Category Archives for "Taxes"

Claiming a Tax Deduction for Medical and Dental Expenses

Your medical expenses may save you money at tax time, but a few key rules apply. Here are some tax tips to help you determine if you can deduct medical and dental expenses on your tax return:

Itemize. You can only claim your medical expenses that you paid for in 2015 if you itemize deductions on your federal tax return.
Income. Include all qualified medical costs that you paid for during the year, however, you only realize a tax benefit when your total amount is more than 10 percent of your adjusted gross income.
Temporary Threshold for Age 65. If you or your spouse is age 65 or older, then it’s 7.5 percent of your adjusted gross income. This exception applies through Dec. 31, 2016.
Qualifying Expenses. You can include most medical and dental costs that you paid for yourself, your spouse and your dependents including:
The costs of diagnosing, treating, easing or preventing disease.
The costs you pay for prescription drugs and insulin.
The costs you pay for insurance premiums for policies that cover medical care qualify.
Some long-term care insurance costs.
Exceptions and special rules apply. Costs reimbursed by insurance or other sources normally do not qualify for a deduction. For more examples of costs you can and can’t deduct, see IRS Publication 502, Medical and Dental Expenses. You can get it on IRS.gov/forms anytime.

Travel Costs Count. You may be able to deduct travel costs you pay for medical care. This includes costs such as public transportation, ambulance service, tolls and parking fees. If you use your car, you can deduct either the actual costs or the standard mileage rate for medical travel. The rate is 23 cents per mile for 2015.
No Double Benefit. You can’t claim a tax deduction for medical expenses paid with funds from your Health Savings Accounts or Flexible Spending Arrangements. Amounts paid with funds from those plans are usually tax-free.
Use the Tool. Use the Interactive Tax Assistant tool on IRS.gov to see if you can deduct your medical expenses. It can answer many of your questions on a wide range of tax topics including the health care law.
Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

Additional IRS Resources:

Schedule A (Form 1040), Itemized Deductions
Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans
IRS YouTube Video:

Medical and Dental Expenses – English | Spanish | ASL
IRS Podcasts:

Medical and Dental Expenses – English | Spanish

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What are FTDs and why are they important?

Federal Tax Deposits (FTDs) for Form 941 are made up of withholding taxes or trust funds (income tax and Federal Insurance Contributions Act (FICA) taxes, which are Social Security and Medicare held in trust), that are actually part of your employee’s wages, along with the employer’s share of FICA. FTDs for Form 940 are taxes paid by the employer to provide for unemployment compensation to workers who have lost their jobs. Only the employer pays FUTA tax; it is not deducted from the employee’s wages. These taxes need to be paid as they become due in order to avoid penalties. If you have a deposit requirement, you must deposit electronically. You can deposit electronically via the Electronic Federal Tax Payment System (EFTPS). EFTPS deposits must be initiated by 8 p.m. eastern time the day before the due date. EFTPS is also used to pay other types of taxes; not just employment taxes.
Who Must Make Deposits?

Employers may have two separate employment tax deposits:
Employers filing Form 941, Employer’s Quarterly Federal Tax Return, with $2,500 or more tax due in the current quarter and $2,500 or more tax due in the prior quarter OR
Employers filing Form 940, Employer’s Annual Federal Unemployment Tax Return (FUTA), with over $500 tax due per quarter.
When To Make Deposits?

If you have a deposit requirement for Form 940, make the deposit by the last day of the first month after the quarter ends.
If you have a deposit requirement for Form 941, there are two EASY ways to remember:
Make a deposit the same day you pay your employees OR
Make the deposit before the due date.
Form 941 Deposit Due Date. If you are a new employer and have never filed 941 forms, you are aMonthly Schedule Depositor for the first calendar year of your business unless you are a special exception to the rule. Monthly Schedule Depositors should deposit taxes from all of their paydays in a month by the 15th of the next month, even if they pay wages every week.
Employers with prior payrolls and taxes of $2,500 or more per quarter must determine if they make either Monthly Schedule Deposits, or Semiweekly Schedule Deposits.
This determination is based on your Form 941 taxes during a four-quarter Lookback Period.
Identify your Lookback Period.

