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2012 state taxes online free 3. 2012 state taxes online 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. 2012 state taxes online free Taxpayer identification numbers for aliens. 2012 state taxes online free Taxpayer identification numbers for adoptees. 2012 state taxes online free What's New Exemption amount. 2012 state taxes online free  The amount you can deduct for each exemption has increased. 2012 state taxes online free It was $3,800 for 2012. 2012 state taxes online free It is $3,900 for 2013. 2012 state taxes online free Exemption phaseout. 2012 state taxes online free  You lose at least part of the benefit of your exemptions if your adjusted gross income is more than a certain amount. 2012 state taxes online 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). 2012 state taxes online free See Phaseout of Exemptions , later. 2012 state taxes online free Introduction This chapter discusses the following topics. 2012 state taxes online free Personal exemptions — You generally can take one for yourself and, if you are married, one for your spouse. 2012 state taxes online free Exemptions for dependents — You generally can take an exemption for each of your dependents. 2012 state taxes online free A dependent is your qualifying child or qualifying relative. 2012 state taxes online 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. 2012 state taxes online free Phaseout of exemptions — Your deduction is reduced if your adjusted gross income is more than a certain amount. 2012 state taxes online free Social security number (SSN) requirement for dependents — You must list the SSN of any dependent for whom you claim an exemption. 2012 state taxes online free Deduction. 2012 state taxes online free   Exemptions reduce your taxable income. 2012 state taxes online free You can deduct $3,900 for each exemption you claim in 2013. 2012 state taxes online 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. 2012 state taxes online free See Phaseout of Exemptions , later. 2012 state taxes online free How to claim exemptions. 2012 state taxes online free    How you claim an exemption on your tax return depends on which form you file. 2012 state taxes online free    If you file Form 1040EZ, the exemption amount is combined with the standard deduction amount and entered on line 5. 2012 state taxes online free    If you file Form 1040A, complete lines 6a through 6d. 2012 state taxes online free The total number of exemptions you can claim is the total in the box on line 6d. 2012 state taxes online free Also complete line 26. 2012 state taxes online free   If you file Form 1040, complete lines 6a through 6d. 2012 state taxes online free The total number of exemptions you can claim is the total in the box on line 6d. 2012 state taxes online free Also complete line 42. 2012 state taxes online 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). 2012 state taxes online free While each is worth the same amount ($3,900 for 2013), different rules apply to each type. 2012 state taxes online free Personal Exemptions You are generally allowed one exemption for yourself. 2012 state taxes online free If you are married, you may be allowed one exemption for your spouse. 2012 state taxes online free These are called personal exemptions. 2012 state taxes online free Your Own Exemption You can take one exemption for yourself unless you can be claimed as a dependent by another taxpayer. 2012 state taxes online 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. 2012 state taxes online free Your Spouse's Exemption Your spouse is never considered your dependent. 2012 state taxes online free Joint return. 2012 state taxes online free   On a joint return you can claim one exemption for yourself and one for your spouse. 2012 state taxes online free Separate return. 2012 state taxes online 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. 2012 state taxes online free This is true even if the other taxpayer does not actually claim your spouse as a dependent. 2012 state taxes online 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. 2012 state taxes online free S. 2012 state taxes online free tax purposes, must not be filing a return, and must not be the dependent of another taxpayer. 2012 state taxes online free Death of spouse. 2012 state taxes online 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 . 2012 state taxes online 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 . 2012 state taxes online free   If you remarried during the year, you cannot take an exemption for your deceased spouse. 2012 state taxes online 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. 2012 state taxes online free If you file a joint return with your new spouse, you can be claimed as an exemption only on that return. 2012 state taxes online free Divorced or separated spouse. 2012 state taxes online free   If you obtained a final decree of divorce or separate maintenance during the year, you cannot take your former spouse's exemption. 2012 state taxes online free This rule applies even if you provided all of your former spouse's support. 2012 state taxes online free Exemptions for Dependents You are allowed one exemption for each person you can claim as a dependent. 2012 state taxes online free You can claim an exemption for a dependent even if your dependent files a return. 2012 state taxes online free The term “dependent” means: A qualifying child, or A qualifying relative. 2012 state taxes online free The terms “ qualifying child ” and “ qualifying relative ” are defined later. 2012 state taxes online free You can claim an exemption for a qualifying child or qualifying relative only if these three tests are met. 2012 state taxes online free Dependent taxpayer test. 2012 state taxes online free Joint return test. 2012 state taxes online free Citizen or resident test. 2012 state taxes online free These three tests are explained in detail later. 2012 state taxes online free All the requirements for claiming an exemption for a dependent are summarized in Table 3-1. 2012 state taxes online free Table 3-1. 2012 state taxes online free Overview of the Rules for Claiming an Exemption for a Dependent Caution. 2012 state taxes online free This table is only an overview of the rules. 2012 state taxes online free For details, see the rest of this chapter. 2012 state taxes online free You cannot claim any dependents if you (or your spouse, if filing jointly) could be claimed as a dependent by another taxpayer. 2012 state taxes online 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. 2012 state taxes online free   You cannot claim a person as a dependent unless that person is a U. 2012 state taxes online free S. 2012 state taxes online free citizen, U. 2012 state taxes online free S. 2012 state taxes online free resident alien, U. 2012 state taxes online free S. 2012 state taxes online free national, or a resident of Canada or Mexico. 2012 state taxes online free 1  You cannot claim a person as a dependent unless that person is your qualifying child or qualifying relative. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online free   The child must have lived with you for more than half of the year. 2012 state taxes online free 2  The child must not have provided more than half of his or her own support for the year. 2012 state taxes online 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). 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online free   The person cannot be your qualifying child or the qualifying child of any other taxpayer. 2012 state taxes online 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). 2012 state taxes online free   The person's gross income for the year must be less than $3,900. 2012 state taxes online free 3  You must provide more than half of the person's total support for the year. 2012 state taxes online free 4  1There is an exception for certain adopted children. 2012 state taxes online 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. 2012 state taxes online free 3There is an exception if the person is disabled and has income from a sheltered workshop. 2012 state taxes online free 4There are exceptions for multiple support agreements, children of divorced or separated parents (or parents who live apart), and kidnapped children. 2012 state taxes online free Dependent not allowed a personal exemption. 2012 state taxes online 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. 2012 state taxes online free This is true even if you do not claim the dependent's exemption on your return. 2012 state taxes online 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. 2012 state taxes online free Housekeepers, maids, or servants. 2012 state taxes online free   If these people work for you, you cannot claim exemptions for them. 2012 state taxes online free Child tax credit. 2012 state taxes online 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. 2012 state taxes online free For more information, see chapter 34. 2012 state taxes online free Dependent Taxpayer Test If you can be claimed as a dependent by another person, you cannot claim anyone else as a dependent. 2012 state taxes online free Even if you have a qualifying child or qualifying relative, you cannot claim that person as a dependent. 2012 state taxes online 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. 2012 state taxes online free Joint Return Test You generally cannot claim a married person as a dependent if he or she files a joint return. 2012 state taxes online free Exception. 2012 state taxes online 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. 2012 state taxes online free Example 1—child files joint return. 2012 state taxes online free You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. 2012 state taxes online free He earned $25,000 for the year. 2012 state taxes online free The couple files a joint return. 2012 state taxes online free You cannot take an exemption for your daughter. 2012 state taxes online free Example 2—child files joint return only as claim for refund of withheld tax. 2012 state taxes online free Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. 2012 state taxes online free Neither is required to file a tax return. 2012 state taxes online free They do not have a child. 2012 state taxes online free Taxes were taken out of their pay so they filed a joint return only to get a refund of the withheld taxes. 2012 state taxes online 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. 2012 state taxes online free You can claim exemptions for each of them if all the other tests to do so are met. 2012 state taxes online free Example 3—child files joint return to claim American opportunity credit. 2012 state taxes online free The facts are the same as in Example 2 except no taxes were taken out of your son's pay. 2012 state taxes online free He and his wife are not required to file a tax return. 2012 state taxes online free However, they file a joint return to claim an American opportunity credit of $124 and get a refund of that amount. 2012 state taxes online 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. 2012 state taxes online free The exception to the joint return test does not apply, so you cannot claim an exemption for either of them. 2012 state taxes online free Citizen or Resident Test You cannot claim a person as a dependent unless that person is a U. 2012 state taxes online free S. 2012 state taxes online free citizen, U. 2012 state taxes online free S. 2012 state taxes online free resident alien, U. 2012 state taxes online free S. 2012 state taxes online free national, or a resident of Canada or Mexico. 2012 state taxes online free However, there is an exception for certain adopted children, as explained next. 2012 state taxes online free Exception for adopted child. 