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2008 taxes online for free 12. 2008 taxes online for free   Self-Employment Tax Table of Contents What's New for 2013 What's New for 2014 Introduction Topics - This chapter discusses: Useful Items - You may want to see: Why Pay Self-Employment Tax? How To Pay Self-Employment TaxReplacing a lost social security card. 2008 taxes online for free Name change. 2008 taxes online for free Penalty for underpayment of estimated tax. 2008 taxes online for free Who Must Pay Self-Employment Tax?Limited partner. 2008 taxes online for free Community property. 2008 taxes online for free Figuring Self-Employment EarningsLandlord Participation in Farming Methods for Figuring Net EarningsRegular Method Farm Optional Method Nonfarm Optional Method Using Both Optional Methods Reporting Self-Employment Tax What's New for 2013 Tax rates. 2008 taxes online for free  For tax years beginning in 2013, the social security part of the self-employment tax increases from 10. 2008 taxes online for free 4% to 12. 2008 taxes online for free 4%. 2008 taxes online for free The Medicare part of the tax remains at 2. 2008 taxes online for free 9%. 2008 taxes online for free As a result, the self-employment tax is increased from 13. 2008 taxes online for free 3% to 15. 2008 taxes online for free 3%. 2008 taxes online for free Additional Medicare Tax. 2008 taxes online for free . 2008 taxes online for free  For tax years beginning in 2013, a 0. 2008 taxes online for free 9% Additional Medicare Tax applies to your Medicare wages, Railroad Retirement Tax Act (RRTA) compensation, and self-employment income above a threshold amount. 2008 taxes online for free Use Form 8959, Additional Medicare Tax, to figure this tax. 2008 taxes online for free For more information, see the Instructions for Form 8959. 2008 taxes online for free Maximum net earnings. 2008 taxes online for free  The maximum net self-employment earnings subject to the social security part (12. 2008 taxes online for free 4%) of the self-employment tax increased to $113,700 for 2013. 2008 taxes online for free There is no maximum limit on earnings subject to the Medicare part (2. 2008 taxes online for free 9%). 2008 taxes online for free What's New for 2014 Maximum net earnings. 2008 taxes online for free  The maximum net self-employment earnings subject to the social security part of the self-employment tax for 2014 will be discussed in the 2013 Publication 334. 2008 taxes online for free Introduction Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. 2008 taxes online for free It is similar to the social security and Medicare taxes withheld from the pay of most wage earners. 2008 taxes online for free You usually have to pay SE tax if you are self-employed. 2008 taxes online for free You are usually self-employed if you operate your own farm on land you either own or rent. 2008 taxes online for free You have to figure SE tax on Schedule SE (Form 1040). 2008 taxes online for free Farmers who have employees may have to pay the employer's share of social security and Medicare taxes, as well. 2008 taxes online for free See chapter 13 for information on employment taxes. 2008 taxes online for free Self-employment tax rate. 2008 taxes online for free   For tax years beginning in 2013, the self-employment tax rate is 15. 2008 taxes online for free 3%. 2008 taxes online for free The rate consists of two parts: 12. 2008 taxes online for free 4% for social security (old-age, survivors, and disability insurance) and 2. 2008 taxes online for free 9% for Medicare (hospital insurance). 2008 taxes online for free Topics - This chapter discusses: Why pay self-employment tax How to pay self-employment tax Who must pay self-employment tax Figuring self-employment earnings Landlord participation in farming Methods for figuring net earnings Reporting self-employment tax Useful Items - You may want to see: Publication 541 Partnerships Form (and Instructions) 1040 U. 2008 taxes online for free S. 2008 taxes online for free Individual Income Tax Return Sch F (Form 1040) Profit or Loss From Farming Sch SE (Form 1040) Self-Employment Tax 1065 U. 2008 taxes online for free S. 2008 taxes online for free Return of Partnership Income Sch K-1 (Form 1065) Partner's Share of Income, Deductions, Credits, etc. 2008 taxes online for free See chapter 16 for information about getting publications and forms. 2008 taxes online for free Why Pay Self-Employment Tax? Social security benefits are available to self-employed persons just as they are to wage earners. 2008 taxes online for free Your payments of SE tax contribute to your coverage under the social security system. 2008 taxes online for free Social security coverage provides you with retirement benefits, disability benefits, survivor benefits, and hospital insurance (Medicare) benefits. 2008 taxes online for free How to become insured under social security. 2008 taxes online for free   You must be insured under the social security system before you begin receiving social security benefits. 2008 taxes online for free You are insured if you have the required number of credits (also called quarters of coverage). 2008 taxes online for free Earning credits in 2013. 2008 taxes online for free   You can earn a maximum of four credits per year. 2008 taxes online for free For 2013, you earn one credit for each $1,160 of combined wages and self-employment earnings subject to social security tax. 2008 taxes online for free You need $4,640 ($1,160 × 4) of combined wages and self-employment earnings subject to social security tax to earn four credits in 2013. 2008 taxes online for free It does not matter whether the income is earned in 1 quarter or is spread over 2 or more quarters. 2008 taxes online for free For an explanation of the number of credits you must have to be insured and the benefits available to you and your family under the social security program, consult your nearest Social Security Administration (SSA) office or visit the SSA website at www. 2008 taxes online for free socialsecurity. 2008 taxes online for free gov. 2008 taxes online for free Making false statements to get or to increase social security benefits may subject you to penalties. 2008 taxes online for free The Social Security Administration (SSA) time limit for posting self-employment earnings. 2008 taxes online for free   Generally, the SSA will give you credit only for self-employment earnings reported on a tax return filed within 3 years, 3 months, and 15 days after the tax year you earned the income. 2008 taxes online for free    If you file your tax return or report a change in your self-employment earnings after the SSA time limit for posting self-employment earnings, the SSA may change its records, but only to remove or reduce the amount. 2008 taxes online for free The SSA will not change its records to increase your self-employment earnings after the SSA time limit listed above. 2008 taxes online for free How To Pay Self-Employment Tax To pay SE tax, you must have a social security number (SSN) or an individual taxpayer identification number (ITIN). 2008 taxes online for free This section explains how to: Obtain an SSN or ITIN, and Pay your SE tax using estimated tax. 2008 taxes online for free An ITIN does not entitle you to social security benefits. 2008 taxes online for free Obtaining an ITIN does not change your immigration or employment status under U. 2008 taxes online for free S. 2008 taxes online for free law. 2008 taxes online for free Obtaining a social security number. 2008 taxes online for free   If you have never had an SSN, apply for one using Form SS-5, Application for a Social Security Card. 2008 taxes online for free The application is also available in Spanish. 2008 taxes online for free You can get this form at any Social Security office or by calling 1-800-772-1213. 2008 taxes online for free    You can also download Form SS-5 from the Social Security Administration website at  www. 2008 taxes online for free socialsecurity. 2008 taxes online for free gov. 2008 taxes online for free   If you have a social security number from the time you were an employee, you must use that number. 2008 taxes online for free Do not apply for a new one. 2008 taxes online for free Replacing a lost social security card. 2008 taxes online for free   If you have a number but lost your card, file Form SS-5. 2008 taxes online for free You will get a new card showing your original number, not a new number. 2008 taxes online for free Name change. 2008 taxes online for free   If your name has changed since you received your social security card, complete Form SS-5 to report a name change. 2008 taxes online for free Obtaining an individual taxpayer identification number. 2008 taxes online for free   The IRS will issue you an ITIN, for tax use only, if you are a nonresident or resident alien and you do not have, and are not eligible to get, an SSN. 2008 taxes online for free To apply for an ITIN, file Form W-7, Application for IRS Individual Taxpayer Identification Number. 2008 taxes online for free You can get this form by calling 1-800-829-3676. 2008 taxes online for free For more information on ITINs, see Publication 1915, Understanding Your IRS Individual Taxpayer Identification Number. 2008 taxes online for free Form W-7 and Publication 1915 are also available in Spanish. 2008 taxes online for free    You can also download Form W-7 from the IRS website at IRS. 2008 taxes online for free gov. 2008 taxes online for free Paying estimated tax. 2008 taxes online for free   Estimated tax is the method used to pay tax (including SE tax) on income not subject to withholding. 2008 taxes online for free You generally have to make estimated tax payments if you expect to owe tax, including SE tax, of $1,000 or more when you file your return. 2008 taxes online for free Use Form 1040-ES, Estimated Tax for Individuals, to figure and pay the tax. 2008 taxes online for free   However, if at least two-thirds of your gross income for 2013 or 2014 was from farming and you file your 2014 Form 1040 and pay all the tax due by March 2, 2015, you do not have to pay any estimated tax. 2008 taxes online for free For more information about estimated tax for farmers, see chapter 15. 2008 taxes online for free Penalty for underpayment of estimated tax. 2008 taxes online for free   You may have to pay a penalty if you do not pay enough estimated tax by its due date. 2008 taxes online for free Who Must Pay Self-Employment Tax? You must pay SE tax and file Schedule SE (Form 1040) if your net earnings from self-employment were $400 or more. 2008 taxes online for free The SE tax rules apply no matter how old you are and even if you are already receiving social security or Medicare benefits. 2008 taxes online for free Aliens. 2008 taxes online for free   Generally, resident aliens must pay self-employment tax under the same rules that apply to U. 2008 taxes online for free S. 2008 taxes online for free citizens. 2008 taxes online for free Nonresident aliens are not subject to self-employment tax. 2008 taxes online for free However, residents of the Virgin Islands, Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, or American Samoa are subject to self-employment tax, as they are considered U. 2008 taxes online for free S. 2008 taxes online for free residents for self-employment tax purposes. 2008 taxes online for free For more information on aliens, see Publication 519, U. 2008 taxes online for free S. 2008 taxes online for free Tax Guide for Aliens. 2008 taxes online for free Are you self-employed?   You are self-employed if you carry on a trade or business (such as running a farm) as a sole proprietor, an independent contractor, a member of a partnership, or are otherwise in business for yourself. 2008 taxes online for free A trade or business is generally an activity carried on for a livelihood or in good faith to make a profit. 2008 taxes online for free Share farmer. 2008 taxes online for free   You are a self-employed farmer under an income-sharing arrangement if both the following apply. 2008 taxes online for free You produce a crop or raise livestock on land belonging to another person. 2008 taxes online for free Your share of the crop or livestock, or the proceeds from their sale, depends on the amount produced. 2008 taxes online for free Your net farm profit or loss from the income-sharing arrangement is reported on Schedule F (Form 1040) and included in your self-employment earnings. 2008 taxes online for free   If you produce a crop or livestock on land belonging to another person and are to receive a specified rate of pay, a fixed sum of money, or a fixed quantity of the crop or livestock, and not a share of the crop or livestock or their proceeds, you may be either self-employed or an employee of the landowner. 2008 taxes online for free This will depend on whether the landowner has the right to direct or control your performance of services. 2008 taxes online for free Example. 2008 taxes online for free A share farmer produces a crop on land owned by another person on a 50-50 crop-share basis. 2008 taxes online for free Under the terms of their agreement, the share farmer furnishes the labor and half the cost of seed and fertilizer. 2008 taxes online for free The landowner furnishes the machinery and equipment used to produce and harvest the crop, and half the cost of seed and fertilizer. 2008 taxes online for free The share farmer is provided a house in which to live. 2008 taxes online for free The landowner and the share farmer decide on a cropping plan. 2008 taxes online for free The share farmer is a self-employed farmer for purposes of the agreement to produce the crops, and the share farmer's part of the profit or loss from the crops is reported on Schedule F (Form 1040) and included in self-employment earnings. 2008 taxes online for free The tax treatment of the landowner is discussed later under Landlord Participation in Farming. 2008 taxes online for free Contract farming. 2008 taxes online for free   Under typical contract farming arrangements, the grower receives a fixed payment per unit of crops or finished livestock delivered to the processor or packing company. 2008 taxes online for free Since the grower typically furnishes labor and bears some production risk, the payments are reported on Schedule F and are therefore subject to self-employment tax. 2008 taxes online for free 4-H Club or FFA project. 2008 taxes online for free   If an individual participates in a 4-H Club or Future Farmers of America (FFA) project, any net income received from sales or prizes related to the project may be subject to income tax. 2008 taxes online for free Report the net income as “Other income” on line 21 of Form 1040. 2008 taxes online for free If necessary, attach a statement showing the gross income and expenses. 2008 taxes online for free The net income may not be subject to SE tax if the project is primarily for educational purposes and not for profit, and is completed by the individual under the rules and economic restrictions of the sponsoring 4-H or FFA organization. 2008 taxes online for free Such a project is generally not considered a trade or business. 2008 taxes online for free Partners in a partnership. 2008 taxes online for free   Generally, you are self-employed if you are a member of a partnership that carries on a trade or business. 2008 taxes online for free Limited partner. 2008 taxes online for free   If you are a limited partner, your partnership income is generally not subject to SE tax. 2008 taxes online for free However, guaranteed payments you receive for services you perform for the partnership are subject to SE tax and should be reported to you in box 14 of your Schedule K-1 (Form 1065). 2008 taxes online for free Business Owned and Operated by Spouses. 2008 taxes online for free   If you and your spouse jointly own and operate a farm as an unincorporated business and share in the profits and losses, you are partners in a partnership whether or not you have a formal partnership agreement. 2008 taxes online for free You must file Form 1065, instead of Schedule F, unless you make a joint election to be treated as a qualified joint venture. 2008 taxes online for free Making this election will allow you to avoid the complexity of Form 1065 but still give each spouse credit for social security earnings on which retirement benefits are based. 2008 taxes online for free Qualified joint venture. 2008 taxes online for free   If you and your spouse each materially participate as the only members of a jointly owned and operated farm, and you file a joint tax return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership for the tax year. 2008 taxes online for free For an explanation of “material participation,” see the instructions for Schedule C, line G, and the instructions for Schedule F, line E. 2008 taxes online for free   To make this election, you must divide all items of income, gain, loss, deduction, and credit attributable to the business between you and your spouse in accordance with your respective interests in the venture. 2008 taxes online for free Each of you must file a separate Schedule F and a separate Schedule SE. 2008 taxes online for free For more information, see Qualified Joint Venture in the Instructions for Schedule SE (Form 1040). 2008 taxes online for free Spouse employee. 2008 taxes online for free   If your spouse is your employee, not your partner, you must withhold and pay social security and Medicare taxes for him or her. 2008 taxes online for free For more information about employment taxes, see chapter 13. 2008 taxes online for free Community property. 2008 taxes online for free   If you are a partner and your distributive share of any income or loss from a trade or business carried on by the partnership is community property, treat your share as your self-employment earnings. 2008 taxes online for free Do not treat any of your share as self-employment earnings of your spouse. 2008 taxes online for free Figuring Self-Employment Earnings Farmer. 2008 taxes online for free   If you are self-employed as a farmer, use Schedule F (Form 1040) to figure your self-employment earnings. 2008 taxes online for free Partnership income or loss. 2008 taxes online for free   If you are a member of a partnership that carries on a trade or business, the partnership should report your self-employment earnings in box 14, code A, of your Schedule K-1 (Form 1065). 