Your Lookback Period for Calendar Year 2016
2014
2015
July 1
to
September 30
3rd Quarter October 1
to
December 31
4th Quarter January 1
to
March 31
1st Quarter April 1
to
June 30
2nd Quarter

Add the total taxes reported during the Lookback Period.
Determine your deposit schedule.

If the total taxes you reported in the Lookback Period were: Then you are a:
$50,000 or less Monthly Schedule Depositor
More than $50,000 Semiweekly Schedule Depositor
Monthly Schedule Depositors

Deposit each month’s taxes by the 15th day of the following month (for example, taxes from paydays during July are deposited by August 15).
Semiweekly Schedule Depositors

For wages paid Saturday, Sunday, Monday, or Tuesday, deposit by the following Friday.
For wages paid Wednesday, Thursday, or Friday, deposit by the following Wednesday.
Exception!
If you accumulate a tax liability of $100,000 or more on any day during a deposit period, you must deposit the tax by the next business day, whether you are a monthly or semiweekly schedule depositor. Monthly depositors must then follow the semiweekly schedule for the rest of the year. For more information about the $100,000 One-Day Rule and the applicable deposit period, refer toPublication 15, Circular E, Employer’s Tax Guide, Depositing Taxes.
Remember!
Deposit rules are based on when wages are paid, not earned. For example, Monthly Schedule Depositors with wages earned in June, but paid in July, deposit August 15.
If the due date for a deposit falls on a non-business day, the deposit is considered timely if it is made by the close of the next business day. Business days include every calendar day other than Saturdays, Sundays, or legal holidays. The term “legal holiday” means any District of Columbia legal holiday. Previously, legal holidays included statewide legal holidays.
How Are Deposits Made?

Federal Tax Deposits (FTDs)

Making Federal Tax Deposits is a process most businesses must do throughout the year.
If you have a deposit requirement, you must deposit electronically.
Employers required to make deposits must deposit electronically. You can deposit electronically via the Electronic Federal Tax Payment System (EFTPS). The IRS encourages employers who are not required to deposit taxes to take advantage of EFTPS to avoid common errors and automate the payment process. EFTPS is fast, secure and available 24 hours a day, 7 days a week. Check out the most frequently asked questions about EFTPS: Publication 966, Choices for Paying ALL Your Federal Taxes (PDF).
If you are a new employer and received an EIN after January 2004, most likely you are already pre-enrolled in the Electronic Federal Tax Payment System (EFTPS) as part of our express enrollment (PDF) initiative for new businesses. You should have received a confirmation package with an EFTPS PIN and instructions on how to activate your EFTPS enrollment.
For more information on Express Enrollment for new businesses refer to Publication 4275 (PDF) found on IRS.gov.
For employer’s mailing address changes, complete Form 8822-B, Change of Address Form – Business.
If you have a deposit requirement, do not send tax payments with your tax return directly to the IRS. For more information, refer to “Depositing Taxes” in Publication 15, Circular E, Employer’s Tax Guide.
Need to make a same-day payment?

If an employer is unable to initiate an EFTPS payment in time to make a required deposit, a same-day wire transfer may be an option. Employers should check with their financial institution to find out if this service is offered and if there are any applicable fees associated with using this method to make a payroll deposit.

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Home Energy Credits Save Money and Cut Taxes

You can trim your taxes and save on your energy bills with certain home improvements. Here are some key facts to know about home energy tax credits:
Non-Business Energy Property Credit
Part of this credit is worth 10 percent of the cost of certain qualified energy-saving items you added to your main home last year. This may include items such as insulation, windows, doors and roofs.
The other part of the credit is not a percentage of the cost. It is for the actual cost of certain property. This may include items like water heaters and heating and air conditioning systems. The credit amount for each type of property has a different dollar limit.
This credit has a maximum lifetime limit of $500. You may only use $200 of this limit for windows.
Your main home must be located in the U.S. to qualify for the credit.
Be sure you have the written certification from the manufacturer that their product qualifies for this tax credit. They usually post it on their website or include it with the product’s packaging. You can rely on it to claim the credit, but do not attach it to your return. Keep it with your tax records.
You may claim the credit on your 2015 tax return if you didn’t reach the lifetime limit in past years. Under current law, this credit is available through Dec. 31, 2016.
Residential Energy Efficient Property Credit
This tax credit is 30 percent of the cost of alternative energy equipment installed on or in your home.
Qualified equipment includes solar hot water heaters, solar electric equipment, wind turbines and fuel cell property.
There is no dollar limit on the credit for most types of property. If your credit is more than the tax you owe, you can carry forward the unused portion of this credit to next year’s tax return.
The home must be in the U.S. It does not have to be your main home, unless the alternative energy equipment is qualified fuel cell property.
This credit is available through 2016.
Use Form 5695, Residential Energy Credits, to claim these credits. For more information on this topic, refer to the form’s instructions. You can get IRS forms anytime on IRS.gov/forms.
Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