2012 state taxes online free   If you are a U. 2012 state taxes online free S. 2012 state taxes online free citizen or U. 2012 state taxes online free S. 2012 state taxes online free national who has legally adopted a child who is not a U. 2012 state taxes online free S. 2012 state taxes online free citizen, U. 2012 state taxes online free S. 2012 state taxes online free resident alien, or U. 2012 state taxes online free S. 2012 state taxes online free national, this test is met if the child lived with you as a member of your household all year. 2012 state taxes online free This exception also applies if the child was lawfully placed with you for legal adoption. 2012 state taxes online free Child's place of residence. 2012 state taxes online free   Children usually are citizens or residents of the country of their parents. 2012 state taxes online free   If you were a U. 2012 state taxes online free S. 2012 state taxes online free citizen when your child was born, the child may be a U. 2012 state taxes online free S. 2012 state taxes online free citizen and meet this test even if the other parent was a nonresident alien and the child was born in a foreign country. 2012 state taxes online free Foreign students' place of residence. 2012 state taxes online 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. 2012 state taxes online free S. 2012 state taxes online free residents and do not meet this test. 2012 state taxes online free You cannot claim an exemption for them. 2012 state taxes online free However, if you provided a home for a foreign student, you may be able to take a charitable contribution deduction. 2012 state taxes online free See Expenses Paid for Student Living With You in chapter 24. 2012 state taxes online free U. 2012 state taxes online free S. 2012 state taxes online free national. 2012 state taxes online free   A U. 2012 state taxes online free S. 2012 state taxes online free national is an individual who, although not a U. 2012 state taxes online free S. 2012 state taxes online free citizen, owes his or her allegiance to the United States. 2012 state taxes online free U. 2012 state taxes online free S. 2012 state taxes online free nationals include American Samoans and Northern Mariana Islanders who chose to become U. 2012 state taxes online free S. 2012 state taxes online free nationals instead of U. 2012 state taxes online free S. 2012 state taxes online free citizens. 2012 state taxes online free Qualifying Child Five tests must be met for a child to be your qualifying child. 2012 state taxes online free The five tests are: Relationship, Age, Residency, Support, and Joint return. 2012 state taxes online free These tests are explained next. 2012 state taxes online 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. 2012 state taxes online free See Special Rule for Qualifying Child of More Than One Person, later. 2012 state taxes online 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. 2012 state taxes online free Adopted child. 2012 state taxes online free   An adopted child is always treated as your own child. 2012 state taxes online free The term “adopted child” includes a child who was lawfully placed with you for legal adoption. 2012 state taxes online free Foster child. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online free Example. 2012 state taxes online free Your son turned 19 on December 10. 2012 state taxes online 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. 2012 state taxes online free Child must be younger than you or spouse. 2012 state taxes online free   To be your qualifying child, a child who is not permanently and totally disabled must be younger than you. 2012 state taxes online 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. 2012 state taxes online free Example 1—child not younger than you or spouse. 2012 state taxes online free Your 23-year-old brother, who is a student and unmarried, lives with you and your spouse. 2012 state taxes online free He is not disabled. 2012 state taxes online free Both you and your spouse are 21 years old, and you file a joint return. 2012 state taxes online free Your brother is not your qualifying child because he is not younger than you or your spouse. 2012 state taxes online free Example 2—child younger than your spouse but not younger than you. 2012 state taxes online free The facts are the same as in Example 1 except your spouse is 25 years old. 2012 state taxes online 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. 2012 state taxes online free Student defined. 2012 state taxes online 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. 2012 state taxes online free The 5 calendar months do not have to be consecutive. 2012 state taxes online free Full-time student. 2012 state taxes online 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. 2012 state taxes online free School defined. 2012 state taxes online free   A school can be an elementary school, junior or senior high school, college, university, or technical, trade, or mechanical school. 2012 state taxes online free However, an on-the-job training course, correspondence school, or school offering courses only through the Internet does not count as a school. 2012 state taxes online free Vocational high school students. 2012 state taxes online 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. 2012 state taxes online free Permanently and totally disabled. 2012 state taxes online free   Your child is permanently and totally disabled if both of the following apply. 2012 state taxes online free He or she cannot engage in any substantial gainful activity because of a physical or mental condition. 2012 state taxes online 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. 2012 state taxes online free Residency Test To meet this test, your child must have lived with you for more than half the year. 2012 state taxes online 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. 2012 state taxes online free Temporary absences. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online free Death or birth of child. 2012 state taxes online 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. 2012 state taxes online free Child born alive. 2012 state taxes online 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. 2012 state taxes online free State or local law must treat the child as having been born alive. 2012 state taxes online free There must be proof of a live birth shown by an official document, such as a birth certificate. 2012 state taxes online 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. 2012 state taxes online free Stillborn child. 2012 state taxes online free   You cannot claim an exemption for a stillborn child. 2012 state taxes online free Kidnapped child. 2012 state taxes online free   You may be able to treat your child as meeting the residency test even if the child has been kidnapped. 2012 state taxes online free See Publication 501 for details. 2012 state taxes online free Children of divorced or separated parents (or parents who live apart). 2012 state taxes online free   In most cases, because of the residency test, a child of divorced or separated parents is the qualifying child of the custodial parent. 2012 state taxes online free However, the child will be treated as the qualifying child of the noncustodial parent if all four of the following statements are true. 2012 state taxes online 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. 2012 state taxes online free The child received over half of his or her support for the year from the parents. 2012 state taxes online free The child is in the custody of one or both parents for more than half of the year. 2012 state taxes online free Either of the following statements is true. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online free If the decree or agreement went into effect after 2008, see Post-2008 divorce decree or separation agreement , later. 2012 state taxes online 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. 2012 state taxes online free Custodial parent and noncustodial parent. 2012 state taxes online free   The custodial parent is the parent with whom the child lived for the greater number of nights during the year. 2012 state taxes online free The other parent is the noncustodial parent. 2012 state taxes online 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. 2012 state taxes online 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). 2012 state taxes online free Equal number of nights. 2012 state taxes online 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). 2012 state taxes online free December 31. 2012 state taxes online free   The night of December 31 is treated as part of the year in which it begins. 2012 state taxes online free For example, December 31, 2013, is treated as part of 2013. 2012 state taxes online free Emancipated child. 2012 state taxes online free   If a child is emancipated under state law, the child is treated as not living with either parent. 2012 state taxes online free See Examples 5 and 6. 2012 state taxes online free Absences. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online free Parent works at night. 2012 state taxes online 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. 2012 state taxes online free On a school day, the child is treated as living at the primary residence registered with the school. 2012 state taxes online free Example 1—child lived with one parent for a greater number of nights. 2012 state taxes online free You and your child’s other parent are divorced. 2012 state taxes online free In 2013, your child lived with you 210 nights and with the other parent 155 nights. 2012 state taxes online free You are the custodial parent. 2012 state taxes online free Example 2—child is away at camp. 2012 state taxes online free In 2013, your daughter lives with each parent for alternate weeks. 2012 state taxes online free In the summer, she spends 6 weeks at summer camp. 2012 state taxes online 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. 2012 state taxes online free Example 3—child lived same number of nights with each parent. 2012 state taxes online 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. 2012 state taxes online free Your AGI is $40,000. 2012 state taxes online free Your ex-spouse's AGI is $25,000. 2012 state taxes online free You are treated as your son's custodial parent because you have the higher AGI. 2012 state taxes online free Example 4—child is at parent’s home but with other parent. 2012 state taxes online free Your son normally lives with you during the week and with his other parent, your ex-spouse, every other weekend. 2012 state taxes online free You become ill and are hospitalized. 2012 state taxes online free The other parent lives in your home with your son for 10 consecutive days while you are in the hospital. 2012 state taxes online free Your son is treated as living with you during this 10-day period because he was living in your home. 2012 state taxes online free Example 5—child emancipated in May. 2012 state taxes online free When your son turned age 18 in May 2013, he became emancipated under the law of the state where he lives. 2012 state taxes online free As a result, he is not considered in the custody of his parents for more than half of the year. 2012 state taxes online free The special rule for children of divorced or separated parents does not apply. 2012 state taxes online free Example 6—child emancipated in August. 2012 state taxes online 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. 2012 state taxes online free She turns 18 and is emancipated under state law on August 1, 2013. 2012 state taxes online 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. 2012 state taxes online free You are the custodial parent. 