2008 taxes online for free Box 14 of Schedule K-1 may also provide amounts for gross farming or fishing income (code B) and gross nonfarm income (code C). 2008 taxes online for free Use these amounts if you use the farm or nonfarm optional method to figure net earnings from self-employment (see Methods for Figuring Net Earnings , later). 2008 taxes online for free   If you are a general partner, you may need to reduce these reported earnings by amounts you claim as a section 179 deduction, unreimbursed partnership expenses, or depletion on oil and gas properties. 2008 taxes online for free   If the amount reported is a loss, include only the deductible amount when you figure your total self-employment earnings. 2008 taxes online for free   For more information, see the Partner's Instructions for Schedule K-1 (Form 1065). 2008 taxes online for free   For general information on partnerships, see Publication 541. 2008 taxes online for free More than one business. 2008 taxes online for free   If you have self-employment earnings from more than one trade, business, or profession, you generally must combine the net profit or loss from each to determine your total self-employment earnings. 2008 taxes online for free A loss from one business reduces your profit from another business. 2008 taxes online for free However, do not combine earnings from farm and nonfarm businesses if you are using one of the optional methods (discussed later) to figure net earnings. 2008 taxes online for free Community property. 2008 taxes online for free   If any of the income from a farm or business, other than a partnership, is community property under state law, it is included in the self-employment earnings of the spouse carrying on the trade or business. 2008 taxes online for free Lost income payments. 2008 taxes online for free   Lost income payments received from insurance or other sources for reducing or stopping farming activities are included in self-employment earnings. 2008 taxes online for free These include USDA payments to compensate for lost income resulting from reductions in tobacco quotas and allotments. 2008 taxes online for free Even if you are not farming when you receive the payment, it is included in self-employment earnings if it relates to your farm business (even though it is temporarily inactive). 2008 taxes online for free A connection exists if it is clear the payment would not have been made but for your conduct of your farm business. 2008 taxes online for free Gain or loss. 2008 taxes online for free   A gain or loss from the disposition of property that is neither stock in trade nor held primarily for sale to customers is not included in self-employment earnings. 2008 taxes online for free It does not matter whether the disposition is a sale, exchange, or involuntary conversion. 2008 taxes online for free For example, gains or losses from the disposition of the following types of property are not included in self-employment earnings. 2008 taxes online for free Investment property. 2008 taxes online for free Depreciable property or other fixed assets used in your trade or business. 2008 taxes online for free Livestock held for draft, breeding, sport, or dairy purposes, and not held primarily for sale, regardless of how long the livestock was held, or whether it was raised or purchased. 2008 taxes online for free Unharvested standing crops sold with land held more than 1 year. 2008 taxes online for free Timber, coal, or iron ore held for more than 1 year if an economic interest was retained, such as a right to receive coal royalties. 2008 taxes online for free   A gain or loss from the cutting of timber is not included in self-employment earnings if the cutting is treated as a sale or exchange. 2008 taxes online for free For more information on electing to treat the cutting of timber as a sale or exchange, see Timber in chapter 8. 2008 taxes online for free Wages and salaries. 2008 taxes online for free   Wages and salaries received for services performed as an employee and covered by social security or railroad retirement are not included in self-employment earnings. 2008 taxes online for free   Wages paid in kind to you for agricultural labor, such as commodity wages, are not included in self-employment earnings. 2008 taxes online for free Retired partner. 2008 taxes online for free   Retirement income received by a partner from his or her partnership under a written plan is not included in self-employment earnings if all the following apply. 2008 taxes online for free The retired partner performs no services for the partnership during the year. 2008 taxes online for free The retired partner is owed only the retirement payments. 2008 taxes online for free The retired partner's share (if any) of the partnership capital was fully paid to the retired partner. 2008 taxes online for free The payments to the retired partner are lifelong periodic payments. 2008 taxes online for free Conservation Reserve Program (CRP) payments. 2008 taxes online for free   Under the Conservation Reserve Program (CRP), if you own or operate highly erodible or other specified cropland, you may enter into a longterm contract with the USDA, agreeing to convert to a less intensive use of that cropland. 2008 taxes online for free You must include the annual rental payments and any onetime incentive payment you receive under the program on Schedule F, lines 4a and 4b. 2008 taxes online for free Cost share payments you receive may qualify for the costsharing exclusion. 2008 taxes online for free See Cost-Sharing Exclusion (Improvements), above. 2008 taxes online for free CRP payments are reported to you on Form 1099G. 2008 taxes online for free Individuals who are receiving Social Security retirement or disability benefits may exclude CRP payments when calculating self-employment tax. 2008 taxes online for free See the instructions for Schedule SE (Form 1040). 2008 taxes online for free Self-employed health insurance deduction. 2008 taxes online for free   You cannot deduct the self-employed health insurance deduction you report on Form 1040, line 29, from self-employment earnings on Schedule SE (Form 1040). 2008 taxes online for free Landlord Participation in Farming As a general rule, income and deductions from rentals and from personal property leased with real estate are not included in determining self-employment earnings. 2008 taxes online for free However, income and deductions from farm rentals, including government commodity program payments received by a landowner who rents land, are included if the rental arrangement provides that the landowner will, and does, materially participate in the production or management of production of the farm products on the land. 2008 taxes online for free Crop shares. 2008 taxes online for free   Rent paid in the form of crop shares is included in self-employment earnings for the year you sell, exchange, give away, or use the crop shares if you meet one of the four material participation tests (discussed next) at the time the crop shares are produced. 2008 taxes online for free Feeding such crop shares to livestock is considered using them. 2008 taxes online for free Your gross income for figuring your self-employment earnings includes the fair market value of the crop shares when they are used as feed. 2008 taxes online for free Material participation for landlords. 2008 taxes online for free   You materially participate if you have an arrangement with your tenant for your participation and you meet one or more of the following tests. 2008 taxes online for free You do at least three of the following. 2008 taxes online for free Pay, using cash or credit, at least half the direct costs of producing the crop or livestock. 2008 taxes online for free Furnish at least half the tools, equipment, and livestock used in the production activities. 2008 taxes online for free Advise or consult with your tenant. 2008 taxes online for free Inspect the production activities periodically. 2008 taxes online for free You regularly and frequently make, or take an important part in making, management decisions substantially contributing to or affecting the success of the enterprise. 2008 taxes online for free You work 100 hours or more spread over a period of 5 weeks or more in activities connected with agricultural production. 2008 taxes online for free You do things that, considered in their totality, show you are materially and significantly involved in the production of the farm commodities. 2008 taxes online for free These tests may be used as general guides for determining whether you are a material participant. 2008 taxes online for free Example. 2008 taxes online for free Drew Houston agrees to produce a crop on J. 2008 taxes online for free Clarke's cotton farm, with each receiving half the proceeds. 2008 taxes online for free Clarke advises Houston when to plant, spray, and pick the cotton. 2008 taxes online for free During the growing season, Clarke inspects the crop every few days to determine whether Houston is properly taking care of the crop. 2008 taxes online for free Houston furnishes all labor needed to grow and harvest the crop. 2008 taxes online for free The management decisions made by Clarke in connection with the care of the cotton crop and his regular inspection of the crop establish that he participates to a material degree in the cotton production operations. 2008 taxes online for free The income Clarke receives from his cotton farm is included in his self-employment earnings. 2008 taxes online for free Methods for Figuring Net Earnings There are three ways to figure your net earnings from self-employment. 2008 taxes online for free The regular method. 2008 taxes online for free The farm optional method. 2008 taxes online for free The nonfarm optional method. 2008 taxes online for free You must use the regular method unless you are eligible to use one or both of the optional methods. 2008 taxes online for free See Figure 12-1 , shown later. 2008 taxes online for free Figure 12-1. 2008 taxes online for free Can I Use the Optional Methods? Please click here for the text description of the image. 2008 taxes online for free Figure 12–1. 2008 taxes online for free Can I Use the Optional Methods? Why use an optional method?   You may want to use the optional methods (discussed later) when you have a loss or a small net profit and any one of the following applies. 2008 taxes online for free You want to receive credit for social security benefit coverage. 2008 taxes online for free You incurred child or dependent care expenses for which you could claim a credit. 2008 taxes online for free (An optional method may increase your earned income, which could increase your credit. 2008 taxes online for free ) You are entitled to the earned income credit. 2008 taxes online for free (An optional method may increase your earned income, which could increase your credit. 2008 taxes online for free ) You are entitled to the additional child tax credit. 2008 taxes online for free (An optional method may increase your earned income, which could increase your credit. 2008 taxes online for free ) Effects of using an optional method. 2008 taxes online for free   Using an optional method could increase your SE tax. 2008 taxes online for free Paying more SE tax may result in you getting higher social security disability or retirement benefits. 2008 taxes online for free   If you use either or both optional methods, you must figure and pay the SE tax due under these methods even if you would have had a smaller SE tax or no SE tax using the regular method. 2008 taxes online for free   The optional methods may be used only to figure your SE tax. 2008 taxes online for free To figure your income tax, include your actual self-employment earnings in gross income, regardless of which method you use to determine SE tax. 2008 taxes online for free Regular Method Multiply your total self-employment earnings by 92. 2008 taxes online for free 35% (. 2008 taxes online for free 9235) to get your net earnings under the regular method. 2008 taxes online for free See Short Schedule SE, line 4, or Long Schedule SE, line 4a. 2008 taxes online for free Net earnings figured using the regular method are also called “actual net earnings. 2008 taxes online for free ” Farm Optional Method Use the farm optional method only for self-employment earnings from a farming business. 2008 taxes online for free You can use this method if you meet either of the following tests. 2008 taxes online for free Your gross farm income is $6,960 or less. 2008 taxes online for free Your net farm profits are less than $5,024. 2008 taxes online for free Gross farm income. 2008 taxes online for free   Your gross farm income is the total of the amounts from: Schedule F (Form 1040), line 9, and Schedule K-1 (Form 1065), box 14, code B (from farm partnerships). 2008 taxes online for free Net farm profits. 2008 taxes online for free   Net farm profits generally are the total of the amounts from: Schedule F (Form 1040), line 34, and Schedule K-1 (Form 1065), box 14, code A (from farm partnerships). 2008 taxes online for free However, you may need to adjust the amount reported on Schedule K-1 if you are a general partner or if it is a loss. 2008 taxes online for free For more information, see Partnership income or loss , earlier. 2008 taxes online for free Figuring farm net earnings. 2008 taxes online for free   If you meet either of the two tests explained above, use Table 12-1. 2008 taxes online for free Figuring Farm Net Earnings , to figure your net earnings from self-employment under the farm optional method. 2008 taxes online for free Table 12-1. 2008 taxes online for free Figuring Farm Net Earnings IF your gross farm income  is. 2008 taxes online for free . 2008 taxes online for free . 2008 taxes online for free THEN your net earnings are equal to. 2008 taxes online for free . 2008 taxes online for free . 2008 taxes online for free $6,960 or less Two-thirds of your gross farm income. 2008 taxes online for free More than $6,960 $4,640 Optional method can reduce or eliminate SE tax. 2008 taxes online for free   If your gross farm income is $6,960 or less and your farm net earnings figured under the farm optional method are less than your actual net earnings, you can use the farm optional method to reduce or eliminate your SE tax. 2008 taxes online for free Your actual net earnings are your net earnings figured using the regular method, explained earlier. 2008 taxes online for free Example. 2008 taxes online for free Your gross farm income is $540 and your net farm profit is $460. 2008 taxes online for free Consequently, your net earnings figured under the farm optional method are $360 (2/3 of $540) and your actual net earnings are $425 (92. 2008 taxes online for free 35% of $460). 2008 taxes online for free You owe no SE tax if you use the optional method because your net earnings under the farm optional method are less than $400. 2008 taxes online for free Nonfarm Optional Method This is an optional method available for determining net earnings from nonfarm self-employment, much like the farm optional method. 2008 taxes online for free If you are also engaged in a nonfarm business, you may be able to use this method to figure your nonfarm net earnings. 2008 taxes online for free You can use this method even if you do not use the farm optional method for determining your farm net earnings and even if you have a net loss from your nonfarm business. 2008 taxes online for free For more information about the nonfarm optional method, see Publication 334. 2008 taxes online for free You cannot combine farm and nonfarm self-employment earnings to figure your net earnings under either of the optional methods. 2008 taxes online for free Using Both Optional Methods If you use both optional methods, you must add the net earnings figured under each method to arrive at your total net earnings from self-employment. 2008 taxes online for free You can report less than your total actual farm and nonfarm net earnings but not less than actual nonfarm net earnings. 2008 taxes online for free If you use both optional methods, you can report no more than $4,640 as your combined net earnings from self-employment. 2008 taxes online for free Reporting Self-Employment Tax Use Schedule SE (Form 1040) to figure and report your SE tax. 2008 taxes online for free Then, enter the SE tax on line 56 of Form 1040 and attach Schedule SE to Form 1040. 2008 taxes online for free Most taxpayers can use Section A–Short Schedule SE to figure their SE tax. 2008 taxes online for free However, certain taxpayers must use Section B–Long Schedule SE. 2008 taxes online for free Use the chart on page 1 of Schedule SE to find out which one to use. 2008 taxes online for free If you have to pay SE tax, you must file Form 1040 (with Schedule SE attached) even if you do not otherwise have to file a federal income tax return. 2008 taxes online for free Deduction for employer-equivalent portion of self-employment tax. 2008 taxes online for free   You can deduct the employer-equivalent portion of your SE tax in figuring your adjusted gross income. 2008 taxes online for free This deduction only affects your income tax. 2008 taxes online for free It does not affect either your net earnings from self-employment or your SE tax. 2008 taxes online for free   To deduct the tax, enter on Form 1040, line 27, the amount shown on Section A, Line 6, or Section B, line 13, Deduction for employer-equivalent portion of self-employment tax, of the Schedule SE. 2008 taxes online for free Joint return. 2008 taxes online for free   Even if you file a joint return, you cannot file a joint Schedule SE. 2008 taxes online for free This is true whether one spouse or both spouses have self-employment earnings. 2008 taxes online for free Your spouse is not considered self-employed just because you are. 2008 taxes online for free If both of you have self-employment earnings, each of you must complete a separate Schedule SE. 2008 taxes online for free However, if one spouse uses the Short Schedule SE and the other spouse has to use the Long Schedule SE, both can use the same form. 2008 taxes online for free Attach both schedules to the joint return. 2008 taxes online for free If you and your spouse operate a business as a partnership, see Business Owned and Operated by Spouses and Qualified joint venture , earlier, under Who Must Pay Self-Employment Tax . 2008 taxes online for free Prev  Up  Next   Home   More Online Publications
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SOI Tax Stats - Business Tax Statistics

