form

WASHINGTON — Homeowners whose mortgage debt was partly or entirely forgiven during 2007 may be able to claim special tax relief by filling out newly-revised Form 982 and attaching it to their 2007 federal income tax return, according to the Internal Revenue Service.

Normally, debt forgiveness results in taxable income. But under the Mortgage Forgiveness Debt Relief Act of 2007, enacted Dec. 20, taxpayers may exclude debt forgiven on their principal residence if the balance of their loan was less than $2 million. The limit is $1 million for a married person filing a separate return. Details are on Form 982 and its instructions, available now on IRS.gov.

“The new law contains important provisions for struggling homeowners,” said Acting IRS Commissioner Linda Stiff. “We urge people with mortgage problems to take full advantage of the valuable tax relief available.”

The late-December enactment means that reporting procedures for this law change were not incorporated into tax-preparation software or IRS forms. For that reason, people using tax software should check with their provider for updates that include the revised Form 982. Similarly, the IRS is now updating its systems and expects to begin accepting electronically-filed returns that include Form 982 by March 3. The paper Form 982 is now being accepted, but the IRS reminds affected taxpayers to consider filing electronically, which greatly reduces errors and speeds refunds.

The new law applies to debt forgiven in 2007, 2008 or 2009. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, may qualify for this relief. In most cases, eligible homeowners only need to fill out a few lines on Form 982 (specifically, lines 1e, 2 and 10b).

The debt must have been used to buy, build or substantially improve the taxpayer's principal residence and must have been secured by that residence. Debt used to refinance qualifying debt is also eligible for the exclusion, but only up to the amount of the old mortgage principal, just before the refinancing.

Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the new tax-relief provision. In some cases, however, other kinds of tax relief, based on insolvency, for example, may be available. See Form 982 for details.

Borrowers whose debt is reduced or eliminated receive a year-end statement (Form 1099-C) from their lender. For debt cancelled in 2007, the lender was required to provide this form to the borrower by Jan. 31, 2008. By law, this form must show the amount of debt forgiven and the fair market value of any property given up through foreclosure.

The IRS urges borrowers to check the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. Borrowers should pay particular attention to the amount of debt forgiven (Box 2) and the value listed for their home (Box 7).

Related Items:

• Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness
• 1099-C

Guidelines For Roth IRA Contributions

From the IRS:

Although Roth IRAs are popular retirement arrangements, some taxpayers may be confused about whether they can contribute to a Roth IRA. Here are some helpful guidelines:

• Income Limits To contribute to a Roth IRA, you must have taxable compensation (e.g., wages, salary, tips, professional fees, bonuses). These limits vary depending on your filing status.
• Age There is no age limitation for Roth IRA contributions.
• Contribution Limits In general, if your only IRA is a Roth IRA, the maximum 2007 contribution limit is the lesser of your taxable compensation or $4,000 ($5,000 if age 50 or older). The maximum contribution limit phases out depending on your modified adjusted gross income.
• Spousal Roth IRA You can make contributions to a Roth IRA for your spouse provided you meet the income requirements.

Time Contributions to a Roth IRA can be made at any time during the year or by the due date of your return for that year (not including extensions).

Roth IRA contributions are not tax deductible and are not reported on your tax return. On the other hand, you do not have to pay tax on any qualified distributions, distributions that are a return of your regular Roth IRA contributions, or distributions that are rolled over into another Roth IRA.

For complete information and definitions of terms, get Publication 590,

Individual Retirement Arrangements. Visit the IRS Web site at IRS.gov, or call 800-TAX-FORM (800-829-3676) to request a free copy of the publication.

Remember that for the genuine IRS Web site be sure to use .gov. Don't be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is www.irs.gov.

Links:

• Publication 590, Individual Retirement Arrangements (PDF 461K)

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Tax Return Online Saves Time And Energy

Returning tax on time is everyone’s moral duty. Even today people are earning heavy amounts; they hesitate to pay their income return. Every year names of many prominent people are flashed on the television and newspaper who do not return their income on time. Even a well educated people show their back when time comes to return their tax. There are many people who play tricks when the date approaches. People very cleverly hide their income. There are a section of people who is ready to pay their income return but the entire procedure of filling forms and to go to the tax return office upsets them. With the advent of tax return online, people can very easily pay their tax.

Tax return season is very hectic for any income tax officer. They are tightly packed with accounting; book keeping and income return preparation work. During this season, accountants do not get time to relax. There are many private firms that provide excellent service to their clients and also earn huge amounts of revenue. There service is hassle-free and it saves time and money. Undertaking tax return online services help the client to get quality work using less manpower. Therefore, clients can use their resources in other areas and generate new business. A reputed tax return online company promises full security. Before they handover the income return work to any professional, they verify the background of the person properly. No employee belongings are permitted inside the work premises and they also do not have access to printers or any other removable media devices.

Tax return online is hassle-free and one need not have to struggle with pen, paper and stamp. There are many people who wonder whether tax retuning online would be safe or not. But, one need not have to worry because there are many security measures against theft and people can rely on this online service totally. With the upcoming of this modern service, people can very easily return their income. The method is quite safe and easy to access. There are also some services that offer optional live chat programs, so that you can ask your questions directly to an expert. It is within the reach of all and online tax service saves time and energy. People need not have to bear the rush of returning income in the income tax office. Now, people can pay their tax sitting anywhere according to their convenience.