2012 state taxes online free Written declaration. 2012 state taxes online 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. 2012 state taxes online free The noncustodial parent must attach a copy of the form or statement to his or her tax return. 2012 state taxes online 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. 2012 state taxes online free Post-1984 and pre-2009 divorce decree or separation agreement. 2012 state taxes online 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. 2012 state taxes online free The decree or agreement must state all three of the following. 2012 state taxes online free The noncustodial parent can claim the child as a dependent without regard to any condition, such as payment of support. 2012 state taxes online free The custodial parent will not claim the child as a dependent for the year. 2012 state taxes online free The years for which the noncustodial parent, rather than the custodial parent, can claim the child as a dependent. 2012 state taxes online free   The noncustodial parent must attach all of the following pages of the decree or agreement to his or her tax return. 2012 state taxes online free The cover page (write the other parent's social security number on this page). 2012 state taxes online free The pages that include all of the information identified in items (1) through (3) above. 2012 state taxes online free The signature page with the other parent's signature and the date of the agreement. 2012 state taxes online free Post-2008 divorce decree or separation agreement. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online free The form or statement must release the custodial parent's claim to the child without any conditions. 2012 state taxes online free For example, the release must not depend on the noncustodial parent paying support. 2012 state taxes online free    The noncustodial parent must attach the required information even if it was filed with a return in an earlier year. 2012 state taxes online free Revocation of release of claim to an exemption. 2012 state taxes online 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). 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online free Remarried parent. 2012 state taxes online free   If you remarry, the support provided by your new spouse is treated as provided by you. 2012 state taxes online free Parents who never married. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online free This test is different from the support test to be a qualifying relative, which is described later. 2012 state taxes online free However, to see what is or is not support, see Support Test (To Be a Qualifying Relative) , later. 2012 state taxes online 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. 2012 state taxes online free Worksheet 3-1. 2012 state taxes online free Worksheet for Determining Support Funds Belonging to the Person You Supported       1. 2012 state taxes online 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. 2012 state taxes online free Do not include funds provided by the state; include those amounts on line 23 instead 1. 2012 state taxes online free     2. 2012 state taxes online free Enter the amount on line 1 that was used for the person's support 2. 2012 state taxes online free     3. 2012 state taxes online free Enter the amount on line 1 that was used for other purposes 3. 2012 state taxes online free     4. 2012 state taxes online free Enter the total amount in the person's savings and other accounts at the end of the year 4. 2012 state taxes online free     5. 2012 state taxes online free Add lines 2 through 4. 2012 state taxes online free (This amount should equal line 1. 2012 state taxes online free ) 5. 2012 state taxes online free     Expenses for Entire Household (where the person you supported lived)       6. 2012 state taxes online free Lodging (complete line 6a or 6b):         a. 2012 state taxes online free Enter the total rent paid 6a. 2012 state taxes online free       b. 2012 state taxes online free Enter the fair rental value of the home. 2012 state taxes online free If the person you supported owned the home,  also include this amount in line 21 6b. 2012 state taxes online free     7. 2012 state taxes online free Enter the total food expenses 7. 2012 state taxes online free     8. 2012 state taxes online free Enter the total amount of utilities (heat, light, water, etc. 2012 state taxes online free not included in line 6a or 6b) 8. 2012 state taxes online free     9. 2012 state taxes online free Enter the total amount of repairs (not included in line 6a or 6b) 9. 2012 state taxes online free     10. 2012 state taxes online free Enter the total of other expenses. 2012 state taxes online free Do not include expenses of maintaining the home, such as mortgage interest, real estate taxes, and insurance 10. 2012 state taxes online free     11. 2012 state taxes online free Add lines 6a through 10. 2012 state taxes online free These are the total household expenses 11. 2012 state taxes online free     12. 2012 state taxes online free Enter total number of persons who lived in the household 12. 2012 state taxes online free     Expenses for the Person You Supported       13. 2012 state taxes online free Divide line 11 by line 12. 2012 state taxes online free This is the person's share of the household expenses 13. 2012 state taxes online free     14. 2012 state taxes online free Enter the person's total clothing expenses 14. 2012 state taxes online free     15. 2012 state taxes online free Enter the person's total education expenses 15. 2012 state taxes online free     16. 2012 state taxes online free Enter the person's total medical and dental expenses not paid for or reimbursed by insurance 16. 2012 state taxes online free     17. 2012 state taxes online free Enter the person's total travel and recreation expenses 17. 2012 state taxes online free     18. 2012 state taxes online free Enter the total of the person's other expenses 18. 2012 state taxes online free     19. 2012 state taxes online free Add lines 13 through 18. 2012 state taxes online free This is the total cost of the person's support for the year 19. 2012 state taxes online free     Did the Person Provide More Than Half of His or Her Own Support?       20. 2012 state taxes online free Multiply line 19 by 50% (. 2012 state taxes online free 50) 20. 2012 state taxes online free     21. 2012 state taxes online free Enter the amount from line 2, plus the amount from line 6b if the person you supported owned  the home. 2012 state taxes online free This is the amount the person provided for his or her own support 21. 2012 state taxes online free     22. 2012 state taxes online free Is line 21 more than line 20?   No. 2012 state taxes online free You meet the support test for this person to be your qualifying child. 2012 state taxes online free If this person also meets the other tests to be a qualifying child, stop here; do not complete lines 23–26. 2012 state taxes online free Otherwise, go to line 23 and fill out the rest of the worksheet to determine if this person is your qualifying relative. 2012 state taxes online free    Yes. 2012 state taxes online free You do not meet the support test for this person to be either your qualifying child or your qualifying relative. 2012 state taxes online free Stop here. 2012 state taxes online free        Did You Provide More Than Half?       23. 2012 state taxes online free Enter the amount others provided for the person's support. 2012 state taxes online free Include amounts provided by state, local, and other welfare societies or agencies. 2012 state taxes online free Do not include any amounts included on line 1 23. 2012 state taxes online free     24. 2012 state taxes online free Add lines 21 and 23 24. 2012 state taxes online free     25. 2012 state taxes online free Subtract line 24 from line 19. 2012 state taxes online free This is the amount you provided for the person's support 25. 2012 state taxes online free     26. 2012 state taxes online free Is line 25 more than line 20?   Yes. 2012 state taxes online free You meet the support test for this person to be your qualifying relative. 2012 state taxes online free    No. 2012 state taxes online free You do not meet the support test for this person to be your qualifying relative. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online free   Example. 2012 state taxes online free You provided $4,000 toward your 16-year-old son's support for the year. 2012 state taxes online free He has a part-time job and provided $6,000 to his own support. 2012 state taxes online free He provided more than half of his own support for the year. 2012 state taxes online free He is not your qualifying child. 2012 state taxes online free Foster care payments and expenses. 2012 state taxes online free   Payments you receive for the support of a foster child from a child placement agency are considered support provided by the agency. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online free For more information about the deduction for charitable contributions, see chapter 24. 2012 state taxes online free If your unreimbursed expenses are not deductible as charitable contributions, they may qualify as support you provided. 2012 state taxes online free   If you are in the trade or business of providing foster care, your unreimbursed expenses are not considered support provided by you. 2012 state taxes online free Example 1. 2012 state taxes online free Lauren, a foster child, lived with Mr. 2012 state taxes online free and Mrs. 2012 state taxes online free Smith for the last 3 months of the year. 2012 state taxes online free The Smiths cared for Lauren because they wanted to adopt her (although she had not been placed with them for adoption). 2012 state taxes online free They did not care for her as a trade or business or to benefit the agency that placed her in their home. 2012 state taxes online free The Smiths' unreimbursed expenses are not deductible as charitable contributions but are considered support they provided for Lauren. 2012 state taxes online free Example 2. 2012 state taxes online free You provided $3,000 toward your 10-year-old foster child's support for the year. 2012 state taxes online free The state government provided $4,000, which is considered support provided by the state, not by the child. 2012 state taxes online free See Support provided by the state (welfare, food stamps, housing, etc. 2012 state taxes online free ) , later. 2012 state taxes online free Your foster child did not provide more than half of her own support for the year. 2012 state taxes online free Scholarships. 2012 state taxes online 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. 2012 state taxes online free Joint Return Test (To Be a Qualifying Child) To meet this test, the child cannot file a joint return for the year. 2012 state taxes online free Exception. 2012 state taxes online 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. 2012 state taxes online free Example 1—child files joint return. 2012 state taxes online free You supported your 18-year-old daughter, and she lived with you all year while her husband was in the Armed Forces. 2012 state taxes online free He earned $25,000 for the year. 2012 state taxes online free The couple files a joint return. 2012 state taxes online free Because your daughter and her husband file a joint return, she is not your qualifying child. 2012 state taxes online free Example 2—child files joint return only as a claim for refund of withheld tax. 2012 state taxes online free Your 18-year-old son and his 17-year-old wife had $800 of wages from part-time jobs and no other income. 2012 state taxes online free Neither is required to file a tax return. 2012 state taxes online free They do not have a child. 