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Each year SOI produces studies that provide statistics on income, deductions, taxes, credits, and more reported by businesses. Select the subject areas below that interest you.

Integrated Business Data (IBD)

 

This section contains statistical tables and articles on all businesses, which were compiled to form the SOI Integrated Business Dataset (IBD). The IBD was assembled at the table level from the annual SOI cross-sectional studies of corporations ( C and S corporations), partnerships, and nonfarm sole proprietorships. The dataset combines data from these types of organizations to enable examination of changes in business composition. Data from these annual statistical studies are generally publicly available and are published in a variety of SOI reports.
Form 8824 Data for Like-Kind Property Exchanges.  1995-2010

Corporations

 

Numerous articles and data which provide statistics on income, deductions, tax, credits, and more as reported by corporations filing on Form 1120 (1120, 1120-A, 1120-L, 1120-PC, 1120-REIT, 1120-RIC, and more) returns and associated schedules can be found here.

International

 

Find statistics for both inbound and outbound international corporate activities here. There's also information on specialized areas covering foreign trusts, international boycotts, and including form types: 5471, 5472, 1118, 1120-F, 1120-FSC, 5713, 5735, and more.

Partnerships

Snapshot of Partnership Returns, 2010

Partnerships are relationships between two or more persons who join to carry on a trade or business, with each person contributing money, property, labor or skill, and each expecting to share in the profits and losses of the business. These data come from taxpayers filing Form 1065 or 1065-B. Look here for statistics and related information on partnerships.

S Corporations

 

S corporations are domestic corporations that elect to be taxed individually on the corporation's income; they can have no more than 75 shareholders (only U.S. citizens, resident aliens, estates, certain trusts, and exempt organizations) and one class of stock. These corporations file on Form 1120S . Look here for statistics and related information on these corporations.

 Sole Proprietorships
 Non-Farm  ||  Farm

Sole Proprietorships are businesses too.  Here you'll find statistics covering basic data, business receipts, deductions, and net income reported by an individual taxpayer on Schedule C (non-farm) of Form 1040.  There are also statistics for Schedule F (farm) of Form 1040

Excise

This section contains statistics on taxes levied on the manufacture, sale, or consumption of commodities, including data for environmental, gasoline, and telephone excise taxes, and more.

Employment

Employment data are available in the IRS Data Book and in SOI Bulletin Articles.  Find statistics for FICA and SECA taxes, and more, here.

 SOI Bulletin Articles

The SOI Bulletin is a quarterly publication containing articles and data releases from all SOI programs. Look here for articles sorted by topic and relating to business tax statistics.

 

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Page Last Reviewed or Updated: 05-Sep-2013