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Change Your Name? It Can Affect Your Taxes

A name change can have an impact on your taxes. All the names on your tax return must match Social Security Administration records. A name mismatch can delay your refund. Here’s what you should know if you changed your name:

Report Name Changes. Did you get married and are now using your new spouse’s last name or hyphenated your last name? Did you divorce and go back to using your former last name? In either case, you should notify the SSA of your name change. That way, your new name on your IRS records will match up with your SSA records.
Make Dependent’s Name Change. Notify the SSA if your dependent had a name change. For example, this could apply if you adopted a child and the child’s last name changed.
If you adopted a child who does not have a Social Security number, you may use an Adoption Taxpayer Identification Number on your tax return. An ATIN is a temporary number. You can apply for an ATIN by filing Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions, with the IRS. You can visit IRS.gov to view, download, print or order the form at any time.

Get a New Card. File Form SS-5, Application for a Social Security Card, to notify SSA of your name change. You can get the form on SSA.gov or call 800-772-1213 to order it. Your new card will show your new name with the same SSN you had before.
Report Changes in Circumstances when they happen. If you enrolled in health insurance coverage through the Health Insurance Marketplace you may receive the benefit of advance payments of the premium tax credit. These are paid directly to your insurance company to lower your monthly premium. Report changes in circumstances, such as a name change, a new address and a change in your income or family size to your Marketplace when they happen throughout the year. Reporting the changes will help you avoid getting too much or too little advance payment of the premium tax credit.
Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

IRS YouTube Videos:

Premium Tax Credit: Changes in Circumstances – English | Spanish | ASL
IRS Podcasts:

Premium Tax Credit: Changes in Circumstances – English | Spanish

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What You Need to Know about Taxable and Non-Taxable Income

All income is taxable unless a law specifically says it isn’t. Here are some basic rules you should know to help you file an accurate tax return:

Taxable income. Taxable income includes money you earn, like wages and tips. It also includes bartering, an exchange of property or services. The fair market value of property or services received is normally taxable.
Some types of income are not taxable except under certain conditions, including:

Life insurance. Proceeds paid to you upon the death of an insured person are usually not taxable. However, if you redeem a life insurance policy for cash, any amount you get that is more than the cost of the policy is taxable.
Qualified scholarship. In most cases, income from a scholarship is not taxable. This includes amounts used for certain costs, such as tuition and required books. On the other hand, amounts you use for room and board are taxable.
Other income tax refunds. State or local income tax refunds may be taxable. You should receive a Form 1099-G from the agency that paid you. They may have sent the form by mail or electronically. Contact them to find out how to get the form. Report any taxable refund you got even if you did not receive Form 1099-G.
Here are some items that are usually not taxable:

Gifts and inheritances
Child support payments
Welfare benefits
Damage awards for physical injury or sickness
Cash rebates from a dealer or manufacturer for an item you buy
Reimbursements for qualified adoption expenses
For more on this topic see Publication 525, Taxable and Nontaxable Income. You can get it at IRS.gov/forms anytime.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

IRS YouTube Videos:

Taxable and Nontaxable Income – English | Spanish | ASL
IRS Podcasts:

Taxable and Nontaxable Income – English | Spanish

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IRS to Parents: Don’t Miss Out on These Tax Savers

Children may help reduce the amount of taxes owed for the year. If you’re a parent, here are several tax benefits you should look for when you file your federal tax return:

