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Show Income Tax Fax By Peter James Wikel Public Accountant Dependents What dependents can I claim? You are entitled to one exemption exemp-tion for each dependent. Additional Addition-al exemptions for old age and blindess apply only to you and your wife or husband, not to any other dependents. Each dependent you claim must qualify under all five of the following fol-lowing conditions: 1. Dependent must have received receiv-ed over one-half of his support from you in 1954. 2. Dependent did not have over $600 income in 1954 besides what you provided unless dependent was your child or step-child under 19 years or age, or if over 19 years of age, a full-time student, in which case the dependent child can earn any amount, as long as you actually provide over one- half of the cost of support. 3. Dependent is not claimed by any other taxpayer and does not file a joint return with another taxpayer. For instance, do not list a dependent married daughter who files a joint return with her husband. hus-band. 4. Dependent must be a citizen of the United States or a resident of the United States, Canada, Mexico, The Republic of Panama or the Canal Zone. 5. Dependent must be closely related to you; that is, your children, chil-dren, including legally adopted children, grandchildren, parents, uncles, aunts, nieces and nepbews; your immediate in-laws, that is, your mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law, and your step-brother, step-sister, step-father or step-mother, or anyone else who meets the above requirements and had as his principal place of abode your home and was a mem ber of your household, even if not related to you. In a joint return a dependent can be claimed if supported by either the husband or wife, such as the husband supporting the wife's niece, etc. If the dependent has worked part time and earned less than $600 in 1954 or . was your child under 19 or over 19 and a student, and income tax was withheld from such earnings, the dependent should file a tax return to secure refund of the tax withheld. This will in no way prevent you from also claiming the exemption for the dependent, provided, of course, that dependent meets all five of the above conditions. If your dependent can qualify in all other ways except that you do not furnish over onehalf of his support then perhaps you can claim the credit anyway. Over half the support of an individual in-dividual for a calendar year shall be treated as received from the taxpayer if (1) no one person contributed over half of such support; (2) over half of such support was received from persons each of whom, but for the fact that he did not contribute contrib-ute over half of such support, sup-port, would have been entitled en-titled to claim such individual individ-ual as a dependent for a taxable tax-able year beginning in such calendar year; (3) the taxpayer contributed over ov-er 10 per cent of such support; sup-port; and (4) each person besides the taxpayer tax-payer who contributed over 10 percent of such support files a written declaration that he will not claim such individual as a dependent for any taxable year beginning begin-ning in such calendar year. In other words, suppose that you and your three brothers each contribute 25 of" the cost of supporting sup-porting your mother. By agreeing among yourselves, any one of you can claim the dependency credit for any year that the others are willing to file a declaration that they will not claim it. Prior to this time, the dependency credit could not be claimed by anyone. Now you can take turns, or one claim it every year. You still cannot can-not pro-rate the credit between you. One must claim the full credit. cred-it. Length of Time To File You have an extra month to file your income tax return in. Your Federal Income Tax return re-turn is not due until April 15, 1955. This does not mean that you can't file sooner. As a matter of fact, if you do have a refund due to you, then you'd better file that return right away. The sooner soon-er you file it, the sooner you'll have the refund. Even if you don't have a refund due, it's a good idea to file as soon as you can and get it over with. If you need help in filing, you will find that the offices of the District Director of Internal Revnue are not so busy in the early part of the tax filing period and therefore there-fore they are able to give you better service. If you have a problem prob-lem and call on the accountant or attorney of your choice for professional assistance, you will find that he is far better able to help you in the early part of the I tax filing period than in the latter part when he is very rushed. Also, if you have a problem, it may very well take several days or weeks time to properly study the matter, and also you may have to write or otherwise collect sup- porting evidence to properly determine de-termine the facts and figures to be used in filing your return. Your Federal Income Tax return re-turn Is due January, 1, 1955, and you have until Friday, April 15, 1955 m which to file it. Suppose you figure it out and you owe some money. Also that you do not want to pay this money until April 15. That's alright. al-right. At least you know how much you owe and you can plan on it Then, too, if you do owe somthing, and think about it, you may remember some overlooked item of expense of deduction that you could have made. If you have your return all figured out early, but not filed, then you have a chance to change it and include this other item. If you wait until the last minute and do it with a rush, you may very well overlook over-look an item of deduction and when you do remember it it will be too late. to do anything except file amended returns. Amended returns re-turns are a lot of trouble and hardly worth the effort for a few dollars. In other words, unless your overldoked item is a sub stantial sum, filing amended returns re-turns is more trouble than the few dollars you would save in taxes. But if you can change your return before filing, then it is no trouble and. you have saved a few dollars. |