2012 state taxes online free Taxes were taken out of their pay so they filed a joint return only to get a refund of the withheld taxes. 2012 state taxes online free The exception to the joint return test applies, so your son may be your qualifying child if all the other tests are met. 2012 state taxes online free Example 3—child files joint return to claim American opportunity credit. 2012 state taxes online free The facts are the same as in Example 2 except no taxes were taken out of your son's pay. 2012 state taxes online free He and his wife were not required to file a tax return. 2012 state taxes online free However, they file a joint return to claim an American opportunity credit of $124 and get a refund of that amount. 2012 state taxes online 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. 2012 state taxes online free The exception to the joint return test does not apply, so your son is not your qualifying child. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online free Sometimes, a child meets the relationship, age, residency, support, and joint return tests to be a qualifying child of more than one person. 2012 state taxes online 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). 2012 state taxes online free The exemption for the child. 2012 state taxes online free The child tax credit. 2012 state taxes online free Head of household filing status. 2012 state taxes online free The credit for child and dependent care expenses. 2012 state taxes online free The exclusion from income for dependent care benefits. 2012 state taxes online free The earned income credit. 2012 state taxes online free The other person cannot take any of these benefits based on this qualifying child. 2012 state taxes online free In other words, you and the other person cannot agree to divide these benefits between you. 2012 state taxes online free The other person cannot take any of these tax benefits for a child unless he or she has a different qualifying child. 2012 state taxes online free Tiebreaker rules. 2012 state taxes online free   To determine which person can treat the child as a qualifying child to claim these six tax benefits, the following tiebreaker rules apply. 2012 state taxes online free If only one of the persons is the child's parent, the child is treated as the qualifying child of the parent. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online free See Example 6 . 2012 state taxes online 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. 2012 state taxes online free Example 1—child lived with parent and grandparent. 2012 state taxes online free You and your 3-year-old daughter Jane lived with your mother all year. 2012 state taxes online free You are 25 years old, unmarried, and your AGI is $9,000. 2012 state taxes online free Your mother's AGI is $15,000. 2012 state taxes online free Jane's father did not live with you or your daughter. 2012 state taxes online free You have not signed Form 8332 (or a similar statement) to release the child's exemption to the noncustodial parent. 2012 state taxes online 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. 2012 state taxes online free However, only one of you can claim her. 2012 state taxes online free Jane is not a qualifying child of anyone else, including her father. 2012 state taxes online free You agree to let your mother claim Jane. 2012 state taxes online 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). 2012 state taxes online free Example 2—parent has higher AGI than grandparent. 2012 state taxes online free The facts are the same as in Example 1 except your AGI is $18,000. 2012 state taxes online free Because your mother's AGI is not higher than yours, she cannot claim Jane. 2012 state taxes online free Only you can claim Jane. 2012 state taxes online free Example 3—two persons claim same child. 2012 state taxes online free The facts are the same as in Example 1 except that you and your mother both claim Jane as a qualifying child. 2012 state taxes online free In this case, you, as the child's parent, will be the only one allowed to claim Jane as a qualifying child. 2012 state taxes online free The IRS will disallow your mother's claim to the six tax benefits listed earlier unless she has another qualifying child. 2012 state taxes online free Example 4—qualifying children split between two persons. 2012 state taxes online 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. 2012 state taxes online free Only one of you can claim each child. 2012 state taxes online free However, if your mother's AGI is higher than yours, you can allow your mother to claim one or more of the children. 2012 state taxes online free For example, if you claim one child, your mother can claim the other two. 2012 state taxes online free Example 5—taxpayer who is a qualifying child. 2012 state taxes online 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. 2012 state taxes online free This means you are your mother's qualifying child. 2012 state taxes online 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. 2012 state taxes online free Example 6—child lived with both parents and grandparent. 2012 state taxes online free The facts are the same as in Example 1 except you are married to your daughter's father. 2012 state taxes online free The two of you live together with your daughter and your mother, and have an AGI of $20,000 on a joint return. 2012 state taxes online free If you and your husband do not claim your daughter as a qualifying child, your mother can claim her instead. 2012 state taxes online 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. 2012 state taxes online free Example 7—separated parents. 2012 state taxes online free You, your husband, and your 10-year-old son lived together until August 1, 2013, when your husband moved out of the household. 2012 state taxes online free In August and September, your son lived with you. 2012 state taxes online free For the rest of the year, your son lived with your husband, the boy's father. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online free You and your husband will file separate returns. 2012 state taxes online free Your husband agrees to let you treat your son as a qualifying child. 2012 state taxes online 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). 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online free Example 8—separated parents claim same child. 2012 state taxes online free The facts are the same as in Example 7 except that you and your husband both claim your son as a qualifying child. 2012 state taxes online free In this case, only your husband will be allowed to treat your son as a qualifying child. 2012 state taxes online free This is because, during 2013, the boy lived with him longer than with you. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online free Example 9—unmarried parents. 2012 state taxes online free You, your 5-year-old son, and your son's father lived together all year. 2012 state taxes online free You and your son's father are not married. 2012 state taxes online 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. 2012 state taxes online free Your AGI is $12,000 and your son's father's AGI is $14,000. 2012 state taxes online free Your son's father agrees to let you claim the child as a qualifying child. 2012 state taxes online 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). 2012 state taxes online free Example 10—unmarried parents claim same child. 2012 state taxes online 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. 2012 state taxes online free In this case, only your son's father will be allowed to treat your son as a qualifying child. 2012 state taxes online free This is because his AGI, $14,000, is more than your AGI, $12,000. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online free Example 11—child did not live with a parent. 2012 state taxes online free You and your 7-year-old niece, your sister's child, lived with your mother all year. 2012 state taxes online free You are 25 years old, and your AGI is $9,300. 2012 state taxes online free Your mother's AGI is $15,000. 2012 state taxes online free Your niece's parents file jointly, have an AGI of less than $9,000, and do not live with you or their child. 2012 state taxes online 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. 2012 state taxes online free However, only your mother can treat her as a qualifying child. 2012 state taxes online free This is because your mother's AGI, $15,000, is more than your AGI, $9,300. 2012 state taxes online free Applying this special rule to divorced or separated parents (or parents who live apart). 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online free Example 1. 2012 state taxes online free You and your 5-year-old son lived all year with your mother, who paid the entire cost of keeping up the home. 2012 state taxes online free Your AGI is $10,000. 2012 state taxes online free Your mother's AGI is $25,000. 2012 state taxes online free Your son's father did not live with you or your son. 2012 state taxes online 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. 2012 state taxes online free Because of this, you cannot claim an exemption or the child tax credit for your son. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online free (Note: The support test does not apply for the earned income credit. 2012 state taxes online free ) However, you agree to let your mother claim your son. 2012 state taxes online 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. 2012 state taxes online free (You cannot claim head of household filing status because your mother paid the entire cost of keeping up the home. 2012 state taxes online free ) Example 2. 2012 state taxes online free The facts are the same as in Example 1 except your AGI is $25,000 and your mother's AGI is $21,000. 2012 state taxes online free Your mother cannot claim your son as a qualifying child for any purpose because her AGI is not higher than yours. 2012 state taxes online free Example 3. 2012 state taxes online 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. 2012 state taxes online free Your mother also claims him as a qualifying child for head of household filing status. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online free Qualifying Relative Four tests must be met for a person to be your qualifying relative. 2012 state taxes online free The four tests are: Not a qualifying child test, Member of household or relationship test, Gross income test, and Support test. 2012 state taxes online free Age. 2012 state taxes online free   Unlike a qualifying child, a qualifying relative can be any age. 2012 state taxes online free There is no age test for a qualifying relative. 2012 state taxes online free Kidnapped child. 2012 state taxes online free   You may be able to treat a child as your qualifying relative even if the child has been kidnapped. 2012 state taxes online free See Publication 501 for details. 2012 state taxes online 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. 2012 state taxes online free Example 1. 2012 state taxes online free Your 22-year-old daughter, who is a student, lives with you and meets all the tests to be your qualifying child. 2012 state taxes online free She is not your qualifying relative. 2012 state taxes online free Example 2. 2012 state taxes online free Your 2-year-old son lives with your parents and meets all the tests to be their qualifying child. 2012 state taxes online free He is not your qualifying relative. 2012 state taxes online free Example 3. 2012 state taxes online 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. 2012 state taxes online free He may be your qualifying relative if the gross income test and the support test are met. 2012 state taxes online free Example 4. 