Dependents. In most cases, you can claim your child as a dependent. You can deduct $4,000 for each dependent you are entitled to claim. You must reduce this amount if your income is above certain limits. For more on these rules, see Publication 501, Exemptions, Standard Deduction and Filing Information.
Child Tax Credit. You may be able to claim the Child Tax Credit for each of your qualifying children under the age of 17. The maximum credit is $1,000 per child. If you get less than the full amount of the credit, you may be eligible for the Additional Child Tax Credit. For more information, see Schedule 8812 and Publication 972, Child Tax Credit.
Child and Dependent Care Credit. You may be able to claim this credit if you paid for the care of one or more qualifying persons. Dependent children under age 13 are among those who qualify. You must have paid for care so that you could work or look for work. See Publication 503, Child and Dependent Care Expenses, for more on this credit.
Earned Income Tax Credit. You may qualify for EITC if you worked but earned less than $53,267 last year. You can get up to $6,242 in EITC. You may qualify with or without children. Use the 2015 EITC Assistant tool at IRS.gov to find out if you qualify. See Publication 596, Earned Income Tax Credit, to learn more.
Adoption Credit. You may be able to claim a tax credit for certain costs you paid to adopt a child. For details see Form 8839, Qualified Adoption Expenses.
Education Tax Credits. An education credit can help you with the cost of higher education. Two credits are available. The American Opportunity Tax Credit and the Lifetime Learning Credit may reduce the amount of tax you owe. If the credit reduces your tax to less than zero, you may get a refund. Even if you don’t owe any taxes, you still may qualify. You must complete Form 8863, Education Credits, and file a return to claim these credits. Use the Interactive Tax Assistant tool on IRS.gov to see if you can claim them. Visit the IRS’s Education Credits Web page to learn more on this topic. Also, see Publication 970, Tax Benefits for Education.
Student Loan Interest. You may be able to deduct interest you paid on a qualified student loan. You can claim this benefit even if you do not itemize your deductions. For more information, see Publication 970.
Self-employed Health Insurance Deduction. If you were self-employed and paid for health insurance, you may be able to deduct premiums you paid during the year. This may include the cost to cover your children under age 27, even if they are not your dependent. See Publication 535, Business Expenses, for details.
You can get related forms and publications on IRS.gov.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

IRS YouTube Videos:

Earned Income Tax Credit – English
Earned Income Tax Credit – Get It Right – English
Education Tax Credits – English
IRS Podcasts:

Education Tax Credits – English | Spanish

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How to Determine if You Can Claim the Premium Tax Credit

The premium tax credit is a credit for certain people who enroll, or whose family member enrolls, in a qualified health plan offered through a Marketplace. Claiming the premium tax credit may increase your refund or lower the amount of tax that you would otherwise owe.

If you did not get advance credit payments in 2015, you can claim the full benefit of the premium tax credit that you are allowed when you file your tax return. You must file Form 8962 to claim the PTC on your tax return.

You can take the PTC for 2015 if you meet all of these conditions.

For at least one month of the year, all of the following were true:

An individual in your tax family was enrolled in a qualified health plan offered through the Marketplace.
The individual was not eligible for minimum essential coverage, other than coverage in the individual market.
The portion of the enrollment premiums for the month for which you are responsible was paid by the due date of your tax return.
To be an applicable taxpayer, you must meet all of the following requirements:

For 2015, your household income is at least 100 percent but no more than 400 percent of the Federal poverty line for your family size.
No one can claim you as a dependent on a tax return for 2015.
If you were married at the end of 2015, you must generally file a joint return. However, filing a separate return from your spouse will not disqualify you from being an applicable taxpayer if you meet certain requirements.
Individuals can use the Premium Tax Credit Flow Chart to determine if they are eligible for the credit. Answer the yes-or-no questions in the chart – or via the accessible text – and follow the arrows to find out if you may be eligible for the premium tax credit. You can also use our interactive tool, Am I eligible to claim the Premium Tax Credit? to find out if you are eligible.

For more information about eligibility requirements see Eligibility for the Premium Tax Credit and also the instructions for Form 8962, Premium Tax Credit on IRS.gov/aca.

