Age is a factor in the qualifying child test, but a qualifying relative can be any age. As long as the following dependency exemption tests are met, you may claim him or her:

1. Qualifying child or qualifying relative test
2. Dependent taxpayer test
3. Citizenship or resident test
4. Joint return test

If you are an unmarried dependent, you must file a tax return if your earned and/or unearned income exceeds certain limits.

• Even if you do not have to file, you should file a federal income tax return to get money back if any of the following apply:
1. You had income tax withheld from your pay.
2. You qualify for the earned income credit.
3. You qualify for the additional child tax credit.

If you claim your daughter as a dependent on your income tax return, she cannot claim herself on her income tax return.

• If an individual is filing his or her own tax return, and the individual can be claimed as a dependent on someone else’s return, the individual cannot claim his or her own personal exemption.
• In this case, your daughter should check the box on her return indicating that someone else can claim her as a dependent.

It depends on the type of mistake that you made:
• Many mathematical errors are caught in the processing of the tax return itself.
• If you did not attach a required schedule, the IRS will contact you and ask for the missing information.
• If you did not report all your income or did not claim a credit, you should file an amended or corrected return using Form 1040X, Amended U.S. Individual Income Tax Return.

When filing an amended or corrected return:
• Include copies of any schedules that have been changed or any Form W-2 (PDF) you did not include.
• Generally, to claim a refund, the Form 1040X (PDF) must be received within three years after the date you filed your original return or within two years after the date you paid the tax, whichever is later. • Please allow the IRS 8-12 weeks to process an amended return.

You must make estimated tax payments for the current tax year if both of the following apply:
• You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits.
• You expect your withholding and credits to be less than the smaller of:
o 90% of the tax to be shown on your current year’s tax return, or
o 100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)

There are special rules for:
• Certain small business taxpayers for periods beginning 2009
• Certain taxpayers with higher adjusted gross income
• Farmers and commercial fishermen
• Aliens
• Estates and Trusts

A dependency exemption may only be claimed on one return.

• Since your son is a qualifying child for both of you, you and your wife can decide who will claim the child.
• A multiple support declaration identifying each of the others who agreed not to claim the exemption must be attached to the return of the person claiming the exemption. Form 2120, Multiple Support Declaration, can be used for this purpose.
• If you cannot agree on who will claim him refer to Tie-Breaker Rule in Publication 501, Exemptions, Standard Deduction, and Filling Information.

Nothing can be deducted for the child support payments.

• Child support payments are neither deductible by the payer nor taxable income to the payee.
You may be able to claim the child as a dependent.
• The parent who the child lived with for the greater part of the year is the custodial parent.
• Generally the custodial parent is allowed to claim the exemption for the child if the other exemption tests are met.
• The noncustodial parent may be allowed to claim the exemption for the child if the custodial parent signs a Form 8332 (PDF), Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent of Divorced of Separated Parents, or a substantially similar statement.

If you are eligible to deduct educational expenses and are also eligible for one of the education credits (the Hope Scholarship Credit, the Lifetime Learning Credit, or the American Opportunity Tax Credit), then it is possible to claim both. You cannot use the SAME educational expenses (no “double benefit”) to claim both benefits.

• You may choose to allocate some of your expenses to the deduction and others to the credit.
• This can be desirable because a qualifying expense for one benefit may not be a qualifying expense for the other tax benefit. For example, the cost of course-related books ordinarily qualifies for the deduction, but not for the Hope Scholarship Credit or the Lifetime Learning Credit. For tax years beginning in 2009 and 2010, course related books may qualify for the American opportunity Tax Credit.

As an employee, you may be able to deduct qualified work-related education expenses as an itemized deduction.

• These are treated as miscellaneous deductions on Form 1040 Schedule A, Itemized Deductions and are subject to the 2 percent of AGI floor.
• You would complete Form 2106, Employee Business Expenses, or Form 2106-EZ, Unreimbursed Employee Business Expenses, when job-related educational expenses are involved.