The 2008 Taxes Online For Free

2008 taxes online for free 3. 2008 taxes online for free   Personal Exemptions and Dependents Table of Contents What's New Introduction Useful Items - You may want to see: ExemptionsPersonal Exemptions Exemptions for Dependents Qualifying Child Qualifying Relative Phaseout of Exemptions Social Security Numbers for DependentsBorn and died in 2013. 2008 taxes online for free Taxpayer identification numbers for aliens. 2008 taxes online for free Taxpayer identification numbers for adoptees. 2008 taxes online for free What's New Exemption amount. 2008 taxes online for free  The amount you can deduct for each exemption has increased. 2008 taxes online for free It was $3,800 for 2012. 2008 taxes online for free It is $3,900 for 2013. 2008 taxes online for free Exemption phaseout. 2008 taxes online for free  You lose at least part of the benefit of your exemptions if your adjusted gross income is more than a certain amount. 2008 taxes online for free For 2013, this amount is $150,000 for a married individual filing a separate return; $250,000 for a single individual; $275,000 for a head of household; and $300,000 for married individuals filing jointly or a qualifying widow(er). 2008 taxes online for free See Phaseout of Exemptions , later. 2008 taxes online for free Introduction This chapter discusses the following topics. 2008 taxes online for free Personal exemptions — You generally can take one for yourself and, if you are married, one for your spouse. 2008 taxes online for free Exemptions for dependents — You generally can take an exemption for each of your dependents. 2008 taxes online for free A dependent is your qualifying child or qualifying relative. 2008 taxes online for free If you are entitled to claim an exemption for a dependent, that dependent cannot claim a personal exemption on his or her own tax return. 2008 taxes online for free Phaseout of exemptions — Your deduction is reduced if your adjusted gross income is more than a certain amount. 2008 taxes online for free Social security number (SSN) requirement for dependents — You must list the SSN of any dependent for whom you claim an exemption. 2008 taxes online for free Deduction. 2008 taxes online for free   Exemptions reduce your taxable income. 2008 taxes online for free You can deduct $3,900 for each exemption you claim in 2013. 2008 taxes online for free But you may lose at least part of the dollar amount of your exemptions if your adjusted gross income is more than a certain amount. 2008 taxes online for free See Phaseout of Exemptions , later. 2008 taxes online for free How to claim exemptions. 2008 taxes online for free    How you claim an exemption on your tax return depends on which form you file. 2008 taxes online for free    If you file Form 1040EZ, the exemption amount is combined with the standard deduction amount and entered on line 5. 2008 taxes online for free    If you file Form 1040A, complete lines 6a through 6d. 2008 taxes online for free The total number of exemptions you can claim is the total in the box on line 6d. 2008 taxes online for free Also complete line 26. 2008 taxes online for free   If you file Form 1040, complete lines 6a through 6d. 2008 taxes online for free The total number of exemptions you can claim is the total in the box on line 6d. 2008 taxes online for free Also complete line 42. 2008 taxes online for free Useful Items - You may want to see: Publication 501 Exemptions, Standard Deduction, and Filing Information Form (and Instructions) 2120 Multiple Support Declaration 8332 Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent Exemptions There are two types of exemptions you may be able to take: Personal exemptions for yourself and your spouse, and Exemptions for dependents (dependency exemptions). 2008 taxes online for free While each is worth the same amount ($3,900 for 2013), different rules apply to each type. 2008 taxes online for free Personal Exemptions You are generally allowed one exemption for yourself. 2008 taxes online for free If you are married, you may be allowed one exemption for your spouse. 2008 taxes online for free These are called personal exemptions. 2008 taxes online for free Your Own Exemption You can take one exemption for yourself unless you can be claimed as a dependent by another taxpayer. 2008 taxes online for free If another taxpayer is entitled to claim you as a dependent, you cannot take an exemption for yourself even if the other taxpayer does not actually claim you as a dependent. 2008 taxes online for free Your Spouse's Exemption Your spouse is never considered your dependent. 2008 taxes online for free Joint return. 2008 taxes online for free   On a joint return you can claim one exemption for yourself and one for your spouse. 2008 taxes online for free Separate return. 2008 taxes online for free   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 return, and was not the dependent of another taxpayer. 2008 taxes online for free This is true even if the other taxpayer does not actually claim your spouse as a dependent. 2008 taxes online for free You can claim an exemption for your spouse even if he or she is a nonresident alien; in that case, your spouse must have no gross income for U. 2008 taxes online for free S. 2008 taxes online for free tax purposes, must not be filing a return, and must not be the dependent of another taxpayer. 2008 taxes online for free Death of spouse. 2008 taxes online for free   If your spouse died during the year and you file a joint return for yourself and your deceased spouse, you generally can claim your spouse's exemption under the rules just explained in Joint return . 2008 taxes online for free If you file a separate return for the year, you may be able to claim your spouse's exemption under the rules just described in Separate return . 2008 taxes online for free   If you remarried during the year, you cannot take an exemption for your deceased spouse. 2008 taxes online for free   If you are a surviving spouse without gross income and you remarry in the year your spouse died, you can be claimed as an exemption on both the final separate return of your deceased spouse and the separate return of your new spouse for that year. 2008 taxes online for free If you file a joint return with your new spouse, you can be claimed as an exemption only on that return. 2008 taxes online for free Divorced or separated spouse. 2008 taxes online for free   If you obtained a final decree of divorce or separate maintenance during the year, you cannot take your former spouse's exemption. 2008 taxes online for free This rule applies even if you provided all of your former spouse's support. 2008 taxes online for free Exemptions for Dependents You are allowed one exemption for each person you can claim as a dependent. 2008 taxes online for free You can claim an exemption for a dependent even if your dependent files a return. 2008 taxes online for free The term “dependent” means: A qualifying child, or A qualifying relative. 2008 taxes online for free The terms “ qualifying child ” and “ qualifying relative ” are defined later. 2008 taxes online for free You can claim an exemption for a qualifying child or qualifying relative only if these three tests are met. 2008 taxes online for free Dependent taxpayer test. 2008 taxes online for free Joint return test. 2008 taxes online for free Citizen or resident test. 2008 taxes online for free These three tests are explained in detail later. 2008 taxes online for free All the requirements for claiming an exemption for a dependent are summarized in Table 3-1. 2008 taxes online for free Table 3-1. 2008 taxes online for free Overview of the Rules for Claiming an Exemption for a Dependent Caution. 2008 taxes online for free This table is only an overview of the rules. 2008 taxes online for free For details, see the rest of this chapter. 2008 taxes online for free You cannot claim any dependents if you (or your spouse, if filing jointly) could be claimed as a dependent by another taxpayer. 2008 taxes online for free   You cannot claim a married person who files a joint return as a dependent unless that joint return is filed only to claim a refund of withheld income tax or estimated tax paid. 2008 taxes online for free   You cannot claim a person as a dependent unless that person is a U. 2008 taxes online for free S. 2008 taxes online for free citizen, U. 2008 taxes online for free S. 2008 taxes online for free resident alien, U. 2008 taxes online for free S. 2008 taxes online for free national, or a resident of Canada or Mexico. 2008 taxes online for free 1  You cannot claim a person as a dependent unless that person is your qualifying child or qualifying relative. 2008 taxes online for free   Tests To Be a Qualifying Child   Tests To Be a Qualifying Relative The child must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them. 2008 taxes online for free   The child must be (a) under age 19 at the end of the year and younger than you (or your spouse, if filing jointly), (b) under age 24 at the end of the year, a student, and younger than you (or your spouse, if filing jointly), or (c) any age if permanently and totally disabled. 2008 taxes online for free   The child must have lived with you for more than half of the year. 2008 taxes online for free 2  The child must not have provided more than half of his or her own support for the year. 2008 taxes online for free   The child is not filing a joint return for the year (unless that return is filed only to get a refund of income tax withheld or estimated tax paid). 2008 taxes online for free  If the child meets the rules to be a qualifying child of more than one person, only one person can actually treat the child as a qualifying child. 2008 taxes online for free See the Special Rule for Qualifying Child of More Than One Person to find out which person is the person entitled to claim the child as a qualifying child. 2008 taxes online for free   The person cannot be your qualifying child or the qualifying child of any other taxpayer. 2008 taxes online for free   The person either (a) must be related to you in one of the ways listed under Relatives who do not have to live with you , or (b) must live with you all year as a member of your household2 (and your relationship must not violate local law). 2008 taxes online for free   The person's gross income for the year must be less than $3,900. 2008 taxes online for free 3  You must provide more than half of the person's total support for the year. 2008 taxes online for free 4  1There is an exception for certain adopted children. 2008 taxes online for free 2There are exceptions for temporary absences, children who were born or died during the year, children of divorced or separated parents (or parents who live apart), and kidnapped children. 2008 taxes online for free 3There is an exception if the person is disabled and has income from a sheltered workshop. 2008 taxes online for free 4There are exceptions for multiple support agreements, children of divorced or separated parents (or parents who live apart), and kidnapped children. 2008 taxes online for free Dependent not allowed a personal exemption. 2008 taxes online for free If you can claim an exemption for your dependent, the dependent cannot claim his or her own personal exemption on his or her own tax return. 2008 taxes online for free This is true even if you do not claim the dependent's exemption on your return. 2008 taxes online for free It is also true if the dependent's exemption on your return is reduced or eliminated under the phaseout rule described under Phaseout of Exemptions, later. 2008 taxes online for free Housekeepers, maids, or servants. 2008 taxes online for free   If these people work for you, you cannot claim exemptions for them. 2008 taxes online for free Child tax credit. 2008 taxes online for free   You may be entitled to a child tax credit for each qualifying child who was under age 17 at the end of the year if you claimed an exemption for that child. 2008 taxes online for free For more information, see chapter 34. 2008 taxes online for free Dependent Taxpayer Test If you can be claimed as a dependent by another person, you cannot claim anyone else as a dependent. 2008 taxes online for free Even if you have a qualifying child or qualifying relative, you cannot claim that person as a dependent. 2008 taxes online for free If you are filing a joint return and your spouse can be claimed as a dependent by someone else, you and your spouse cannot claim any dependents on your joint return. 2008 taxes online for free Joint Return Test You generally cannot claim a married person as a dependent if he or she files a joint return. 2008 taxes online for free Exception. 2008 taxes online for free   You can claim an exemption for a person who files a joint return if that person and his or her spouse file the joint return only to claim a refund of income tax withheld or estimated tax paid. 2008 taxes online for free Example 1—child files joint return. 2008 taxes online for free You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. 2008 taxes online for free He earned $25,000 for the year. 2008 taxes online for free The couple files a joint return. 2008 taxes online for free You cannot take an exemption for your daughter. 2008 taxes online for free Example 2—child files joint return only as claim for refund of withheld tax. 2008 taxes online for free Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. 2008 taxes online for free Neither is required to file a tax return. 2008 taxes online for free They do not have a child. 2008 taxes online for free Taxes were taken out of their pay so they filed a joint return only to get a refund of the withheld taxes. 2008 taxes online for free The exception to the joint return test applies, so you are not disqualified from claiming an exemption for each of them just because they file a joint return. 2008 taxes online for free You can claim exemptions for each of them if all the other tests to do so are met. 2008 taxes online for free Example 3—child files joint return to claim American opportunity credit. 2008 taxes online for free The facts are the same as in Example 2 except no taxes were taken out of your son's pay. 2008 taxes online for free He and his wife are not required to file a tax return. 2008 taxes online for free However, they file a joint return to claim an American opportunity credit of $124 and get a refund of that amount. 2008 taxes online for free Because claiming the American opportunity credit is their reason for filing the return, they are not filing it only to get a refund of income tax withheld or estimated tax paid. 2008 taxes online for free The exception to the joint return test does not apply, so you cannot claim an exemption for either of them. 2008 taxes online for free Citizen or Resident Test You cannot claim a person as a dependent unless that person is a U. 2008 taxes online for free S. 2008 taxes online for free citizen, U. 2008 taxes online for free S. 2008 taxes online for free resident alien, U. 2008 taxes online for free S. 2008 taxes online for free national, or a resident of Canada or Mexico. 2008 taxes online for free However, there is an exception for certain adopted children, as explained next. 2008 taxes online for free Exception for adopted child. 2008 taxes online for free   If you are a U. 2008 taxes online for free S. 2008 taxes online for free citizen or U. 2008 taxes online for free S. 2008 taxes online for free national who has legally adopted a child who is not a U. 2008 taxes online for free S. 2008 taxes online for free citizen, U. 2008 taxes online for free S. 2008 taxes online for free resident alien, or U. 2008 taxes online for free S. 2008 taxes online for free national, this test is met if the child lived with you as a member of your household all year. 2008 taxes online for free This exception also applies if the child was lawfully placed with you for legal adoption. 2008 taxes online for free Child's place of residence. 2008 taxes online for free   Children usually are citizens or residents of the country of their parents. 2008 taxes online for free   If you were a U. 2008 taxes online for free S. 2008 taxes online for free citizen when your child was born, the child may be a U. 2008 taxes online for free S. 2008 taxes online for free citizen and meet this test even if the other parent was a nonresident alien and the child was born in a foreign country. 2008 taxes online for free Foreign students' place of residence. 