If you received the benefit of advance credit payments in 2015, you must file a tax return to reconcile the amount of advance credit payments made on your behalf with the amount of your actual premium tax credit. You must file an income tax return for this purpose even if you are otherwise not required to file a return. You’ll file Form 8962, Premium Tax Credit, with your tax return to reconcile the credit.

Remember, that filing electronically is the easiest way to file a complete and accurate tax return as the software does the math and guides you through the filing process. Electronic filing options include: free Volunteer Assistance, IRS Free File, commercial software, and professional assistance.

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The Earned Income Tax Credit: Often Missed

The Earned Income Tax Credit has helped workers with low and moderate incomes get a tax break for 40 years. Yet, one out of every five eligible workers fails to claim it. Here are some things you should know about this valuable credit:

Review Your Eligibility. If you worked and earned under $53,267, you may qualify for EITC. If your income or family situation has changed, you should review the EITC eligibility rules. You might qualify for EITC this year even if you didn’t in the past. If you qualify for EITC you must file a federal income tax return and claim the credit to get it. This is true even if you are not otherwise required to file a tax return. Don’t guess about your EITC eligibility. Use the EITC Assistant tool on IRS.gov. The tool can help you find out if you qualify for the credit. It can also estimate the amount of your EITC.
Know the Rules. You need to understand the rules before you claim the EITC, to be sure you qualify. It’s important that you get this right. Here are some factors you should consider:
o If you are married and file a separate return you do not qualify for EITC.

o You must have a Social Security number that is valid for employment for yourself, your spouse, if married, and any qualifying child listed on your tax return.

o You must have earned income. Earned income includes earnings from working for someone else or working for yourself.

o You may be married or single, with or without children to qualify. If you don’t have children, you must also meet age, residency and dependency rules. If you have a child who lived with you for more than six months of 2015, the child must meet age, residency, relationship and the joint return rules to qualify.

o If you are a member of the U.S. Armed Forces serving in a combat zone, special rules apply.

Lower Your Tax or Get a Refund. If you qualify for EITC, you could pay less federal tax, no tax or even get a refund. EITC could be worth up to $6,242. The average credit was $2,447 last year.
Use Free Services. If you do your own taxes, the best way to file your return to claim EITC is to use IRS Free File. Free brand-name software will figure your taxes and EITC for you. Combining e-file with direct deposit is the fastest and safest way to get your refund. Free File is only available on IRS.gov/freefile. You can also get free help preparing and e-filing your return to claim your EITC. The IRS Volunteer Income Tax Assistance, or VITA, program offers free help at thousands of sites around the country. You can also get help with the health care law tax provisions with Free File or VITA.
For more on EITC, see IRS Publication 596, Earned Income Credit. It’s available in English and Spanish on IRS.gov.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

Additional IRS Resources:

Schedule EIC

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Six Tips on Whether to File a 2015 Tax Return

Most people file a tax return because they have to, but even if you don’t, there are times when you should. You may be eligible for a tax refund and not know it. Here are six tips to help you find out if you should file a tax return:

General Filing Rules. Whether you need to file a tax return depends on a few factors. In most cases, the amount of your income, your filing status and your age determine if you must file a tax return. For example, if you’re single and under age 65 you must file if your income was at least $10,300. Other rules may apply if you’re self-employed or if you’re a dependent of another person. There are also other cases when you must file. Go to IRS.gov/filing to find out if you need to file.
Premium Tax Credit. If you enrolled in health insurance through the Health Insurance Marketplace in 2015, you may be eligible for the premium tax credit. You will need to file a return to claim the credit. If you chose to have advance payments of the premium tax credit sent directly to your insurer during 2015 you must file a federal tax return. You will reconcile any advance payments with the allowable premium tax credit. You should receive Form 1095-A, Health Insurance Marketplace Statement, by early February. The form will have information that will help you file your tax return
Tax Withheld or Paid. Did your employer withhold federal income tax from your pay? Did you make estimated tax payments? Did you overpay last year and have it applied to this year’s tax? If you answered “yes” to any of these questions, you could be due a refund. But you have to file a tax return to get it.
Earned Income Tax Credit. Did you work and earn less than $53,267 last year? You could receive EITC as a tax refund, if you qualify, with or without a qualifying child. You may be eligible for up to $6,242. Use the 2015 EITC Assistant tool on IRS.gov to find out if you qualify. If you do, file a tax return to claim it.
Additional Child Tax Credit. Do you have at least one child that qualifies for the Child Tax Credit? If you don’t get the full credit amount, you may qualify for the Additional Child Tax Credit.
American Opportunity Tax Credit. The AOTC is available for four years of post secondary education and can be up to $2,500 per eligible student. You, your spouse or your dependent must have been a student enrolled at least half time for at least one academic period. Even if you don’t owe any taxes, you still may qualify. You must complete Form 8863, Education Credits, and file it with your return to claim the credit. Use the Interactive Tax Assistant tool on IRS.gov to see if you can claim the credit. Learn more by visiting the IRS’ Education Credits Web page.
The instructions for Forms 1040, 1040A or 1040EZ list income tax filing requirements. You can also use the Interactive Tax Assistant tool on IRS.gov. Look for “Do I need to file a return?” under general topics to see if you need to file. The tool is available 24/7 to answer many tax questions. Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

