Wednesday, September 13, 2017

Claiming your parent or a relative as a dependent

Are you your parent caregiver and always wanted to know if you could claim your parent as a dependent? 

Answer:

You may claim your parent as a dependent if you meet the following IRS tests:
  1. You're not a dependent of another taxpayer.
  2. Your parent, if married, doesn't file a joint return, unless your parent and his or her spouse file a joint return only to claim a refund of income tax withheld or estimated tax paid.
  3. Your parent is a U.S. citizen, U.S. national, U.S. resident alien, or a resident of Canada or Mexico.
  4. You paid more than half of your parent's support for the calendar year.
  5. Your parent's gross income for the calendar year was less than the exemption amount.
  6. Your parent isn't a qualifying child of another taxpayer.

Relatives who don't have to live with you. 

A person related to you in any of the following ways doesn't have to live with you all year as a member of your household to meet this test.

  1. Your child, stepchild, foster child, or a descendant of any of them (for example, your grandchild). (A legally adopted child is considered your child.)
  2. Your brother, sister, half brother, half sister, stepbrother, or stepsister.
  3. Your father, mother, grandparent, or other direct ancestor, but not foster parent.
  4. Your stepfather or stepmother.
  5. A son or daughter of your brother or sister.
  6. A son or daughter of your half brother or half sister.
  7. A brother or sister of your father or mother.
  8. Your son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law.
Surprisingly, any of these relationships that were established by marriage aren't ended by death or divorce.

TAX DEDUCTIONS HOMEOWNERS SHOULD KEEP IN MIND



New homeowners do not know how lucky they are to be able to write off mortgage interest and property taxes. Galloway Tax Express want our clients to take advantage of all tax benefits as a homeowner with the following tips.
Homeowner Mortgage Interest
This is the most common homeowner tax deduction. This includes equity loan, home improvement loan, and points. If you have a first or second home you may be able to deduct that interest up to $1 million dollars in loan value.

     

Equity Loan Interest
 You may be able to deduct some of the interest from your home equity loan, however, limited to the smaller of $100,000 or the total of your home’s value minus the outstanding debt.


Home Improvement Loan Interest

Home improvement loan interest can be deductible up to $100,000. The loan must be for capital improvements and not simple repairs. Capital improvements is something that will make your home value increase or change the way you can use your home. Examples of capital improvements include:
  • Porch
  • Insulation
  • Built In Appliances
  • Roof
  • Fence
  • Garage
  • Landscaping
  • Deck
  • Swimming Pool
  • Heating
  • Cooling


Home Purchase Points
If your home purchased or refinanced was your primary home, you may be able to write off the points from that loan with the point from a second home being spread out over the life of the loan.

Homeowner Home Property Taxes
Almost always, state and local taxes are deductible in states, whether paid in escrow or to the state.

Home Office Tax Deductions
Home offices may be able to deduct costs related to that portion of your home. However, must be used exclusively as your place of business or as the storage for samples and inventory.