2008 taxes online for free   Foreign students brought to this country under a qualified international education exchange program and placed in American homes for a temporary period generally are not U. 2008 taxes online for free S. 2008 taxes online for free residents and do not meet this test. 2008 taxes online for free You cannot claim an exemption for them. 2008 taxes online for free However, if you provided a home for a foreign student, you may be able to take a charitable contribution deduction. 2008 taxes online for free See Expenses Paid for Student Living With You in chapter 24. 2008 taxes online for free U. 2008 taxes online for free S. 2008 taxes online for free national. 2008 taxes online for free   A U. 2008 taxes online for free S. 2008 taxes online for free national is an individual who, although not a U. 2008 taxes online for free S. 2008 taxes online for free citizen, owes his or her allegiance to the United States. 2008 taxes online for free U. 2008 taxes online for free S. 2008 taxes online for free nationals include American Samoans and Northern Mariana Islanders who chose to become U. 2008 taxes online for free S. 2008 taxes online for free nationals instead of U. 2008 taxes online for free S. 2008 taxes online for free citizens. 2008 taxes online for free Qualifying Child Five tests must be met for a child to be your qualifying child. 2008 taxes online for free The five tests are: Relationship, Age, Residency, Support, and Joint return. 2008 taxes online for free These tests are explained next. 2008 taxes online for free If a child meets the five tests to be the qualifying child of more than one person, a special rule applies to determine which person can actually treat the child as a qualifying child. 2008 taxes online for free See Special Rule for Qualifying Child of More Than One Person, later. 2008 taxes online for free Relationship Test To meet this test, a child must be: Your son, daughter, stepchild, foster child, or a descendant (for example, your grandchild) of any of them, or Your brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant (for example, your niece or nephew) of any of them. 2008 taxes online for free Adopted child. 2008 taxes online for free   An adopted child is always treated as your own child. 2008 taxes online for free The term “adopted child” includes a child who was lawfully placed with you for legal adoption. 2008 taxes online for free Foster child. 2008 taxes online for free   A foster child is an individual who is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. 2008 taxes online for free Age Test To meet this test, a child must be: Under age 19 at the end of the year and younger than you (or your spouse, if filing jointly), A student under age 24 at the end of the year and younger than you (or your spouse, if filing jointly), or Permanently and totally disabled at any time during the year, regardless of age. 2008 taxes online for free Example. 2008 taxes online for free Your son turned 19 on December 10. 2008 taxes online for free Unless he was permanently and totally disabled or a student, he does not meet the age test because, at the end of the year, he was not under age 19. 2008 taxes online for free Child must be younger than you or spouse. 2008 taxes online for free   To be your qualifying child, a child who is not permanently and totally disabled must be younger than you. 2008 taxes online for free However, if you are married filing jointly, the child must be younger than you or your spouse but does not have to be younger than both of you. 2008 taxes online for free Example 1—child not younger than you or spouse. 2008 taxes online for free Your 23-year-old brother, who is a student and unmarried, lives with you and your spouse. 2008 taxes online for free He is not disabled. 2008 taxes online for free Both you and your spouse are 21 years old, and you file a joint return. 2008 taxes online for free Your brother is not your qualifying child because he is not younger than you or your spouse. 2008 taxes online for free Example 2—child younger than your spouse but not younger than you. 2008 taxes online for free The facts are the same as in Example 1 except your spouse is 25 years old. 2008 taxes online for free Because your brother is younger than your spouse, and you and your spouse are filing a joint return, your brother is your qualifying child, even though he is not younger than you. 2008 taxes online for free Student defined. 2008 taxes online for free   To qualify as a student, your child must be, during some part of each of any 5 calendar months of the year: A full-time student at a school that has a regular teaching staff, course of study, and a regularly enrolled student body at the school, or A student taking a full-time, on-farm training course given by a school described in (1), or by a state, county, or local government agency. 2008 taxes online for free The 5 calendar months do not have to be consecutive. 2008 taxes online for free Full-time student. 2008 taxes online for free   A full-time student is a student who is enrolled for the number of hours or courses the school considers to be full-time attendance. 2008 taxes online for free School defined. 2008 taxes online for free   A school can be an elementary school, junior or senior high school, college, university, or technical, trade, or mechanical school. 2008 taxes online for free However, an on-the-job training course, correspondence school, or school offering courses only through the Internet does not count as a school. 2008 taxes online for free Vocational high school students. 2008 taxes online for free   Students who work on “co-op” jobs in private industry as a part of a school's regular course of classroom and practical training are considered full-time students. 2008 taxes online for free Permanently and totally disabled. 2008 taxes online for free   Your child is permanently and totally disabled if both of the following apply. 2008 taxes online for free He or she cannot engage in any substantial gainful activity because of a physical or mental condition. 2008 taxes online for free A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death. 2008 taxes online for free Residency Test To meet this test, your child must have lived with you for more than half the year. 2008 taxes online for free There are exceptions for temporary absences, children who were born or died during the year, kidnapped children, and children of divorced or separated parents. 2008 taxes online for free Temporary absences. 2008 taxes online for free   Your child is considered to have lived with you during periods of time when one of you, or both, are temporarily absent due to special circumstances such as: Illness, Education, Business, Vacation, or Military service. 2008 taxes online for free Your child is also considered to have lived with you during any required hospital stay following birth, as long as the child would have lived with you during that time but for the hospitalization. 2008 taxes online for free Death or birth of child. 2008 taxes online for free   A child who was born or died during the year is treated as having lived with you more than half of the year if your home was the child's home more than half of the time he or she was alive during the year. 2008 taxes online for free Child born alive. 2008 taxes online for free   You may be able to claim an exemption for a child born alive during the year, even if the child lived only for a moment. 2008 taxes online for free State or local law must treat the child as having been born alive. 2008 taxes online for free There must be proof of a live birth shown by an official document, such as a birth certificate. 2008 taxes online for free The child must be your qualifying child or qualifying relative, and all the other tests to claim an exemption for a dependent must be met. 2008 taxes online for free Stillborn child. 2008 taxes online for free   You cannot claim an exemption for a stillborn child. 2008 taxes online for free Kidnapped child. 2008 taxes online for free   You may be able to treat your child as meeting the residency test even if the child has been kidnapped. 2008 taxes online for free See Publication 501 for details. 2008 taxes online for free Children of divorced or separated parents (or parents who live apart). 2008 taxes online for free   In most cases, because of the residency test, a child of divorced or separated parents is the qualifying child of the custodial parent. 2008 taxes online for free However, the child will be treated as the qualifying child of the noncustodial parent if all four of the following statements are true. 2008 taxes online for free The parents: Are divorced or legally separated under a decree of divorce or separate maintenance, Are separated under a written separation agreement, or Lived apart at all times during the last 6 months of the year, whether or not they are or were married. 2008 taxes online for free The child received over half of his or her support for the year from the parents. 2008 taxes online for free The child is in the custody of one or both parents for more than half of the year. 2008 taxes online for free Either of the following statements is true. 2008 taxes online for free The custodial parent signs a written declaration, discussed later, that he or she will not claim the child as a dependent for the year, and the noncustodial parent attaches this written declaration to his or her return. 2008 taxes online for free (If the decree or agreement went into effect after 1984 and before 2009, see Post-1984 and pre-2009 divorce decree or separation agreement , later. 2008 taxes online for free If the decree or agreement went into effect after 2008, see Post-2008 divorce decree or separation agreement , later. 2008 taxes online for free ) A pre-1985 decree of divorce or separate maintenance or written separation agreement that applies to 2013 states that the noncustodial parent can claim the child as a dependent, the decree or agreement was not changed after 1984 to say the noncustodial parent cannot claim the child as a dependent, and the noncustodial parent provides at least $600 for the child's support during the year. 2008 taxes online for free Custodial parent and noncustodial parent. 2008 taxes online for free   The custodial parent is the parent with whom the child lived for the greater number of nights during the year. 2008 taxes online for free The other parent is the noncustodial parent. 2008 taxes online for free   If the parents divorced or separated during the year and the child lived with both parents before the separation, the custodial parent is the one with whom the child lived for the greater number of nights during the rest of the year. 2008 taxes online for free   A child is treated as living with a parent for a night if the child sleeps: At that parent's home, whether or not the parent is present, or In the company of the parent, when the child does not sleep at a parent's home (for example, the parent and child are on vacation together). 2008 taxes online for free Equal number of nights. 2008 taxes online for free   If the child lived with each parent for an equal number of nights during the year, the custodial parent is the parent with the higher adjusted gross income (AGI). 2008 taxes online for free December 31. 2008 taxes online for free   The night of December 31 is treated as part of the year in which it begins. 2008 taxes online for free For example, December 31, 2013, is treated as part of 2013. 2008 taxes online for free Emancipated child. 2008 taxes online for free   If a child is emancipated under state law, the child is treated as not living with either parent. 2008 taxes online for free See Examples 5 and 6. 2008 taxes online for free Absences. 2008 taxes online for free   If a child was not with either parent on a particular night (because, for example, the child was staying at a friend's house), the child is treated as living with the parent with whom the child normally would have lived for that night, except for the absence. 2008 taxes online for free But if it cannot be determined with which parent the child normally would have lived or if the child would not have lived with either parent that night, the child is treated as not living with either parent that night. 2008 taxes online for free Parent works at night. 2008 taxes online for free   If, due to a parent's nighttime work schedule, a child lives for a greater number of days, but not nights, with the parent who works at night, that parent is treated as the custodial parent. 2008 taxes online for free On a school day, the child is treated as living at the primary residence registered with the school. 2008 taxes online for free Example 1—child lived with one parent for a greater number of nights. 2008 taxes online for free You and your child’s other parent are divorced. 2008 taxes online for free In 2013, your child lived with you 210 nights and with the other parent 155 nights. 2008 taxes online for free You are the custodial parent. 2008 taxes online for free Example 2—child is away at camp. 2008 taxes online for free In 2013, your daughter lives with each parent for alternate weeks. 2008 taxes online for free In the summer, she spends 6 weeks at summer camp. 2008 taxes online for free During the time she is at camp, she is treated as living with you for 3 weeks and with her other parent, your ex-spouse, for 3 weeks because this is how long she would have lived with each parent if she had not attended summer camp. 2008 taxes online for free Example 3—child lived same number of nights with each parent. 2008 taxes online for free Your son lived with you 180 nights during the year and lived the same number of nights with his other parent, your ex-spouse. 2008 taxes online for free Your AGI is $40,000. 2008 taxes online for free Your ex-spouse's AGI is $25,000. 2008 taxes online for free You are treated as your son's custodial parent because you have the higher AGI. 2008 taxes online for free Example 4—child is at parent’s home but with other parent. 2008 taxes online for free Your son normally lives with you during the week and with his other parent, your ex-spouse, every other weekend. 2008 taxes online for free You become ill and are hospitalized. 2008 taxes online for free The other parent lives in your home with your son for 10 consecutive days while you are in the hospital. 2008 taxes online for free Your son is treated as living with you during this 10-day period because he was living in your home. 2008 taxes online for free Example 5—child emancipated in May. 2008 taxes online for free When your son turned age 18 in May 2013, he became emancipated under the law of the state where he lives. 2008 taxes online for free As a result, he is not considered in the custody of his parents for more than half of the year. 2008 taxes online for free The special rule for children of divorced or separated parents does not apply. 2008 taxes online for free Example 6—child emancipated in August. 2008 taxes online for free Your daughter lives with you from January 1, 2013, until May 31, 2013, and lives with her other parent, your ex-spouse, from June 1, 2013, through the end of the year. 2008 taxes online for free She turns 18 and is emancipated under state law on August 1, 2013. 2008 taxes online for free Because she is treated as not living with either parent beginning on August 1, she is treated as living with you the greater number of nights in 2013. 2008 taxes online for free You are the custodial parent. 2008 taxes online for free Written declaration. 2008 taxes online for free    The custodial parent may use either Form 8332 or a similar statement (containing the same information required by the form) to make the written declaration to release the exemption to the noncustodial parent. 2008 taxes online for free The noncustodial parent must attach a copy of the form or statement to his or her tax return. 2008 taxes online for free   The exemption can be released for 1 year, for a number of specified years (for example, alternate years), or for all future years, as specified in the declaration. 2008 taxes online for free Post-1984 and pre-2009 divorce decree or separation agreement. 2008 taxes online for free   If the divorce decree or separation agreement went into effect after 1984 and before 2009, the noncustodial parent may be able to attach certain pages from the decree or agreement instead of Form 8332. 2008 taxes online for free The decree or agreement must state all three of the following. 2008 taxes online for free The noncustodial parent can claim the child as a dependent without regard to any condition, such as payment of support. 2008 taxes online for free The custodial parent will not claim the child as a dependent for the year. 2008 taxes online for free The years for which the noncustodial parent, rather than the custodial parent, can claim the child as a dependent. 