Additional IRS Resources:
The Premium Tax Credit
Form 8962, Premium Tax Credit (PTC)
Schedule 8812 (Form 1040A or 1040), Child Tax Credit
Publication 972, Child Tax Credit

IRS YouTube Videos:
Education Tax Credits – English | Spanish | ASL

IRS Podcasts:
Education Tax Credits – English | Spanish

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Exemptions and Dependents: TopTen Tax Facts

Most people can claim an exemption on their tax return. It can lower your taxable income. In most cases, that reduces the amount of tax you owe for the year. Here are the top 10 tax facts about exemptions to help you file your tax return.

1. E-file Your Tax Return. Easy does it! Use IRS E-file to file a complete and accurate tax return. The software will help you determine the number of exemptions that you can claim. E-file options include free Volunteer Assistance, IRS Free File, commercial software and professional assistance.

2. Exemptions Cut Income. There are two types of exemptions. The first type is a personal exemption. The second type is an exemption for a dependent. You can usually deduct $4,000 for each exemption you claim on your 2015 tax return.

3. Personal Exemptions. You can usually claim an exemption for yourself. If you’re married and file a joint return, you can claim one for your spouse, too. If you file a separate return, you can claim an exemption for your spouse only if your spouse:

Had no gross income,
Is not filing a tax return, and
Was not the dependent of another taxpayer.
4. Exemptions for Dependents. You can usually claim an exemption for each of your dependents. A dependent is either your child or a relative who meets a set of tests. You can’t claim your spouse as a dependent. You must list the Social Security number of each dependent you claim on your tax return. For more on these rules, see IRS Publication 501, Exemptions, Standard Deduction, and Filing Information. Get Publication 501 on IRS.gov. Just click on the Forms & Pubs tab on the home page.

5. Report Health Care Coverage. The health care law requires you to report certain health insurance information for you and your family. The individual shared responsibility provision requires you and each member of your family to either:

Have qualifying health insurance, called minimum essential coverage, or
Have an exemption from this coverage requirement, or
Make a shared responsibility payment when you file your 2015 tax return.
Visit IRS.gov/ACA for more on these rules.

6. Some People Don’t Qualify. You normally may not claim married persons as dependents if they file a joint return with their spouse. There are some exceptions to this rule.

7. Dependents May Have to File. A person who you can claim as your dependent may have to file their own tax return. This depends on certain factors, like total income, whether they are married and if they owe certain taxes.

8. No Exemption on Dependent’s Return. If you can claim a person as a dependent, that person can’t claim a personal exemption on his or her own tax return. This is true even if you don’t actually claim that person on your tax return. This rule applies because you can claim that person as your dependent.

9. Exemption Phase-Out. The $4,000 per exemption is subject to income limits. This rule may reduce or eliminate the amount you can claim based on the amount of your income. See Publication 501 for details.

10. Try the IRS Online Tool. Use the Interactive Tax Assistant tool on IRS.gov to see if a person qualifies as your dependent.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

IRS YouTube Videos:

Welcome to Free File – English
First Time Filing a Tax Return? – English | Spanish | ASL
Interactive Tax Assistant – English | ASL
IRS Podcasts:

First Time Filing a Tax Return? – English | Spanish
Interactive Tax Assistant – English

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