2012 state taxes online 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. 2012 state taxes online free He is not your qualifying child because he does not meet the residency test. 2012 state taxes online free He may be your qualifying relative if the gross income test and the support test are met. 2012 state taxes online free Child of person not required to file a return. 2012 state taxes online 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. 2012 state taxes online free Example 1—return not required. 2012 state taxes online free You support an unrelated friend and her 3-year-old child, who lived with you all year in your home. 2012 state taxes online free Your friend has no gross income, is not required to file a 2013 tax return, and does not file a 2013 tax return. 2012 state taxes online free Both your friend and her child are your qualifying relatives if the support test is met. 2012 state taxes online free Example 2—return filed to claim refund. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online free Both your friend and her child are your qualifying relatives if the support test is met. 2012 state taxes online free Example 3—earned income credit claimed. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online free Child in Canada or Mexico. 2012 state taxes online free   You may be able to claim your child as a dependent even if the child lives in Canada or Mexico. 2012 state taxes online free If the child does not live with you, the child does not meet the residency test to be your qualifying child. 2012 state taxes online free However, the child may still be your qualifying relative. 2012 state taxes online free If the persons the child does live with are not U. 2012 state taxes online free S. 2012 state taxes online free citizens and have no U. 2012 state taxes online free S. 2012 state taxes online free gross income, those persons are not “taxpayers,” so the child is not the qualifying child of any other taxpayer. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online free S. 2012 state taxes online free citizen, U. 2012 state taxes online free S. 2012 state taxes online free resident alien, or U. 2012 state taxes online free S. 2012 state taxes online free national. 2012 state taxes online free There is an exception for certain adopted children who lived with you all year. 2012 state taxes online free See Citizen or Resident Test , earlier. 2012 state taxes online free Example. 2012 state taxes online 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. 2012 state taxes online free You are single and live in the United States. 2012 state taxes online free Your mother is not a U. 2012 state taxes online free S. 2012 state taxes online free citizen and has no U. 2012 state taxes online free S. 2012 state taxes online free income, so she is not a “taxpayer. 2012 state taxes online free ” Your children are not your qualifying children because they do not meet the residency test. 2012 state taxes online 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. 2012 state taxes online free You may also be able to claim your mother as a dependent if the gross income and support tests are met. 2012 state taxes online 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 . 2012 state taxes online free If at any time during the year the person was your spouse, that person cannot be your qualifying relative. 2012 state taxes online free However, see Personal Exemptions , earlier. 2012 state taxes online free Relatives who do not have to live with you. 2012 state taxes online 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. 2012 state taxes online free Your child, stepchild, foster child, or a descendant of any of them (for example, your grandchild). 2012 state taxes online free (A legally adopted child is considered your child. 2012 state taxes online free ) Your brother, sister, half brother, half sister, stepbrother, or stepsister. 2012 state taxes online free Your father, mother, grandparent, or other direct ancestor, but not foster parent. 2012 state taxes online free Your stepfather or stepmother. 2012 state taxes online free A son or daughter of your brother or sister. 2012 state taxes online free A son or daughter of your half brother or half sister. 2012 state taxes online free A brother or sister of your father or mother. 2012 state taxes online free Your son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. 2012 state taxes online free Any of these relationships that were established by marriage are not ended by death or divorce. 2012 state taxes online free Example. 2012 state taxes online free You and your wife began supporting your wife's father, a widower, in 2006. 2012 state taxes online free Your wife died in 2012. 2012 state taxes online free Despite your wife's death, your father-in-law continues to meet this test, even if he does not live with you. 2012 state taxes online free You can claim him as a dependent if all other tests are met, including the gross income test and support test. 2012 state taxes online free Foster child. 2012 state taxes online 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. 2012 state taxes online free Joint return. 2012 state taxes online free   If you file a joint return, the person can be related to either you or your spouse. 2012 state taxes online free Also, the person does not need to be related to the spouse who provides support. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online free Temporary absences. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online free Death or birth. 2012 state taxes online free   A person who died during the year, but lived with you as a member of your household until death, will meet this test. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online free Example. 2012 state taxes online free Your dependent mother died on January 15. 2012 state taxes online free She met the tests to be your qualifying relative. 2012 state taxes online free The other tests to claim an exemption for a dependent were also met. 2012 state taxes online free You can claim an exemption for her on your return. 2012 state taxes online free Local law violated. 2012 state taxes online 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. 2012 state taxes online free Example. 2012 state taxes online free Your girlfriend lived with you as a member of your household all year. 2012 state taxes online free However, your relationship with her violated the laws of the state where you live, because she was married to someone else. 2012 state taxes online free Therefore, she does not meet this test and you cannot claim her as a dependent. 2012 state taxes online free Adopted child. 2012 state taxes online free   An adopted child is always treated as your own child. 2012 state taxes online free The term “adopted child” includes a child who was lawfully placed with you for legal adoption. 2012 state taxes online free Cousin. 2012 state taxes online free   Your cousin meets this test only if he or she lives with you all year as a member of your household. 2012 state taxes online free A cousin is a descendant of a brother or sister of your father or mother. 2012 state taxes online free Gross Income Test To meet this test, a person's gross income for the year must be less than $3,900. 2012 state taxes online free Gross income defined. 2012 state taxes online free   Gross income is all income in the form of money, property, and services that is not exempt from tax. 2012 state taxes online 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. 2012 state taxes online free   Gross receipts from rental property are gross income. 2012 state taxes online free Do not deduct taxes, repairs, or other expenses, to determine the gross income from rental property. 2012 state taxes online free   Gross income includes a partner's share of the gross (not a share of the net) partnership income. 2012 state taxes online free    Gross income also includes all taxable unemployment compensation and certain scholarship and fellowship grants. 2012 state taxes online 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. 2012 state taxes online free For more information about scholarships, see chapter 12. 2012 state taxes online free   Tax-exempt income, such as certain social security benefits, is not included in gross income. 2012 state taxes online free Disabled dependent working at sheltered workshop. 2012 state taxes online 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. 2012 state taxes online free The availability of medical care at the workshop must be the main reason for the individual's presence there. 2012 state taxes online free Also, the income must come solely from activities at the workshop that are incident to this medical care. 2012 state taxes online 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. 2012 state taxes online free S. 2012 state taxes online free possession, a political subdivision of a state or possession, the United States, or the District of Columbia. 2012 state taxes online free “Permanently and totally disabled” has the same meaning here as under Qualifying Child, earlier. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online free How to determine if support test is met. 2012 state taxes online 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. 2012 state taxes online free This includes support the person provided from his or her own funds. 2012 state taxes online free   You may find Worksheet 3-1 helpful in figuring whether you provided more than half of a person's support. 2012 state taxes online free Person's own funds not used for support. 2012 state taxes online free   A person's own funds are not support unless they are actually spent for support. 2012 state taxes online free Example. 2012 state taxes online free Your mother received $2,400 in social security benefits and $300 in interest. 2012 state taxes online free She paid $2,000 for lodging and $400 for 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the calendar year in which your fiscal year begins. 2012 state taxes online free Armed Forces dependency allotments. 2012 state taxes online 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. 2012 state taxes online 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. 2012 state taxes online free Example. 2012 state taxes online free You are in the Armed Forces. 2012 state taxes online free You authorize an allotment for your widowed mother that she uses to support herself and her sister. 2012 state taxes online 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. 2012 state taxes online free Tax-exempt military quarters allowances. 2012 state taxes online free   These allowances are treated the same way as dependency allotments in figuring support. 2012 state taxes online free The allotment of pay and the tax-exempt basic allowance for quarters are both considered as provided by you for support. 2012 state taxes online free Tax-exempt income. 2012 state taxes online free   In figuring a person's total support, include tax-exempt income, savings, and borrowed amounts used to support that person. 2012 state taxes online 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. 2012 state taxes online free Example 1. 2012 state taxes online free You provide $4,000 toward your mother's support during the year. 2012 state taxes online free She has earned income of $600, nontaxable social security benefits of $4,800, and tax-exempt interest of $200. 2012 state taxes online free She uses all these for her support. 2012 state taxes online 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). 2012 state taxes online free Example 2. 2012 state taxes online free Your niece takes out a student loan of $2,500 a
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Tax Law Changes Related to Midwestern Disaster Areas