2008 taxes online for free   The noncustodial parent must attach all of the following pages of the decree or agreement to his or her tax return. 2008 taxes online for free The cover page (write the other parent's social security number on this page). 2008 taxes online for free The pages that include all of the information identified in items (1) through (3) above. 2008 taxes online for free The signature page with the other parent's signature and the date of the agreement. 2008 taxes online for free Post-2008 divorce decree or separation agreement. 2008 taxes online for free   The noncustodial parent cannot attach pages from the decree or agreement instead of Form 8332 if the decree or agreement went into effect after 2008. 2008 taxes online for free The custodial parent must sign either Form 8332 or a similar statement whose only purpose is to release the custodial parent's claim to an exemption for a child, and the noncustodial parent must attach a copy to his or her return. 2008 taxes online for free The form or statement must release the custodial parent's claim to the child without any conditions. 2008 taxes online for free For example, the release must not depend on the noncustodial parent paying support. 2008 taxes online for free    The noncustodial parent must attach the required information even if it was filed with a return in an earlier year. 2008 taxes online for free Revocation of release of claim to an exemption. 2008 taxes online for free   The custodial parent can revoke a release of claim to exemption that he or she previously released to the noncustodial parent on Form 8332 (or a similar statement). 2008 taxes online for free For the revocation to be effective for 2013, the custodial parent must have given (or made reasonable efforts to give) written notice of the revocation to the noncustodial parent in 2012 or earlier. 2008 taxes online for free The custodial parent can use Part III of Form 8332 for this purpose and must attach a copy of the revocation to his or her return for each tax year he or she claims the child as a dependent as a result of the revocation. 2008 taxes online for free Remarried parent. 2008 taxes online for free   If you remarry, the support provided by your new spouse is treated as provided by you. 2008 taxes online for free Parents who never married. 2008 taxes online for free   This special rule for divorced or separated parents also applies to parents who never married, and who lived apart at all times during the last 6 months of the year. 2008 taxes online for free Support Test (To Be a Qualifying Child) To meet this test, the child cannot have provided more than half of his or her own support for the year. 2008 taxes online for free This test is different from the support test to be a qualifying relative, which is described later. 2008 taxes online for free However, to see what is or is not support, see Support Test (To Be a Qualifying Relative) , later. 2008 taxes online for free If you are not sure whether a child provided more than half of his or her own support, you may find Worksheet 3-1 helpful. 2008 taxes online for free Worksheet 3-1. 2008 taxes online for free Worksheet for Determining Support Funds Belonging to the Person You Supported       1. 2008 taxes online for free Enter the total funds belonging to the person you supported, including income received (taxable and nontaxable) and amounts borrowed during the year, plus the amount in savings and other accounts at the beginning of the year. 2008 taxes online for free Do not include funds provided by the state; include those amounts on line 23 instead 1. 2008 taxes online for free     2. 2008 taxes online for free Enter the amount on line 1 that was used for the person's support 2. 2008 taxes online for free     3. 2008 taxes online for free Enter the amount on line 1 that was used for other purposes 3. 2008 taxes online for free     4. 2008 taxes online for free Enter the total amount in the person's savings and other accounts at the end of the year 4. 2008 taxes online for free     5. 2008 taxes online for free Add lines 2 through 4. 2008 taxes online for free (This amount should equal line 1. 2008 taxes online for free ) 5. 2008 taxes online for free     Expenses for Entire Household (where the person you supported lived)       6. 2008 taxes online for free Lodging (complete line 6a or 6b):         a. 2008 taxes online for free Enter the total rent paid 6a. 2008 taxes online for free       b. 2008 taxes online for free Enter the fair rental value of the home. 2008 taxes online for free If the person you supported owned the home,  also include this amount in line 21 6b. 2008 taxes online for free     7. 2008 taxes online for free Enter the total food expenses 7. 2008 taxes online for free     8. 2008 taxes online for free Enter the total amount of utilities (heat, light, water, etc. 2008 taxes online for free not included in line 6a or 6b) 8. 2008 taxes online for free     9. 2008 taxes online for free Enter the total amount of repairs (not included in line 6a or 6b) 9. 2008 taxes online for free     10. 2008 taxes online for free Enter the total of other expenses. 2008 taxes online for free Do not include expenses of maintaining the home, such as mortgage interest, real estate taxes, and insurance 10. 2008 taxes online for free     11. 2008 taxes online for free Add lines 6a through 10. 2008 taxes online for free These are the total household expenses 11. 2008 taxes online for free     12. 2008 taxes online for free Enter total number of persons who lived in the household 12. 2008 taxes online for free     Expenses for the Person You Supported       13. 2008 taxes online for free Divide line 11 by line 12. 2008 taxes online for free This is the person's share of the household expenses 13. 2008 taxes online for free     14. 2008 taxes online for free Enter the person's total clothing expenses 14. 2008 taxes online for free     15. 2008 taxes online for free Enter the person's total education expenses 15. 2008 taxes online for free     16. 2008 taxes online for free Enter the person's total medical and dental expenses not paid for or reimbursed by insurance 16. 2008 taxes online for free     17. 2008 taxes online for free Enter the person's total travel and recreation expenses 17. 2008 taxes online for free     18. 2008 taxes online for free Enter the total of the person's other expenses 18. 2008 taxes online for free     19. 2008 taxes online for free Add lines 13 through 18. 2008 taxes online for free This is the total cost of the person's support for the year 19. 2008 taxes online for free     Did the Person Provide More Than Half of His or Her Own Support?       20. 2008 taxes online for free Multiply line 19 by 50% (. 2008 taxes online for free 50) 20. 2008 taxes online for free     21. 2008 taxes online for free Enter the amount from line 2, plus the amount from line 6b if the person you supported owned  the home. 2008 taxes online for free This is the amount the person provided for his or her own support 21. 2008 taxes online for free     22. 2008 taxes online for free Is line 21 more than line 20?   No. 2008 taxes online for free You meet the support test for this person to be your qualifying child. 2008 taxes online for free If this person also meets the other tests to be a qualifying child, stop here; do not complete lines 23–26. 2008 taxes online for free Otherwise, go to line 23 and fill out the rest of the worksheet to determine if this person is your qualifying relative. 2008 taxes online for free    Yes. 2008 taxes online for free You do not meet the support test for this person to be either your qualifying child or your qualifying relative. 2008 taxes online for free Stop here. 2008 taxes online for free        Did You Provide More Than Half?       23. 2008 taxes online for free Enter the amount others provided for the person's support. 2008 taxes online for free Include amounts provided by state, local, and other welfare societies or agencies. 2008 taxes online for free Do not include any amounts included on line 1 23. 2008 taxes online for free     24. 2008 taxes online for free Add lines 21 and 23 24. 2008 taxes online for free     25. 2008 taxes online for free Subtract line 24 from line 19. 2008 taxes online for free This is the amount you provided for the person's support 25. 2008 taxes online for free     26. 2008 taxes online for free Is line 25 more than line 20?   Yes. 2008 taxes online for free You meet the support test for this person to be your qualifying relative. 2008 taxes online for free    No. 2008 taxes online for free You do not meet the support test for this person to be your qualifying relative. 2008 taxes online for free You cannot claim an exemption for this person unless you can do so under a multiple support agreement, the support test for children of divorced or separated parents, or the special rule for kidnapped children. 2008 taxes online for free See Multiple Support Agreement or Support Test for Children of Divorced or Separated Parents (or Parents Who Live Apart) , or Kidnapped child under Qualifying Relative. 2008 taxes online for free   Example. 2008 taxes online for free You provided $4,000 toward your 16-year-old son's support for the year. 2008 taxes online for free He has a part-time job and provided $6,000 to his own support. 2008 taxes online for free He provided more than half of his own support for the year. 2008 taxes online for free He is not your qualifying child. 2008 taxes online for free Foster care payments and expenses. 2008 taxes online for free   Payments you receive for the support of a foster child from a child placement agency are considered support provided by the agency. 2008 taxes online for free Similarly, payments you receive for the support of a foster child from a state or county are considered support provided by the state or county. 2008 taxes online for free   If you are not in the trade or business of providing foster care and your unreimbursed out-of-pocket expenses in caring for a foster child were mainly to benefit an organization qualified to receive deductible charitable contributions, the expenses are deductible as charitable contributions but are not considered support you provided. 2008 taxes online for free For more information about the deduction for charitable contributions, see chapter 24. 2008 taxes online for free If your unreimbursed expenses are not deductible as charitable contributions, they may qualify as support you provided. 2008 taxes online for free   If you are in the trade or business of providing foster care, your unreimbursed expenses are not considered support provided by you. 2008 taxes online for free Example 1. 2008 taxes online for free Lauren, a foster child, lived with Mr. 2008 taxes online for free and Mrs. 2008 taxes online for free Smith for the last 3 months of the year. 2008 taxes online for free The Smiths cared for Lauren because they wanted to adopt her (although she had not been placed with them for adoption). 2008 taxes online for free They did not care for her as a trade or business or to benefit the agency that placed her in their home. 2008 taxes online for free The Smiths' unreimbursed expenses are not deductible as charitable contributions but are considered support they provided for Lauren. 2008 taxes online for free Example 2. 2008 taxes online for free You provided $3,000 toward your 10-year-old foster child's support for the year. 2008 taxes online for free The state government provided $4,000, which is considered support provided by the state, not by the child. 2008 taxes online for free See Support provided by the state (welfare, food stamps, housing, etc. 2008 taxes online for free ) , later. 2008 taxes online for free Your foster child did not provide more than half of her own support for the year. 2008 taxes online for free Scholarships. 2008 taxes online for free   A scholarship received by a child who is a student is not taken into account in determining whether the child provided more than half of his or her own support. 2008 taxes online for free Joint Return Test (To Be a Qualifying Child) To meet this test, the child cannot file a joint return for the year. 2008 taxes online for free Exception. 2008 taxes online for free   An exception to the joint return test applies if your child and his or her spouse file a joint return only to claim a refund of income tax withheld or estimated tax paid. 2008 taxes online for free Example 1—child files joint return. 2008 taxes online for free You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. 2008 taxes online for free He earned $25,000 for the year. 2008 taxes online for free The couple files a joint return. 2008 taxes online for free Because your daughter and her husband file a joint return, she is not your qualifying child. 2008 taxes online for free Example 2—child files joint return only as a claim for refund of withheld tax. 2008 taxes online for free Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. 2008 taxes online for free Neither is required to file a tax return. 2008 taxes online for free They do not have a child. 2008 taxes online for free Taxes were taken out of their pay so they filed a joint return only to get a refund of the withheld taxes. 2008 taxes online for free The exception to the joint return test applies, so your son may be your qualifying child if all the other tests are met. 2008 taxes online for free Example 3—child files joint return to claim American opportunity credit. 2008 taxes online for free The facts are the same as in Example 2 except no taxes were taken out of your son's pay. 2008 taxes online for free He and his wife were not required to file a tax return. 2008 taxes online for free However, they file a joint return to claim an American opportunity credit of $124 and get a refund of that amount. 2008 taxes online for free Because claiming the American opportunity credit is their reason for filing the return, they are not filing it only to get a refund of income tax withheld or estimated tax paid. 2008 taxes online for free The exception to the joint return test does not apply, so your son is not your qualifying child. 2008 taxes online for free Special Rule for Qualifying Child of More Than One Person If your qualifying child is not a qualifying child of anyone else, this special rule does not apply to you and you do not need to read about it. 2008 taxes online for free This is also true if your qualifying child is not a qualifying child of anyone else except your spouse with whom you file a joint return. 2008 taxes online for free If a child is treated as the qualifying child of the noncustodial parent under the rules for children of divorced or separated parents (or parents who live apart) described earlier, see Applying this special rule to divorced or separated parents (or parents who live apart), later. 2008 taxes online for free Sometimes, a child meets the relationship, age, residency, support, and joint return tests to be a qualifying child of more than one person. 2008 taxes online for free Although the child is a qualifying child of each of these persons, only one person can actually treat the child as a qualifying child to take all of the following tax benefits (provided the person is eligible for each benefit). 2008 taxes online for free The exemption for the child. 2008 taxes online for free The child tax credit. 2008 taxes online for free Head of household filing status. 2008 taxes online for free The credit for child and dependent care expenses. 2008 taxes online for free The exclusion from income for dependent care benefits. 2008 taxes online for free The earned income credit. 2008 taxes online for free The other person cannot take any of these benefits based on this qualifying child. 2008 taxes online for free In other words, you and the other person cannot agree to divide these benefits between you. 2008 taxes online for free The other person cannot take any of these tax benefits for a child unless he or she has a different qualifying child. 2008 taxes online for free Tiebreaker rules. 2008 taxes online for free   To determine which person can treat the child as a qualifying child to claim these six tax benefits, the following tiebreaker rules apply. 2008 taxes online for free If only one of the persons is the child's parent, the child is treated as the qualifying child of the parent. 2008 taxes online for free If the parents file a joint return together and can claim the child as a qualifying child, the child is treated as the qualifying child of the parents. 