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If you don’t have kids, that doesn’t mean you don’t have dependents. Siblings, nieces and nephews under 19 and even a live-in boyfriend can qualify. Essentially, if you’re supporting someone financially for the entire year, you could qualify for a dependency exemption of $3,950 per person.
If you earned more than $10 in interest on bank accounts, money markets or insurance dividends, you’ll need to fess up when filing your taxes. (Your bank or financial institution will send you a 1099-INT or 1099-OID form with the relevant numbers.) Don’t freak out that you’re entering a very small number, though--it’s because most banks offer pretty low interest rates.
Sure, you may have a few decades before retirement, but if you receive survivor or disability benefits, and have other sources of income (including that jam profit from your home-based business), then your Social Security income may be taxed based on all of this incoming cash flow. For instance, if you’re single and your total combined income for the year is between $25,000 and $32,000, then up to 50 percent of your income can be taxed. If your combined income is more than $32K, then up to 85 percent of your benefits is fair game.
This tax was originally created because some extremely wealthy people were skipping out on paying the tax man. What this means for you? Couples with kids who make over $75,000 and typically itemize deductions could get penalized. But before you start to worry, check out the IRS’s AMT Assistant to see if you actually have to pay extra.a Hint: Sign up for the Health Savings Account at work, or a pretax medical deduction plan, as they reduce your salary and lower both AMT and regular taxes.
Consider this your babysitting cash. The purpose of this credit is so you can put your kids (12 years old and under; no age limit if disabled) in child care while you work or look for work. Earn as much as $1,050 with one child and $2,100 with two or more children. To get credit, fill in child care details on Form 2441.
Sure, the 1040 form is technically in English, but the IRS seems to be a big fan of perplexing jargon. (It also has a hard time letting go of the past. Like, stop asking us about our 2002 return, IRS.)
Take the “net premium tax credit,” for instance. While it may sound posh, it’s (sadly) not a deduction for shopping at luxury boutiques. It has to do with your health insurance. (Sorry.)
Lisa Lewis, CPA and editor at TurboTax, cleared up some of the most confusing points for us. Together, we went over the 1040, line by line, to demystify the top 10 befuddling, and often missed, tax calculations. Read on to score an even bigger refund this year.
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