Frequently Asked Questions About Tax Returns

Everyone wants to reduce their tax obligation by claiming more expenses. However, when looking for deductions they might be entitled to, clients often have a ton of questions but find answers difficult to come by. To ensure you have all your doubts cleared, Edrien Inc. has answered some of the most frequently asked questions about tax returns.

1. My sixteen-year-old lives with me and has started earning money. Can I still claim my child?

Yes, you can claim your sixteen-year-old child in your tax return while they still file for their tax return. An exemption of $4,050 will be adjusted to a tax payer’s income along with education credit and tax credit. You are entitled to claim your child as your dependent until the age of twenty-six. However, if your child earns more than $14,000, it would be advisable for him/her to claim his exemption. And if they earn over $1050, they are required to file their tax return without using their exemption. Be aware as the tax claiming exemption may change in 2018. Edrien Inc. can assist you in filing the correct tax return.

2. I work and go to school part-time taking a minimum of six credit units in community college. Can I claim the education expenses as my itemized deduction?

If you are single and your AGI (Annual Gross Income) is over $90,000, you are not eligible for education credit. If this is the case, you may deduct education expenses as an itemized deduction under form 2106 (Business Expenses). Such expenses must be mandatory in order for you to maintain your work and if your employer did not re-inverse you. Education can be used as itemized vs. Education credit. Also, with regards to education credit, you are entitled to claim only the education credit for a maximum of four years, and then it becomes adjustment until line 23 Form 1040. Edrien Inc. will help you understand the differences between credit and deduction, and provide assistance when claiming an education credit or using it as a deduction.

3. When my child studied abroad, I paid their education fees. Can I claim an education credit for studying abroad?

At the beginning of the 2017 tax year, the Federal government limits the claim of the education credit conducted overseas unless the school is related to a U.S. college or university. The school must produce student Form 1098-T, only then you can obtain the education credit. Do not use this expense as your itemized deduction because such expense is used by your child and your child is not a taxpayer, they are your dependent. Edrien Inc. can assist you in claiming the proper credit for your child.

4. I pay credit card interest; can I deduct credit card interest under the personal tax return Schedule A form?

No, you cannot deduct credit card interest used under Schedule A form deduction. If you are self-employed and you’ve obtained a business loan, the scenario changes. The self-employed who obtain business loans are entitled to deduct business loan interest under Form Schedule C line 16b. You are only allowed to deduct the interest, not the entire loan amount because the loan amount becomes part of your capital and you cannot deduct capital as expenses. Edrien Inc. can assist you in filing business tax returns and personal tax returns.

5. In the 2017 tax year, I paid Federal tax return of $2000 and State tax return of $1000. Can I deduct both, federal and state tax paid return for 2018?

You can only deduct the State tax paid $1000 under form Schedule A line 8 (other paid taxes). Federal paid taxes is not deductible under personal tax return unless it is your business or you are self-employed. Edrien Inc.can help in planning your business tax return for the future.

6. I won $1,500 in a casino slot machine; do I need to declare the winning for my tax return?

Yes, by law you are required to declare your gambling winnings as taxable income. However, you can also use such winning as a deduction under Schedule A line 23 labeling it “gambling loss.”

7. My mom is unemployed and currently living with me. Can I claim my parents in my tax return as my dependent?

You can claim your parents as your dependent only if you have provided over fifty percent support. When claiming a dependent, the general rule is that you must provide minimum fifty percent of support for you to use them as your dependent.

8. I was married on December 30th at the end of the year, do I need to file “married filing jointly” or “single” for the next filing tax year?

Even if you are not married for the entire year, by law, your filing status must be “married filing jointly” as you married at the end of the calendar year. The same rule applies if you are divorced. If you divorce one month before the year ends, your filing status must be “single.”

If you have any more questions about tax returns, get in touch with the experts at Edrien Inc.. As the best tax accountants in Baltimore, MD, we offer accounting, bookkeeping, tax preparation, tax returns, tax filings, notary and immigration consultation services. To learn more about how we can help you, please click here or contact us by clicking here.