FS-2008-27, December 2008

WASHINGTON — The Heartland Disaster Tax Relief Act of 2008 provides certain tax breaks to help victims of the severe storms, flooding and tornadoes that occurred in Arkansas, Illinois, Indiana, Iowa, Kansas, Michigan, Missouri, Minnesota, Nebraska and Wisconsin that the federal government declared a disaster during the period beginning May 20, 2008, and ending July 31, 2008.

The recently enacted legislation alters the tax code to help individuals who suffered losses as a result of the Midwestern Disasters and to make it easier for individuals and businesses to engage in charity to benefit those affected by the severe storms, flooding and tornadoes.

The counties in these states that encompass the “Midwestern Disaster Areas” are identified in Tables 1 and 2 at the end of this fact sheet. Taxpayers located in the counties listed in Table 1 are eligible for all portions of the relief made available to the Midwestern Disaster Areas by the recently enacted legislation. Those taxpayers located in the counties listed in Table 2 are eligible only for certain special tax provisions. For a more complete listing of the tax relief provisions that the Heartland Disaster Tax Relief Act of 2008 provides to taxpayers located in the counties listed in Tables 1 and 2, see Publication 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas.

Individuals Affected by the Midwestern Disasters

In general, for individuals affected by the Midwestern Disasters, the Heartland Disaster Tax Relief Act of 2008 provides tax-favored early distributions and loans from retirement accounts, eliminates the limitations on claiming losses and permits certain earned income tax credit (EITC) and refundable child tax credit recipients to choose either tax year 2008 or 2007 to determine their earned income and use the more beneficial result.

The recently enacted legislation also allows affected individuals to exclude from income certain cancellations of debt and extends, from two years to five years, the replacement period for converted properties. Portions of the Heartland Disaster Tax Relief Act of 2008 are highlighted below.

Removal of Loss Limitations: For taxpayers who suffered casualty or theft losses to property owned for personal use that are attributable to the Midwestern Disasters, recently enacted legislation removes certain loss limitations. Ordinarily, to figure a deduction for a casualty or theft loss of personal-use property from a particular disaster, taxpayers who itemize must reduce the loss by $100 and also reduce their total casualty and theft losses by 10 percent of their adjusted gross income. Only the excess over these $100 and 10 percent limits is deductible for those taxpayers who itemize their deductions. The recently enacted legislation, however, removes these limits for the Midwestern Disasters on losses of personal-use property, so that the entire amount of unreimbursed losses is deductible if a taxpayer itemizes.

To qualify, a loss must arise in a Midwestern Disaster Area and be attributable to the severe storms, flooding or tornadoes for which the Disaster Declarations identified in Tables 1 and 2 were issued. Note: The new increased standard deduction for net disaster losses does not apply to losses in Midwestern disaster areas.

Cancellation of Debt: Individuals whose main home was located in a Midwestern Disaster Area on the date that a disaster was declared for the county in which they live, will not include in income any non-business debt, such as a mortgage, that is canceled on or after the applicable disaster date and before Jan. 1, 2010, provided that the debt is not secured by property located outside the Midwestern Disaster Areas. If the individual’s main home was located in a Midwestern Disaster Area as shown in Table 2, the individual must also have had an economic loss because of the severe storms, floods or tornadoes. Examples of economic losses include, but are not limited to:

  • Loss, damage to, or destruction of real or personal property from fire, flooding, looting, vandalism, theft, wind or other cause;
  • Loss related to displacement from one’s home; or
  • Loss of livelihood due to temporary or permanent layoffs.

Usually, the cancellation of debt is treated as income by the person for whom the debt is forgiven.

Earned Income Tax Credit and Refundable Child Tax Credit: The recently enacted legislation allows eligible individuals to choose to calculate their earned income tax credit (EITC) or refundable child tax credit using their prior year’s earned income. An eligible individual is one whose earned income in 2008 is less than their earned income in 2007 and their main home on the applicable disaster date was in a Midwestern Disaster Area as shown in Table 1 or their main home on the applicable disaster date was in a Midwestern Disaster Area as shown in Table 2 and they were displaced from that home because of the severe storms, tornadoes or flooding. Taxpayers eligible to make the choice should figure their EITC and refundable child tax credit using their earned income for each year before making the choice to see which gives them the higher credits.

Education Credits: The recently enacted legislation provides educational assistance to students enrolled and paying tuition at eligible educational institutions located in Midwestern Disaster Areas counties identified in Table 1 for any tax year beginning in 2008 or 2009. Basically, the new legislation expands the Hope and Lifetime Learning educational credits in the following way:

  • The Hope Credit is expanded to 100 percent of the first $2,400 in eligible expenses plus 50 percent of the next $2,400 – doubling the maximum Hope Credit from $1,800 to $3,600 for each eligible student.
  • The Lifetime Learning Credit is expanded from 20 percent to 40 percent of the first $10,000 in eligible expenses.

Exemption for Taxpayers Housing Individuals Displaced by the Disasters: Taxpayers who provided housing in their main homes to individuals displaced by the severe storms, tornadoes or flooding that occurred in the Midwestern Disaster Areas may be able to claim an additional exemption amount of $500 for each such displaced individual. The additional exemption amount is allowable once per taxpayer for a specific Midwestern Disaster displaced individual in 2008 or 2009, but not in both years. The maximum additional exemption amount that can be claimed for all displaced individuals is $2,000, or $1,000 if married filing separately. Any exemption amount claimed in 2008 will reduce the $2,000 maximum for 2009.

To qualify as a displaced individual, the individual must have had his or her main home in a Midwestern Disaster Area on the applicable disaster date, and he or she must have been displaced from that home. If the displaced individual’s main home was located in a Midwestern Disaster Area as shown in Table 2, that home must have been damaged by the severe storms, tornadoes or flooding or the individual must have been evacuated from the home because of the severe storms, tornadoes or flooding. In addition, the displaced individual must have been provided housing in the taxpayer’s main home for a period of at least 60 consecutive days ending in the tax year in which the exemption is claimed. The displaced individual cannot be the taxpayer’s spouse or dependent. 

This benefit applies to the counties listed in Tables 1 and 2. More detailed information on claiming the additional exemption can be found in Publication 4492-B.

Recapture of Federal Mortgage Subsidy: Generally, taxpayers who financed their homes under a federally-subsidized program may have to repay all or part of the benefit they received from that program when they sell or otherwise dispose of their home. This repayment is known, technically, as recapture.  Taxpayers do not, however, have to recapture any benefit if their mortgage loan was a qualified home improvement loan of not more than $15,000. The recently enacted legislation provides for this amount to be increased to $150,000, if the loan was provided prior to 2011 and was used to alter, repair, or improve an existing owner-occupied residence in a Midwestern Disaster Area as shown in Table 1. 

Retirement Funds

To help victims of the severe storms, flooding and tornadoes in the Midwestern Disaster Areas, the recently enacted legislation provides certain tax-favored treatment for early distributions, plan loans and re-contributions. These benefits apply to the counties listed in Tables 1 and 2.

Qualified Disaster Recovery Assistance Distributions: A qualified disaster recovery distribution is any distribution from an eligible retirement plan that meets the following requirements:  (1) the distribution was made on or after an applicable disaster date listed in Tables 1 or 2 and before Jan. 1, 2010; (2) the distribution was made to a taxpayer whose main home was located in a Midwestern Disaster Area on the applicable disaster date; and (3) the taxpayer sustained an economic loss because of the severe storms, tornadoes or flooding that affected the Midwestern Disaster Areas. If these requirements are met, the taxpayer can generally designate any distribution from an eligible retirement plan as a qualified disaster recovery assistance distribution, regardless of whether the distribution was made on account of the severe storms, tornadoes or flooding.  The total amount of tax-favored distributions an individual can receive from all plans, annuities or IRAs is $100,000.

Taxation of Qualified Disaster Recovery Assistance Distributions: Qualified disaster recovery assistance distributions are included in income in equal amounts over three years. The taxpayer can, however, elect to include the entire distribution income in the year it was received. An eligible individual who receives qualified disaster recovery assistance distributions does not have to pay the 10% additional tax on early distributions (or the additional 25% tax for certain distributions from SIMPLE IRAs). Under the new law, qualified disaster recovery assistance distributions are not subject to the mandatory 20% withholding. Any distributions received in excess of the $100,000 qualified disaster recovery assistance distribution limit may be subject to the additional tax on early distributions. 

Repayment of Qualified Disaster Recovery Assistance Distributions: Taxpayers may choose to repay any portion of a qualified disaster recovery distribution that is eligible for tax-free rollover treatment into an eligible retirement plan within three years from the date of the distribution. The distribution will be treated as though it were paid in a direct rollover (note that for purposes of the one-rollover-per-year limitation for IRAs, a repayment to an IRA is not considered a qualified rollover). To report a re-contribution, the eligible individual must also file a Form 8930, Qualified Disaster Recovery Assistance Retirement Plan Distributions and Repayments. Refer to Publication 4492-B for additional information on repaying qualified disaster recovery assistance distributions and for a list of the qualified disaster recovery assistance distributions that cannot be repaid.