2008 taxes online for free If the parents do not file a joint return together but both parents claim the child as a qualifying child, the IRS will treat the child as the qualifying child of the parent with whom the child lived for the longer period of time during the year. 2008 taxes online for free If the child lived with each parent for the same amount of time, the IRS will treat the child as the qualifying child of the parent who had the higher adjusted gross income (AGI) for the year. 2008 taxes online for free If no parent can claim the child as a qualifying child, the child is treated as the qualifying child of the person who had the highest AGI for the year. 2008 taxes online for free If a parent can claim the child as a qualifying child but no parent does so claim the child, the child is treated as the qualifying child of the person who had the highest AGI for the year, but only if that person's AGI is higher than the highest AGI of any of the child's parents who can claim the child. 2008 taxes online for free If the child's parents file a joint return with each other, this rule can be applied by dividing the parents' combined AGI equally between the parents. 2008 taxes online for free See Example 6 . 2008 taxes online for free   Subject to these tiebreaker rules, you and the other person may be able to choose which of you claims the child as a qualifying child. 2008 taxes online for free Example 1—child lived with parent and grandparent. 2008 taxes online for free You and your 3-year-old daughter Jane lived with your mother all year. 2008 taxes online for free You are 25 years old, unmarried, and your AGI is $9,000. 2008 taxes online for free Your mother's AGI is $15,000. 2008 taxes online for free Jane's father did not live with you or your daughter. 2008 taxes online for free You have not signed Form 8332 (or a similar statement) to release the child's exemption to the noncustodial parent. 2008 taxes online for free Jane is a qualifying child of both you and your mother because she meets the relationship, age, residency, support, and joint return tests for both you and your mother. 2008 taxes online for free However, only one of you can claim her. 2008 taxes online for free Jane is not a qualifying child of anyone else, including her father. 2008 taxes online for free You agree to let your mother claim Jane. 2008 taxes online for free This means your mother can claim Jane as a qualifying child for all of the six tax benefits listed earlier, if she qualifies (and if you do not claim Jane as a qualifying child for any of those tax benefits). 2008 taxes online for free Example 2—parent has higher AGI than grandparent. 2008 taxes online for free The facts are the same as in Example 1 except your AGI is $18,000. 2008 taxes online for free Because your mother's AGI is not higher than yours, she cannot claim Jane. 2008 taxes online for free Only you can claim Jane. 2008 taxes online for free Example 3—two persons claim same child. 2008 taxes online for free The facts are the same as in Example 1 except that you and your mother both claim Jane as a qualifying child. 2008 taxes online for free In this case, you, as the child's parent, will be the only one allowed to claim Jane as a qualifying child. 2008 taxes online for free The IRS will disallow your mother's claim to the six tax benefits listed earlier unless she has another qualifying child. 2008 taxes online for free Example 4—qualifying children split between two persons. 2008 taxes online for free The facts are the same as in Example 1 except you also have two other young children who are qualifying children of both you and your mother. 2008 taxes online for free Only one of you can claim each child. 2008 taxes online for free However, if your mother's AGI is higher than yours, you can allow your mother to claim one or more of the children. 2008 taxes online for free For example, if you claim one child, your mother can claim the other two. 2008 taxes online for free Example 5—taxpayer who is a qualifying child. 2008 taxes online for free The facts are the same as in Example 1 except you are only 18 years old and did not provide more than half of your own support for the year. 2008 taxes online for free This means you are your mother's qualifying child. 2008 taxes online for free If she can claim you as a dependent, then you cannot claim your daughter as a dependent because of the Dependent Taxpayer Test explained earlier. 2008 taxes online for free Example 6—child lived with both parents and grandparent. 2008 taxes online for free The facts are the same as in Example 1 except you are married to your daughter's father. 2008 taxes online for free The two of you live together with your daughter and your mother, and have an AGI of $20,000 on a joint return. 2008 taxes online for free If you and your husband do not claim your daughter as a qualifying child, your mother can claim her instead. 2008 taxes online for free Even though the AGI on your joint return, $20,000, is more than your mother's AGI of $15,000, for this purpose each parent's AGI can be treated as $10,000, so your mother's $15,000 AGI is treated as higher than the highest AGI of any of the child's parents who can claim the child. 2008 taxes online for free Example 7—separated parents. 2008 taxes online for free You, your husband, and your 10-year-old son lived together until August 1, 2013, when your husband moved out of the household. 2008 taxes online for free In August and September, your son lived with you. 2008 taxes online for free For the rest of the year, your son lived with your husband, the boy's father. 2008 taxes online for free Your son is a qualifying child of both you and your husband because your son lived with each of you for more than half the year and because he met the relationship, age, support, and joint return tests for both of you. 2008 taxes online for free At the end of the year, you and your husband still were not divorced, legally separated, or separated under a written separation agreement, so the rule for children of divorced or separated parents (or parents who live apart) does not apply. 2008 taxes online for free You and your husband will file separate returns. 2008 taxes online for free Your husband agrees to let you treat your son as a qualifying child. 2008 taxes online for free This means, if your husband does not claim your son as a qualifying child, you can claim your son as a qualifying child for the dependency exemption, child tax credit, and exclusion for dependent care benefits (if you qualify for each of those tax benefits). 2008 taxes online for free However, you cannot claim head of household filing status because you and your husband did not live apart for the last 6 months of the year. 2008 taxes online for free As a result, your filing status is married filing separately, so you cannot claim the earned income credit or the credit for child and dependent care expenses. 2008 taxes online for free Example 8—separated parents claim same child. 2008 taxes online for free The facts are the same as in Example 7 except that you and your husband both claim your son as a qualifying child. 2008 taxes online for free In this case, only your husband will be allowed to treat your son as a qualifying child. 2008 taxes online for free This is because, during 2013, the boy lived with him longer than with you. 2008 taxes online for free If you claimed an exemption or the child tax credit for your son, the IRS will disallow your claim to both these tax benefits. 2008 taxes online for free If you do not have another qualifying child or dependent, the IRS will also disallow your claim to the exclusion for dependent care benefits. 2008 taxes online for free In addition, because you and your husband did not live apart for the last 6 months of the year, your husband cannot claim head of household filing status. 2008 taxes online for free As a result, his filing status is married filing separately, so he cannot claim the earned income credit or the credit for child and dependent care expenses. 2008 taxes online for free Example 9—unmarried parents. 2008 taxes online for free You, your 5-year-old son, and your son's father lived together all year. 2008 taxes online for free You and your son's father are not married. 2008 taxes online for free Your son is a qualifying child of both you and his father because he meets the relationship, age, residency, support, and joint return tests for both you and his father. 2008 taxes online for free Your AGI is $12,000 and your son's father's AGI is $14,000. 2008 taxes online for free Your son's father agrees to let you claim the child as a qualifying child. 2008 taxes online for free This means you can claim him as a qualifying child for the dependency exemption, child tax credit, head of household filing status, credit for child and dependent care expenses, exclusion for dependent care benefits, and the earned income credit, if you qualify for each of those tax benefits (and if your son's father does not, in fact, claim your son as a qualifying child for any of those tax benefits). 2008 taxes online for free Example 10—unmarried parents claim same child. 2008 taxes online for free The facts are the same as in Example 9 except that you and your son's father both claim your son as a qualifying child. 2008 taxes online for free In this case, only your son's father will be allowed to treat your son as a qualifying child. 2008 taxes online for free This is because his AGI, $14,000, is more than your AGI, $12,000. 2008 taxes online for free If you claimed an exemption or the child tax credit for your son, the IRS will disallow your claim to both these tax benefits. 2008 taxes online for free If you do not have another qualifying child or dependent, the IRS will also disallow your claim to the earned income credit, head of household filing status, the credit for child and dependent care expenses, and the exclusion for dependent care benefits. 2008 taxes online for free Example 11—child did not live with a parent. 2008 taxes online for free You and your 7-year-old niece, your sister's child, lived with your mother all year. 2008 taxes online for free You are 25 years old, and your AGI is $9,300. 2008 taxes online for free Your mother's AGI is $15,000. 2008 taxes online for free Your niece's parents file jointly, have an AGI of less than $9,000, and do not live with you or their child. 2008 taxes online for free Your niece is a qualifying child of both you and your mother because she meets the relationship, age, residency, support, and joint return tests for both you and your mother. 2008 taxes online for free However, only your mother can treat her as a qualifying child. 2008 taxes online for free This is because your mother's AGI, $15,000, is more than your AGI, $9,300. 2008 taxes online for free Applying this special rule to divorced or separated parents (or parents who live apart). 2008 taxes online for free   If a child is treated as the qualifying child of the noncustodial parent under the rules described earlier for children of divorced or separated parents (or parents who live apart), only the noncustodial parent can claim an exemption and the child tax credit for the child. 2008 taxes online for free However, the custodial parent, if eligible, or other eligible person can claim the child as a qualifying child for head of household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, and the earned income credit. 2008 taxes online for free If the child is the qualifying child of more than one person for these benefits, then the tiebreaker rules just explained determine which person can treat the child as a qualifying child. 2008 taxes online for free Example 1. 2008 taxes online for free You and your 5-year-old son lived all year with your mother, who paid the entire cost of keeping up the home. 2008 taxes online for free Your AGI is $10,000. 2008 taxes online for free Your mother's AGI is $25,000. 2008 taxes online for free Your son's father did not live with you or your son. 2008 taxes online for free Under the rules explained earlier for children of divorced or separated parents (or parents who live apart), your son is treated as the qualifying child of his father, who can claim an exemption and the child tax credit for him. 2008 taxes online for free Because of this, you cannot claim an exemption or the child tax credit for your son. 2008 taxes online for free However, your son's father cannot claim your son as a qualifying child for head of household filing status, the credit for child and dependent care expenses, the exclusion for dependent care benefits, or the earned income credit. 2008 taxes online for free You and your mother did not have any child care expenses or dependent care benefits, so neither of you can claim the credit for child and dependent care expenses or the exclusion for dependent care benefits. 2008 taxes online for free But the boy is a qualifying child of both you and your mother for head of household filing status and the earned income credit because he meets the relationship, age, residency, support, and joint return tests for both you and your mother. 2008 taxes online for free (Note: The support test does not apply for the earned income credit. 2008 taxes online for free ) However, you agree to let your mother claim your son. 2008 taxes online for free This means she can claim him for head of household filing status and the earned income credit if she qualifies for each and if you do not claim him as a qualifying child for the earned income credit. 2008 taxes online for free (You cannot claim head of household filing status because your mother paid the entire cost of keeping up the home. 2008 taxes online for free ) Example 2. 2008 taxes online for free The facts are the same as in Example 1 except your AGI is $25,000 and your mother's AGI is $21,000. 2008 taxes online for free Your mother cannot claim your son as a qualifying child for any purpose because her AGI is not higher than yours. 2008 taxes online for free Example 3. 2008 taxes online for free The facts are the same as in Example 1 except you and your mother both claim your son as a qualifying child for the earned income credit. 2008 taxes online for free Your mother also claims him as a qualifying child for head of household filing status. 2008 taxes online for free You, as the child's parent, will be the only one allowed to claim your son as a qualifying child for the earned income credit. 2008 taxes online for free The IRS will disallow your mother's claim to the earned income credit and head of household filing status unless she has another qualifying child. 2008 taxes online for free Qualifying Relative Four tests must be met for a person to be your qualifying relative. 2008 taxes online for free The four tests are: Not a qualifying child test, Member of household or relationship test, Gross income test, and Support test. 2008 taxes online for free Age. 2008 taxes online for free   Unlike a qualifying child, a qualifying relative can be any age. 2008 taxes online for free There is no age test for a qualifying relative. 2008 taxes online for free Kidnapped child. 2008 taxes online for free   You may be able to treat a child as your qualifying relative even if the child has been kidnapped. 2008 taxes online for free See Publication 501 for details. 2008 taxes online for free Not a Qualifying Child Test A child is not your qualifying relative if the child is your qualifying child or the qualifying child of any other taxpayer. 2008 taxes online for free Example 1. 2008 taxes online for free Your 22-year-old daughter, who is a student, lives with you and meets all the tests to be your qualifying child. 2008 taxes online for free She is not your qualifying relative. 2008 taxes online for free Example 2. 2008 taxes online for free Your 2-year-old son lives with your parents and meets all the tests to be their qualifying child. 2008 taxes online for free He is not your qualifying relative. 2008 taxes online for free Example 3. 2008 taxes online for free Your son lives with you but is not your qualifying child because he is 30 years old and does not meet the age test. 2008 taxes online for free He may be your qualifying relative if the gross income test and the support test are met. 2008 taxes online for free Example 4. 2008 taxes online for free Your 13-year-old grandson lived with his mother for 3 months, with his uncle for 4 months, and with you for 5 months during the year. 2008 taxes online for free He is not your qualifying child because he does not meet the residency test. 2008 taxes online for free He may be your qualifying relative if the gross income test and the support test are met. 2008 taxes online for free Child of person not required to file a return. 