These days, there are many circumstances in life that come with tax benefits that didn’t exist in the past and are not commonly known. It’s very difficult for individuals to stay current on all of the intricacies of the tax system. That’s why it’s so important to work with a knowledgeable professional when preparing your taxes. At James T. Borello & Co., our consultants stay up-to-date on all of the year-to-year changes in the tax code and make sure our clients receive the full benefit of all available deductions, exemptions and credits.
Dependent Parents Exemption
Taxpayers can take personal exemptions for themselves and their dependents. Some people mistakenly believe that their children are their only dependents. In truth, however, any person who meets the IRS tests for dependency may be claimed. These tests are for:
- Member of Household or Relationship—must be a relative or live in your home
- Gross Income—must be less than allowed tax deduction
- Support—must receive more than one half support from you
- Joint Return—usually cannot file a joint return with spouse
- Citizenship—must be a U.S. citizen/national or resident of North America
- Consequently, if your parent lives in your household and/or relies on you for more than one half of his or her support, you can claim your parent as a dependent.
Child and Dependent Care Credit
If you pay someone to provide care for your spouse or one of your dependents, you may be qualified for the Child and Dependent Care Credit. This credit is only available if the care allows you (and your spouse) to work, to look for work or to go to school. Other qualifications also apply.
Adoption Tax Credit
Adopting a child can cost thousands of dollars including court fees, adoption service fees, traveling expenses and attorney fees. The IRS allows for an Adoption Tax Credit to help offset these costs. This credit phases out at higher incomes.
Contact us to learn how these and other tax deductions, credits and exemptions can reduce your taxable income.