Repayment of Qualified Distributions for the Purchase or Construction of a Main Home: An individual who received a qualified distribution to purchase or construct a main home in a Midwestern disaster area can repay part or all of that distribution to an eligible retirement plan on or after the applicable disaster date, but no later than March 3, 2009. To be a qualified distribution, the distribution must meet all of the following requirements:  (1) the distribution is a hardship distribution from a 401(k) plan or a tax-sheltered annuity contract, or a qualified first-time homebuyer distribution from an IRA; (2) the distribution was received within six months prior to the day after the applicable disaster date; and (3) the distribution was used to purchase or construct a main home in a Midwestern Disaster Area that was not purchased or constructed because of the severe storms, tornadoes or flooding. 
Amounts that are repaid before March 4, 2009, are treated as a qualified rollover and are not included in income (note that for purposes of the one-rollover-per-year limitation for IRAs, a repayment to an IRA is not considered a qualified rollover). If the qualified distribution is not repaid by March 4, 2009, the distribution may be taxable for 2007 or 2008, as well as subject to the additional 10% tax on early distributions (or the additional 25% tax for certain SIMPLE IRAs). Any repayments must be reported on Form 8930, Qualified Disaster Recovery Assistance Retirement Plan Distributions and Repayments.  

Retirement Plan Loans: Under the new law, the allowable retirement plan loan amount for eligible individuals is increased from $50,000 to $100,000. To figure the dollar limit, an eligible individual would start with (a) $100,000 and subtract the highest outstanding balance of loans from these plans during the prior year and compare that figure to (b) the eligible individual’s vested benefit under the plan. Whichever figure is less is the limit that the eligible individual can borrow from the employer’s plans without a tax consequence.

For an eligible individual, payments on retirement plan loans outstanding on or after the applicable disaster date may be suspended for one year by the plan administrator. To qualify for suspension, the due date for any loan payment must occur during the period beginning on the applicable disaster date and ending on Dec. 31, 2009. 

Charity Encouraged by New Law

To encourage charity, the recently enacted legislation suspends the limits on certain charitable contributions, creates an exemption for those housing Midwestern Disaster displaced individuals, increases the standard mileage rate for charitable use of vehicles and excludes from gross income mileage reimbursements to charitable volunteers.

Suspension of Charitable Limits for Certain Charitable Contributions: In the case of an individual, the recently enacted legislation allows a deduction for qualified contributions up to the amount by which the taxpayer’s contribution base – adjusted gross income – exceeds the deduction for other charitable contributions. Contributions in excess of this amount are generally carried over to succeeding taxable years. The recently enacted legislation allows corporations to elect to deduct qualified cash contributions without regard to the 10% of taxable income limit.

Qualified contributions are defined as cash contributions to a charitable organization described in section 170(b)(1)(A) (other than a supporting organization described in section 509(a)(3)), for relief efforts in one or more Midwestern Disaster Areas made after May 1, 2008, and before Jan. 1, 2009. Contributions of non-cash property, such as securities, are not qualified contributions.

The charitable contribution deduction up to the amount of qualified contributions (as defined above) paid during the year is not treated as an itemized deduction for purposes of the overall limitation on itemized deductions. This benefit applies only to the counties listed in Table 1.

Increase in the Standard Mileage Rate for Charitable Use of Vehicles: The recently enacted legislation provides special standard mileage rates for taxpayers who used their vehicles to provide charitable services related solely to the severe storms, tornadoes and flooding that occurred in the Midwestern Disaster Areas during the period May 2, 2008, through Dec. 31, 2008.  The special rate is 36 cents per mile for the period May 2, 2008, through June 30, 2008. For the period July 1, 2008, through Dec. 31, 2008, the special rate is 41 cents per mile.

Taxpayers may also exclude from income any amounts received as mileage reimbursement for the use of a private passenger automobile for the benefit of a qualified charitable organization in responding to the severe storms, tornadoes and flooding that occurred in the Midwestern Disaster Areas during the period May 2, 2008, through Dec. 31, 2008. Taxpayers cannot claim a deduction or credit for any amounts excluded and must keep records of miles driven, time, place (or use) and purpose of the mileage. The amount that can be excluded from income cannot exceed 50.5 cents per mile for the period May 2, 2008, through June 30, 2008; and 58.5 cents per mile for the period July 1, 2008, through Dec. 31, 2008. This benefit applies only to the counties listed in Table 1.

Table 1
Taxpayers located in these counties are eligible for all portions of relief identified in this document.

Applicable Disaster Date*

State 

Affected Counties - Midwestern Disaster Areas 

 5/2/2008  Arkansas Arkansas, Benton, Cleburne, Conway, Crittenden, Grant, Lonoke, Mississippi, Phillips, Pulaski, Saline and Van Buren.
 6/1/2008  Illinois Adams, Calhoun, Clark, Coles, Crawford, Cumberland, Douglas, Edgar, Hancock, Henderson, Jasper, Jersey, Lake, Lawrence, Mercer, Rock Island, Whiteside, and Winnebago.
 6/6/2008  Indiana Adams, Bartholomew, Brown, Clay, Daviess, Dearborn, Decatur, Gibson, Grant, Greene, Hamilton, Hancock, Hendricks, Henry, Huntington, Jackson, Jefferson, Jennings, Johnson, Knox, Lawrence, Madison, Marion, Monroe, Morgan, Owen, Parke, Pike, Posey, Putnam, Randolph, Ripley, Rush, Shelby, Sullivan, Tippecanoe, Vermillion, Vigo, Washington and Wayne.
 5/25/2008  Iowa Adair, Adams, Allamakee, Appanoose, Audubon, Benton, Black Hawk, Boone, Bremer, Buchanan, Butler, Cass, Cedar, Cerro Gordo, Chickasaw, Clarke, Clayton, Clinton, Crawford, Dallas, Davis, Decatur, Delaware, Des Moines, Dubuque, Fayette, Floyd, Franklin, Fremont, Greene, Grundy, Guthrie, Hamilton, Hancock, Hardin, Harrison, Henry, Howard, Humboldt, Iowa, Jackson, Jasper, Johnson, Jones, Keokuk, Kossuth, Lee, Linn, Louisa, Lucas, Madison, Mahaska, Marion, Marshall, Mills, Mitchell, Monona, Monroe, Montgomery, Muscatine, Page, Polk, Pottawattamie, Poweshiek, Ringgold, Scott, Story, Tama, Union, Van Buren, Wapello, Warren, Washington, Webster, Winnebago, Winneshiek, Worth and Wright.
 5/10/2008  Missouri Barry, Jasper and Newton.
 6/1/2008  Missouri Adair, Andrew, Callaway, Cass, Chariton, Clark, Gentry, Greene, Harrison, Holt, Johnson, Lewis, Lincoln, Linn, Livingston, Macon, Marion, Monroe, Nodaway, Pike, Putnam, Ralls, St. Charles, Stone, Taney, Vernon and Webster.
 5/22/2008  Nebraska Buffalo, Butler, Colfax, Custer, Dawson, Douglas, Gage, Hamilton, Holt, Jefferson, Kearney, Lancaster, Platte, Richardson, Sarpy and Saunders.
 6/5/2008  Wisconsin Adams, Calumet, Crawford, Columbia, Dane, Dodge, Fond du Lac, Grant, Green, Green Lake, Iowa, Jefferson, Juneau, Kenosha, La Crosse, Manitowoc, Marquette, Milwaukee, Monroe, Ozaukee, Racine, Richland, Rock, Sauk, Sheboygan, Vernon, Walworth, Washington, Waukesha and Winnebago.