2008 taxes online for free   A child is not the qualifying child of any other taxpayer and so may qualify as your qualifying relative if the child's parent (or other person for whom the child is defined as a qualifying child) is not required to file an income tax return and either: Does not file an income tax return, or Files a return only to get a refund of income tax withheld or estimated tax paid. 2008 taxes online for free Example 1—return not required. 2008 taxes online for free You support an unrelated friend and her 3-year-old child, who lived with you all year in your home. 2008 taxes online for free Your friend has no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. 2008 taxes online for free Both your friend and her child are your qualifying relatives if the support test is met. 2008 taxes online for free Example 2—return filed to claim refund. 2008 taxes online for free The facts are the same as in Example 1 except your friend had wages of $1,500 during the year and had income tax withheld from her wages. 2008 taxes online for free She files a return only to get a refund of the income tax withheld and does not claim the earned income credit or any other tax credits or deductions. 2008 taxes online for free Both your friend and her child are your qualifying relatives if the support test is met. 2008 taxes online for free Example 3—earned income credit claimed. 2008 taxes online for free The facts are the same as in Example 2 except your friend had wages of $8,000 during the year and claimed the earned income credit on her return. 2008 taxes online for free Your friend's child is the qualifying child of another taxpayer (your friend), so you cannot claim your friend's child as your qualifying relative. 2008 taxes online for free Child in Canada or Mexico. 2008 taxes online for free   You may be able to claim your child as a dependent even if the child lives in Canada or Mexico. 2008 taxes online for free If the child does not live with you, the child does not meet the residency test to be your qualifying child. 2008 taxes online for free However, the child may still be your qualifying relative. 2008 taxes online for free If the persons the child does live with are not U. 2008 taxes online for free S. 2008 taxes online for free citizens and have no U. 2008 taxes online for free S. 2008 taxes online for free gross income, those persons are not “taxpayers,” so the child is not the qualifying child of any other taxpayer. 2008 taxes online for free If the child is not the qualifying child of any other taxpayer, the child is your qualifying relative as long as the gross income test and the support test are met. 2008 taxes online for free   You cannot claim as a dependent a child who lives in a foreign country other than Canada or Mexico, unless the child is a U. 2008 taxes online for free S. 2008 taxes online for free citizen, U. 2008 taxes online for free S. 2008 taxes online for free resident alien, or U. 2008 taxes online for free S. 2008 taxes online for free national. 2008 taxes online for free There is an exception for certain adopted children who lived with you all year. 2008 taxes online for free See Citizen or Resident Test , earlier. 2008 taxes online for free Example. 2008 taxes online for free You provide all the support of your children, ages 6, 8, and 12, who live in Mexico with your mother and have no income. 2008 taxes online for free You are single and live in the United States. 2008 taxes online for free Your mother is not a U. 2008 taxes online for free S. 2008 taxes online for free citizen and has no U. 2008 taxes online for free S. 2008 taxes online for free income, so she is not a “taxpayer. 2008 taxes online for free ” Your children are not your qualifying children because they do not meet the residency test. 2008 taxes online for free But since they are not the qualifying children of any other taxpayer, they are your qualifying relatives and you can claim them as dependents. 2008 taxes online for free You may also be able to claim your mother as a dependent if the gross income and support tests are met. 2008 taxes online for free Member of Household or Relationship Test To meet this test, a person must either: Live with you all year as a member of your household, or Be related to you in one of the ways listed under Relatives who do not have to live with you . 2008 taxes online for free If at any time during the year the person was your spouse, that person cannot be your qualifying relative. 2008 taxes online for free However, see Personal Exemptions , earlier. 2008 taxes online for free Relatives who do not have to live with you. 2008 taxes online for free   A person related to you in any of the following ways does not have to live with you all year as a member of your household to meet this test. 2008 taxes online for free Your child, stepchild, foster child, or a descendant of any of them (for example, your grandchild). 2008 taxes online for free (A legally adopted child is considered your child. 2008 taxes online for free ) Your brother, sister, half brother, half sister, stepbrother, or stepsister. 2008 taxes online for free Your father, mother, grandparent, or other direct ancestor, but not foster parent. 2008 taxes online for free Your stepfather or stepmother. 2008 taxes online for free A son or daughter of your brother or sister. 2008 taxes online for free A son or daughter of your half brother or half sister. 2008 taxes online for free A brother or sister of your father or mother. 2008 taxes online for free Your son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. 2008 taxes online for free Any of these relationships that were established by marriage are not ended by death or divorce. 2008 taxes online for free Example. 2008 taxes online for free You and your wife began supporting your wife's father, a widower, in 2006. 2008 taxes online for free Your wife died in 2012. 2008 taxes online for free Despite your wife's death, your father-in-law continues to meet this test, even if he does not live with you. 2008 taxes online for free You can claim him as a dependent if all other tests are met, including the gross income test and support test. 2008 taxes online for free Foster child. 2008 taxes online for free   A foster child is an individual who is placed with you by an authorized placement agency or by judgment, decree, or other order of any court of competent jurisdiction. 2008 taxes online for free Joint return. 2008 taxes online for free   If you file a joint return, the person can be related to either you or your spouse. 2008 taxes online for free Also, the person does not need to be related to the spouse who provides support. 2008 taxes online for free   For example, your spouse's uncle who receives more than half of his support from you may be your qualifying relative, even though he does not live with you. 2008 taxes online for free However, if you and your spouse file separate returns, your spouse's uncle can be your qualifying relative only if he lives with you all year as a member of your household. 2008 taxes online for free Temporary absences. 2008 taxes online for free   A person is considered to live with you as a member of your household during periods of time when one of you, or both, are temporarily absent due to special circumstances such as: Illness, Education, Business, Vacation, or Military service. 2008 taxes online for free   If the person is placed in a nursing home for an indefinite period of time to receive constant medical care, the absence may be considered temporary. 2008 taxes online for free Death or birth. 2008 taxes online for free   A person who died during the year, but lived with you as a member of your household until death, will meet this test. 2008 taxes online for free The same is true for a child who was born during the year and lived with you as a member of your household for the rest of the year. 2008 taxes online for free The test is also met if a child lived with you as a member of your household except for any required hospital stay following birth. 2008 taxes online for free   If your dependent died during the year and you otherwise qualify to claim an exemption for the dependent, you can still claim the exemption. 2008 taxes online for free Example. 2008 taxes online for free Your dependent mother died on January 15. 2008 taxes online for free She met the tests to be your qualifying relative. 2008 taxes online for free The other tests to claim an exemption for a dependent were also met. 2008 taxes online for free You can claim an exemption for her on your return. 2008 taxes online for free Local law violated. 2008 taxes online for free   A person does not meet this test if at any time during the year the relationship between you and that person violates local law. 2008 taxes online for free Example. 2008 taxes online for free Your girlfriend lived with you as a member of your household all year. 2008 taxes online for free However, your relationship with her violated the laws of the state where you live, because she was married to someone else. 2008 taxes online for free Therefore, she does not meet this test and you cannot claim her as a dependent. 2008 taxes online for free Adopted child. 2008 taxes online for free   An adopted child is always treated as your own child. 2008 taxes online for free The term “adopted child” includes a child who was lawfully placed with you for legal adoption. 2008 taxes online for free Cousin. 2008 taxes online for free   Your cousin meets this test only if he or she lives with you all year as a member of your household. 2008 taxes online for free A cousin is a descendant of a brother or sister of your father or mother. 2008 taxes online for free Gross Income Test To meet this test, a person's gross income for the year must be less than $3,900. 2008 taxes online for free Gross income defined. 2008 taxes online for free   Gross income is all income in the form of money, property, and services that is not exempt from tax. 2008 taxes online for free   In a manufacturing, merchandising, or mining business, gross income is the total net sales minus the cost of goods sold, plus any miscellaneous income from the business. 2008 taxes online for free   Gross receipts from rental property are gross income. 2008 taxes online for free Do not deduct taxes, repairs, or other expenses, to determine the gross income from rental property. 2008 taxes online for free   Gross income includes a partner's share of the gross (not a share of the net) partnership income. 2008 taxes online for free    Gross income also includes all taxable unemployment compensation and certain scholarship and fellowship grants. 2008 taxes online for free Scholarships received by degree candidates and used for tuition, fees, supplies, books, and equipment required for particular courses generally are not included in gross income. 2008 taxes online for free For more information about scholarships, see chapter 12. 2008 taxes online for free   Tax-exempt income, such as certain social security benefits, is not included in gross income. 2008 taxes online for free Disabled dependent working at sheltered workshop. 2008 taxes online for free   For purposes of the gross income test, the gross income of an individual who is permanently and totally disabled at any time during the year does not include income for services the individual performs at a sheltered workshop. 2008 taxes online for free The availability of medical care at the workshop must be the main reason for the individual's presence there. 2008 taxes online for free Also, the income must come solely from activities at the workshop that are incident to this medical care. 2008 taxes online for free   A “sheltered workshop” is a school that: Provides special instruction or training designed to alleviate the disability of the individual, and Is operated by certain tax-exempt organizations, or by a state, a U. 2008 taxes online for free S. 2008 taxes online for free possession, a political subdivision of a state or possession, the United States, or the District of Columbia. 2008 taxes online for free “Permanently and totally disabled” has the same meaning here as under Qualifying Child, earlier. 2008 taxes online for free Support Test (To Be a Qualifying Relative) To meet this test, you generally must provide more than half of a person's total support during the calendar year. 2008 taxes online for free However, if two or more persons provide support, but no one person provides more than half of a person's total support, see Multiple Support Agreement , later. 2008 taxes online for free How to determine if support test is met. 2008 taxes online for free   You figure whether you have provided more than half of a person's total support by comparing the amount you contributed to that person's support with the entire amount of support that person received from all sources. 2008 taxes online for free This includes support the person provided from his or her own funds. 2008 taxes online for free   You may find Worksheet 3-1 helpful in figuring whether you provided more than half of a person's support. 2008 taxes online for free Person's own funds not used for support. 2008 taxes online for free   A person's own funds are not support unless they are actually spent for support. 2008 taxes online for free Example. 2008 taxes online for free Your mother received $2,400 in social security benefits and $300 in interest. 2008 taxes online for free She paid $2,000 for lodging and $400 for recreation. 2008 taxes online for free She put $300 in a savings account. 2008 taxes online for free Even though your mother received a total of $2,700 ($2,400 + $300), she spent only $2,400 ($2,000 + $400) for her own support. 2008 taxes online for free If you spent more than $2,400 for her support and no other support was received, you have provided more than half of her support. 2008 taxes online for free Child's wages used for own support. 2008 taxes online for free   You cannot include in your contribution to your child's support any support paid for by the child with the child's own wages, even if you paid the wages. 2008 taxes online for free Year support is provided. 2008 taxes online for free   The year you provide the support is the year you pay for it, even if you do so with borrowed money that you repay in a later year. 2008 taxes online for free   If you use a fiscal year to report your income, you must provide more than half of the dependent's support for the calendar year in which your fiscal year begins. 2008 taxes online for free Armed Forces dependency allotments. 2008 taxes online for free   The part of the allotment contributed by the government and the part taken out of your military pay are both considered provided by you in figuring whether you provide more than half of the support. 2008 taxes online for free If your allotment is used to support persons other than those you name, you can take the exemptions for them if they otherwise qualify. 2008 taxes online for free Example. 2008 taxes online for free You are in the Armed Forces. 2008 taxes online for free You authorize an allotment for your widowed mother that she uses to support herself and her sister. 2008 taxes online for free If the allotment provides more than half of each person's support, you can take an exemption for each of them, if they otherwise qualify, even though you authorize the allotment only for your mother. 2008 taxes online for free Tax-exempt military quarters allowances. 2008 taxes online for free   These allowances are treated the same way as dependency allotments in figuring support. 2008 taxes online for free The allotment of pay and the tax-exempt basic allowance for quarters are both considered as provided by you for support. 2008 taxes online for free Tax-exempt income. 2008 taxes online for free   In figuring a person's total support, include tax-exempt income, savings, and borrowed amounts used to support that person. 2008 taxes online for free Tax-exempt income includes certain social security benefits, welfare benefits, nontaxable life insurance proceeds, Armed Forces family allotments, nontaxable pensions, and tax-exempt interest. 2008 taxes online for free Example 1. 2008 taxes online for free You provide $4,000 toward your mother's support during the year. 2008 taxes online for free She has earned income of $600, nontaxable social security benefits of $4,800, and tax-exempt interest of $200. 2008 taxes online for free She uses all these for her support. 2008 taxes online for free You cannot claim an exemption for your mother because the $4,000 you provide is not more than half of her total support of $9,600 ($4,000 + $600 + $4,800 + $200). 2008 taxes online for free Example 2. 2008 taxes online for free Your niece takes out a student loan of $2,500 a