Self-employed individuals include educational expenses as deductions on one of the following forms:
• Form 1040 Schedule C, Profit or Loss From Business.
• Form 1040 Schedule C -EZ Net Profit From Business.
• Form 1040 Schedule F Profit or Loss From Farming.
The tuition and fees deduction may be claimed on Form 1040.
The education credits may be claimed for Form 8863.

If you claim a deduction of at least $250 but not more than $500 for the car donation, you will need only a written acknowlegment from the charity at the time of the donation. The acknowledgment must include the name of the charity, a description of the care, and a statement of whether the charity provided any goods or services in return for the car and, if so, a description and estimate of the fair market value of the goods and services. Do not attach the acknowledgment to your return: instead, retain it with your records to substantiate your donation.

If you claim a deduction of more than $500 for the car donation, you will need the following:
• Copy B of Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes. Attach this form to your tax return.
• Section A of Form 8283, Noncash Charitable Contributions. Complete Section A only if you claim a deduction of $5,000. Attach this form to your tax return.
• A written acknowledgment form the charity that includes your name and taxpayer identification number, the vehicle identification number, the donation date, and a statement of whether the charity provided any goods or services in return for the car and, if so, a description and estimate of the fair market value of the goods or services. Attach this acknowledgment to your return.
• You will need to obtain and keep evidence of your car donation and be able to substantiate the fair market value of the car.

If you claim a deduction of more than $5,000 for the car donation, in addition to the items listed above for deductions of more than $500, you will also need the following:
• Section B of Form 8283 You should complete Section B, which generally requires an appraisal by a qualified appraiser, instead of Section A, and attach the form to your return.
• A written acknowledgment by a qualified appraiser. Do not attach the appraisal to your tax return; instead, keep it with your records to substantiate your donation.

You may deduct home equity debt interest, as an itemized deduction, if all the following conditions apply:

• You are legally liable to pay the interest
• You pay the interest in the tax year
• The debt is secured with your home
• You do not exceed certain limitations

If payment for services you provided is listed in box 7 of Form 1099-MISC, you are being treated as a self-employed worker, also referred to as an independent contractor:

• You do not necessarily have to “have a business,” but simply perform services as a non-employee to have your compensation treated this way.
• The payer has determined that an employer-employee relationship does not exist in your case.
• That determination is complex, but is essentially made by examining the right to control how, when, and where you perform those services.
• It is not based on how you are paid, how often you are paid, nor whether you work part-time or full-time.

There are three basic areas that are relevant to determine employment status:
• Behavioral control,
• Financial control, and
• Relationship of the parties
If you think that you were, or are, an employee and you would like the IRS to issue a determination, you may submit Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.
Unless you think you were an employee, you report your non-employee compensation on Form 1040, Schedule C, Profit or Loss from Business (Sole Proprietorship), or Form 1040, Schedule C-EZ, Net Profit from Business: • You also need to complete Form 1040, Schedule SE, Self-Employment Tax, and pay self-employment tax on your net earnings from self-employment, if you had net earnings from self-employment of $400 or more. • This is the manner by which self-employed persons pay into the Social Security and Medicare trust funds. Employees pay into the Social Security and Medicare trust funds, as well as income tax withholding, through deductions from their paychecks.
• Generally, there is no tax withholding on self-employment income.
• You may be subject to the requirement to make quarterly estimated tax payments.
• If you did not make estimated tax payments, you may be charged a penalty for underpayment of estimated tax penalty.

Alimony, separate maintenance, and similar payments from your spouse or former spouse are taxable to you in the year received:
• The amount is reported on Form 1040.
• You cannot use Form 1040A or Form 1040 EZ.
To help determine if these payments are considered alimony, please read the following rules that apply to payments under divorce or separation instruments executed after 1984. They also apply to instruments that were modified after 1984 to specify that the following rules apply or to change the amount or period of payment or to add or delete any contingency or condition.