 

Table 2
Taxpayers located in the counties listed below are eligible for all of the special tax provisions identified in this fact sheet except the education credits, charitable giving incentives (suspension of charitable limits and increase in standard mileage rates) and the recapture of federal mortgage subsidy.**

Applicable Disaster Date*

State

Affected Counties - Midwestern Disaster Areas

 6/1/2008  Illinois Greene, Madison, Monroe, Pike, Randolph, St. Clair and Scott.
 6/6/2008  Indiana Benton, Boone, Fountain, Franklin, Jay, Montgomery, Ohio, Switzerland, Union and Wabash.
 5/25/2008  Iowa Carroll, Cherokee, Lyon, Palo Alto, Pocahontas, Taylor and Wayne.
 5/22/2008  Kansas Barber, Barton, Bourbon, Brown, Butler, Chautauqua, Cherokee, Clark, Clay, Comanche, Cowley, Crawford, Decatur, Dickinson, Edwards, Elk, Ellis, Ellsworth, Franklin, Gove, Graham, Harper, Haskell, Hodgeman, Jackson, Jewell, Kingman, Kiowa, Lane, Linn, Logan, Mitchell, Montgomery, Ness, Norton, Osborne, Pawnee, Phillips, Pratt, Reno, Republic, Riley, Rooks, Rush, Saline, Seward, Sheridan, Smith, Stafford, Sumner, Thomas, Trego, Wallace and Wilson.
 6/6/2008  Michigan Allegan, Barry, Eaton, Ingham, Lake, Manistee, Mason, Missaukee, Osceola, Ottawa, Saginaw and Wexford.
 6/7/2008  Minnesota Cook, Fillmore, Freeborn, Houston, Mower and Nobles.
 6/1/2008  Missouri Atchison, Audrain, Bates, Buchanan, Cape Girardeau, Carroll, Christian, Daviess, Grundy, Howard, Jefferson, Knox, Mercer, Miller, Mississippi, Morgan, New Madrid, Pemiscot, Perry, Pettis, Platte, Polk, Randolph, Ray, Saline, Schuyler, Scotland, Scott, Shelby, St. Genevieve, St. Louis, Sullivan, the Independent City of St. Louis and Worth.
 4/23/2008  Nebraska Gage, Johnson, Morrill, Nemaha and Pawnee.
 5/22/2008  Nebraska Adams, Blaine, Boone, Boyd, Brown, Burt, Cass, Chase, Cherry, Cuming, Dundy, Fillmore, Frontier, Furnas, Garfield, Gosper, Greeley, Hall, Hayes, Howard, Johnson, Keya Paha, Lincoln, Logan, Loup, Merrick, McPherson, Morrill, Nance, Nemaha, Otoe, Phelps, Polk, Red Willow, Rock, Saline, Seward, Sherman, Stanton, Thayer, Thomas, Thurston, Valley, Webster, Wheeler and York.
 6/27/2008  Nebraska Dodge, Douglas, Sarpy and Saunders.
 6/5/2008  Wisconsin Lafayette.


* In some cases the date will be later due to the continuation of the severe storms, tornadoes or flooding that began on the above date. The Federal Emergency Management Agency has more details.

** See Pub. 4492-B for a more complete listing of the tax provisions that are available to taxpayers located in the affected counties in the Midwestern Disaster Areas listed in Tables 1 and 2.

Page Last Reviewed or Updated: 18-Aug-2012

The 2012 State Taxes Online Free

2012 state taxes online free Publication 523 - Introductory Material Table of Contents Future Developments Reminders IntroductionOrdering forms and publications. 2012 state taxes online free Tax questions. 2012 state taxes online free Useful Items - You may want to see: Future Developments For the latest information about developments related to Publication 523, such as legislation enacted after it was published, go to www. 2012 state taxes online free irs. 2012 state taxes online free gov/pub523. 2012 state taxes online free Reminders Change of address. 2012 state taxes online free  If you change your mailing address, be sure to notify the Internal Revenue Service (IRS) using Form 8822, Change of Address. 2012 state taxes online free Mail it to the Internal Revenue Service Center for your old address. 2012 state taxes online free (Addresses for the Service Centers are on the back of the form. 2012 state taxes online free ) Home sold with undeducted points. 2012 state taxes online free  If you have not deducted all the points you paid to secure a mortgage on your old home, you may be able to deduct the remaining points in the year of sale. 2012 state taxes online free See Points in Publication 936, Home Mortgage Interest Deduction. 2012 state taxes online free Photographs of missing children. 2012 state taxes online free  The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. 2012 state taxes online free Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. 2012 state taxes online free You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. 2012 state taxes online free Introduction This publication explains the tax rules that apply when you sell your main home. 2012 state taxes online free In most cases, your main home is the one in which you live most of the time. 2012 state taxes online free If you sold your main home in 2013, you may be able to exclude from income any gain up to a limit of $250,000 ($500,000 on a joint return in most cases). 2012 state taxes online free See Excluding the Gain , later. 2012 state taxes online free Generally, if you can exclude all the gain, you do not need to report the sale on your tax return. 2012 state taxes online free If you have gain that cannot be excluded, you generally must report it on Form 8949, Sales and Other Dispositions of Capital Assets, and Schedule D (Form 1040), Capital Gains and Losses. 2012 state taxes online free You may also have to complete Form 4797, Sales of Business Property. 2012 state taxes online free See Reporting the Sale , later. 2012 state taxes online free If you have a loss on the sale, you generally cannot deduct it on your return. 2012 state taxes online free However, you may need to report it. 2012 state taxes online free See Reporting the Sale , later. 2012 state taxes online free The main topics in this publication are: Figuring gain or loss, Basis, Excluding the gain, Ownership and use tests, and Reporting the sale. 2012 state taxes online free Other topics include: Business use or rental of home, Deducting taxes in the year of sale, and Recapturing a federal mortgage subsidy. 2012 state taxes online free Net Investment Income Tax (NIIT). 2012 state taxes online free   If any part of the gain on the sale of a home is not excluded under the rules discussed in this publication, it may be subject to the NIIT. 2012 state taxes online free For more details, see Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, and its instructions. 2012 state taxes online free Worksheets. 2012 state taxes online free   Near the end of this publication you will find worksheets you can use to figure your gain (or loss) and your exclusion. 2012 state taxes online free Use Worksheet 1 to figure the adjusted basis of the home you sold. 2012 state taxes online free Use Worksheet 2 to figure the gain (or loss), the exclusion, and the taxable gain (if any) on the sale. 2012 state taxes online free If you do not qualify for the maximum exclusion, use Worksheet 3 to figure your reduced maximum exclusion. 2012 state taxes online free Date of sale. 2012 state taxes online free    If you received a Form 1099-S, Proceeds From Real Estate Transactions, the date of sale should be shown in box 1. 2012 state taxes online free If you did not receive this form, the date of sale is the earlier of (a) the date title transferred or (b) the date the economic burdens and benefits of ownership shifted to the buyer. 2012 state taxes online free In most cases, these dates are the same. 2012 state taxes online free What is not covered in this publication. 2012 state taxes online free   This publication does not cover the sale of rental property, second homes, or vacation homes. 2012 state taxes online free For information on how to report any gain or loss from those sales, see Publication 544, Sales and Other Dispositions of Assets. 2012 state taxes online free Comments and suggestions. 2012 state taxes online free   We welcome your comments about this publication and your suggestions for future editions. 2012 state taxes online free   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. 2012 state taxes online free NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. 2012 state taxes online free Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. 2012 state taxes online free   You can send your comments from www. 2012 state taxes online free irs. 2012 state taxes online free gov/formspubs/. 2012 state taxes online free Click on “More Information” and then on “Comment on Tax Forms and Publications”. 2012 state taxes online free   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. 2012 state taxes online free Ordering forms and publications. 2012 state taxes online free   Visit www. 2012 state taxes online free irs. 2012 state taxes online free gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. 2012 state taxes online free Internal Revenue Service 1201 N. 2012 state taxes online free Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. 2012 state taxes online free   If you have a tax question, check the information available on IRS. 2012 state taxes online free gov or call 1-800-829-1040. 2012 state taxes online free We cannot answer tax questions sent to either of the above addresses. 2012 state taxes online free Useful Items - You may want to see: Publication 527 Residential Rental Property 530 Tax Information for Homeowners 544 Sales and Other Dispositions of Assets 547 Casualties, Disasters, and Thefts 551 Basis of Assets 587 Business Use of Your Home 936 Home Mortgage Interest Deduction 4681 Canceled Debts, Foreclosures, Repossessions, and Abandonments Form (and Instructions) Schedule A (Form 1040) Itemized Deductions Schedule D (Form 1040) Capital Gains and Losses 982 Reduction of Tax Attributes Due to Discharge of Indebtedness 1040 U. 2012 state taxes online free S. 2012 state taxes online free Individual Income Tax Return 1040NR U. 2012 state taxes online free S. 2012 state taxes online free Nonresident Alien Income Tax Return 1040X Amended U. 2012 state taxes online free S. 2012 state taxes online free Individual Income Tax Return 1099-S Proceeds From Real Estate Transactions 4797 Sales of Business Property 5405 Repayment of the First-Time Homebuyer Credit 8822 Change of Address 8828 Recapture of Federal Mortgage Subsidy 8939 Allocation of Increase in Basis for Property Acquired From a Decedent 8949 Sales and Other Dispositions of Capital Assets W-2 Wage and Tax Statement See How To Get Tax Help , near the end of this publication, for information about getting these publications and forms. 2012 state taxes online free Prev  Up  Next   Home   More Online Publications