Tax return online is very modern and it is within the reach of all. If you are totally inexperienced in returning your income online then there are many websites that will guide you how to proceed. There are several sites on the web where you can calculate your income return. Tax return online is very easy and saves your valuable time. There is less possibility of any sort of mistakes. Now, you need not have to make any prior plan to return your income. The process takes place very fast and it is free from any error.

By: Michelle Barkley

Article Directory: http://www.articledashboard.com

Michelle Barkley is a CPA who advises people on tax preparation and tax calculation.She specializes in Tax return outsourcing,Tax return online and Outsourced Accounting.To know more about Accounting outsourcing services and accounting outsourcing in India and to use the services visit www.ifrworld.com

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Do I Have to Pay Taxes on My Google Adsense Earnings?

Do I Have to Pay Taxes on My Google Adsense Earnings?

Google Adsense is required to collect tax information from those who participate in the program. If you’re a business, you’ll need to put your EIN number on your application. If you’re an individual, all you’ll need is your social security number. If you don’t have that information when you initially sign up, you can still apply for the Google Adsense program. But be advised that Google Adsense will withhold payments to you until they receive your tax information.

While Google does not withhold taxes or provide any tax advice, they will send you a 1099 once your earnings reach a certain amount. Of course, if you are a Non-US business and have no activity in the United States, you will not need to provide this information. For more tax information regarding the Google Adsense program, visit the Google Adsense Support site. For other tax-related questions or concerns, you can log onto www.irs.gov.

If you use a separate room of your house just to make money on the internet, and it is used for that purpose only, or is considered a home office, some tax deductions you can take are the cost of your internet, your phone, your computer, fax machine and copier. You can take the section 179 deduction or depreciate the equipment. Software you buy for your business and the cost of ads you place across the Internet are also tax deductible. Just make sure you have accurate records.

Tim
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U.S. Master Tax Guide!!

Personal Exemptions And Dependents For Federal Income Tax

For this article today, I will focus on personal exemptions and dependents as it concerns your federal income tax return.

The exemption amount has been increased this year to $3,4000 for personal exemptions and exemptions for dependents. There are different rules for both types of exemptions.

If your adjusted gross income (AGI) is above a certain amount, you lose part of the benefit concerning exemptions. These phaseouts start at $117, 300 for married people filing separately, $156,400 for single filers, $195,500 for head of household, and for married filing jointly or qualifying widow(er), the amount is $234,600. Each exemption cannot be reduced to lower than $1,133.

With personal exemptions, you take one for yourself and one for your spouse. You also take an exemption for each of your dependents, provided they are a qualifying child or qualifying relative, which I will explain further down. If you claim an exemption for a dependent, and that dependent files a federal income tax return, they cannot claim their own personal exemption. Also, if another taxpayer is entitled to claim you as a dependent, and even if they do not, you cannot claim the personal exemption on your own return.

One thing that I need to clear up, as I run into this problem a lot, your spouse is NEVER your dependent.

If you file a separate return, you can claim the exemption for your spouse
only if your spouse had no gross income, is not filing a return, and was not the dependent of
another taxpayer. This is true even if the other taxpayer does not actually claim your spouse as
a dependent. This is also true if your spouse is a nonresident alien.

To claim an exemption for a qualifying child or qualifying relative, there are 3 rules that must be met. These 3 rules are Dependent taxpayer test, Joint return test, and Citizen or resident test.


Tests To Be a Qualifying Child

1. The child must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them. Cousins do not count.

2. The child must be (a) under age 19 at the end of the year, (b) under age 24 at the end of the year and a full-time student, or (c) any age if permanently and totally disabled.

3. The child must have lived with you for more than half ofthe year.

4. The child must not have provided more than half of his or her own support for the year.

5. If the child meets the rules to be a qualifying child of more than one person, you must be the person entitled to claim the child as a qualifying child.

Tests to be a qualifying relative

1.) The person cannot be your qualifying child or the qualifying child of any other taxpayer.

2.) The person either (a) must be related to you in one of the ways listed under Relatives who do not have to live with you, or (b) must live with you all year as a member of your
household , and your relationship must not violate local law. For example, if you live in Florida as boyfriend/girlfriend, this actually violates Florida law, so that would not be allowed.

3.) The person’s gross income for the year must be less than$3,400.

4.) You must provide more than half of the person’s total support for the year.


You cannot claim any dependents if you, or your spouse if filing jointly, could be claimed as a dependent by another taxpayer

You cannot claim a married person who files a joint return as a dependent unless that joint return is only a claim for refund and there would be no tax liability for either spouse on separate returns.

You cannot claim a person as a dependent unless that person is a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico, for some part of the year.

I hope this helps you when it comes time to file your 2007 Federal Tax Return.

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Tim Watson is a tax preparer during the tax season. Do you need to learn even more about taxes? Here is a great guide U.S. Master Tax Guide . Need a break? Take a look at my Christmas Page . You may use this as is provided the resource box stays intact.