A payment to or for a spouse or former spouse under a divorce or separation instrument is alimony, if the spouses do not file a joint return with each other, if all the following conditions are met:
• (1) The payment must be made by cash, check, money order, etc.
• (2) The instrument does not designate the payments as not includible in the gross income of the recipient spouse and not deductible by the payor spouse.
• (3) The spouses are not members of the same household at the time the payments are made. Exception: If you are not legally separated under a decree of divorce or separate maintenance, a payment under a written separation agreement, support decree or court order may qualify as alimony even if you are members of the same household at the time of payment.
• (4) There is no liability for payments after the death of the recipient spouse.
• (5) The payment is not treated as child support.

No, child support payments are neither deductible by the payer nor taxable to the payee. When you total your gross income to see if you are required to file a tax return, do not include child support payments received.

• Elective contributions to a 401(k) plan are subject to certain distribution restrictions. See Publication 560, Publication 575 and Tax Topic 424.
• Generally, the exception for using retirement funds to build or purchase your first home does not apply to a distribution of your elective contributions from a 401(k) plan.
• If you are under the age of 59 1/2, a distribution (including a distribution of employer matching and profit sharing contributions) from your 401(k) plan subject to a 10% additional tax on early distributions. This 10% additional tax is in addition to other taxes that apply to the distribution.
• However, a 401(k) plan may permit loans and hardship distributions. Depending on the terms of your 401(k) plan, you may be able to receive a loan or hardship distribution to build or purchase your first home.
• Your plan administrator or employer should have written information about your particular plan (including the availability of loans or hardship distributions and applicable requirements) as well as other plan rules.

• The amount contributed to a 401(k) plan cannot be used as an IRA deduction.

This 401(k) contribution is already excluded from your taxable income, as it is not included in box 1 taxable wages of your W-2 form.

You can obtain currency exchange rates at several web sites referenced below.

Governmental Resources
• Treasury Department’s Currency Exchange Rate
• Federal Reserve Board
• U. S. Department of Agriculture

Social security benefits include monthly retirement, survivor, and disability benefits. They do not include supplemental security income (SSI) payments, which are not taxable. The amount of social security benefits that must be included on your income tax return and used to calculate your income tax liability depends on the total amount of your income and benefits for the taxable year.

To find out whether any of your benefits may be taxable, compare the base amount for your filing status with the total of:
• One-half of your benefits.
• All of your other income, including tax-exempt interest.

The base amount for your filing status is shown next:
• $25,000 if you are single, head of household, qualifying widow(er) or married filing separately living apart from your spouse at any time during the tax year.
• $32,000 if you are married filing jointly.
• $-0- if you are married filing separately living with your spouse at any time during the tax year.

Yes, if you meet the other requirements to claim the child and dependent care credit, but are missing the social security number or other taxpayer identification number of a provider, you can still claim the credit by demonstrating “due diligence” in attempting to secure this information.

• If a provider of child care refuses to give the identifying information, the taxpayer can still claim the credit.
• The taxpayer must provide whatever information is available about the provider (such as name and address) on Form 2441, Child and Dependent Care Expenses.
• Write “see page 2” in the columns requesting the missing information.
• Write at the bottom of page 2 that the provider refused to give the requested information.
• This statement will show that the taxpayer used due diligence in trying to secure and furnish the identifying information.

Expenses that qualify for an education credit are qualified tuition and related expenses required for enrollment or attendance at an eligible educational institution.

• An eligible educational institution includes most accredited colleges, universities, vocational schools, or other postsecondary educational institutions eligible to participate in the student aid programs administered by the Department of Education.

Qualified expenses do not include expenses for:
• Student activity fees,
• Athletics (unless the course is part of the student’s degree program),
• Room and board,
• Insurance,
• Transportation or similar personal, living, or family expenses.
• The cost of books and equipment are generally not qualified expenses because eligible educational institutions usually do not require that the cost of the books or equipment be paid to the institution as a condition of the student’s enrollment or attendance at the institution; however, for taxable years 2009 and 2010, the American Opportunity Tax Credit modifies the Hope Credit to include course material.