Here’s how the credit for other dependents can benefit taxpayers

Taxpayers with dependents may qualify to claim a few different tax credits. One of these is the child tax credit. The child tax credit benefits people whose dependent meets a series of tests. If the dependent doesn’t meet those qualifications, the taxpayer may be able to claim the credit for other dependents.

Here’s some info about the credit for other dependents. These details can help taxpayers find out if they can claim it when they file their taxes next year.

  • A taxpayer can’t claim the credit for other dependents for a child who qualifies for the child tax credit or the additional child tax credit.
  • A qualifying individual could be the taxpayer’s older child, parent or cousin. It could even be someone who is not related to the taxpayer.
  • To qualify, the unrelated person must have lived with the taxpayer for the entire tax year.
  • The maximum amount of the credit is $500 per qualifying dependent.
  • The dependent must be a U.S. citizen, a U.S. national, or a U.S. resident alien.
  • Taxpayers who are eligible to claim this credit must list the name and Social Security number or individual taxpayer identification number for each dependent they claim on their tax return.
  • The credit begins to phase out at $200,000 of modified adjusted gross income. This amount is $400,000 for married couples filing jointly.
  • Taxpayers can use the worksheet on page 6 of Publication 972, Child Tax Credit, to determine if they can claim this credit.


More Information:
Whom May I Claim as a Dependent?
Publication 5307, Tax Reform Basics for Individuals and Families
Publication 501, Exemptions, Standard Deduction and Filing Information

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IRS extends Oct. 15 and other upcoming deadlines, provides other tax relief for victims of Tropical Storm Imelda

WASHINGTON – Victims of Tropical Storm Imelda in parts of Texas, including the Houston area, have until Jan. 31, 2020, to file various individual and business tax returns and make tax payments, the Internal Revenue Service announced today.

The IRS is offering this relief to any area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual assistance. Currently this includes Chambers, Harris, Jefferson, Liberty, Montgomery and Orange counties in Texas, but taxpayers in localities added later to the disaster area will automatically receive the same filing and payment relief. The current list of eligible localities is always available on the disaster relief page on IRS.gov.

The tax relief postpones various tax filing and payment deadlines that occurred starting on Sept. 17, 2019. As a result, affected individuals and businesses will have until Jan. 31, 2020, to file returns and pay any taxes that were originally due during this period. This means individuals who had a valid extension to file their 2018 return due to run out on Oct. 15, 2019, will now have until Jan. 31, 2020, to file. The IRS noted, however, that because tax payments related to these 2018 returns were due on April 15, 2019, those payments are not eligible for this relief.

The Jan. 31, 2020 deadline also applies to quarterly estimated income tax payments due on Jan. 15, 2020, and the quarterly payroll and excise tax returns normally due on Oct. 31, 2019. It also applies to tax-exempt organizations, operating on a calendar-year basis, that had a valid extension due to run out on Nov. 15, 2019. Businesses with extensions also have the additional time including, among others, calendar-year corporations whose 2018 extensions run out on Oct. 15, 2019.    

In addition, penalties on payroll and excise tax deposits due on or after Sept. 17, 2019, and before Oct. 2, 2019, will be abated as long as the deposits are made by Oct. 2, 2019.

The IRS disaster relief page has details on other returns, payments and tax-related actions qualifying for the additional time.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Therefore, taxpayers do not need to contact the agency to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2019 return normally filed next year), or the return for the prior year (2018). Be sure to write the FEMA declaration number − 4466 for Texas − on any return claiming a loss. See Publication 547 for details.

The tax relief is part of a coordinated federal response to the damage caused by severe storms and flooding and is based on local damage assessments by FEMA.

For information on disaster recovery, visit disasterassistance.gov.

The earned income tax credit can put money in taxpayers’ pockets

The earned income tax credit benefits working people with low-to-moderate income. Last year, the average credit was $2,445. EITC not only reduces the amount of tax someone owes, but may also give them a refund, even if they don’t owe any tax at all.

Here are a few things people should know about this credit:

  • Taxpayers may move in and out of eligibility for the credit throughout the year. This may happen after major life events. Because of this, it’s a good idea for people to find out if they qualify.
  • To qualify, people must meet certain requirements and file a federal tax return. They must file even if they don’t owe any tax or aren’t otherwise required to file.
  • Taxpayers qualify based on their income, the number of children they have, and the filing status they use on their tax return. For a child to qualify, they must live with the taxpayer for more than six months of the year.

Here’s a quick look at the income limits for the different filing statuses. Those who work and earn less than these amounts may qualify.

Married filing jointly:

  • Zero children: $21,370
  • One child: $46,884
  • Two children: $52,493
  • Three or more children: $55,952

Head of household and single:

  • Zero children: $15,570
  • One child: $41,094
  • Two children: $46,703
  • Three or more children: $50,162

The maximum credit amounts are based on the number of children a taxpayer has. They are the same for all filing statuses:

  • Zero children: $529
  • One child: $3,526
  • Two children: $5,828
  • Three or more children: $6,557

Taxpayers who file using the status married filing separately cannot claim EITC.


More information:
Publication 5334, Do I Qualify for EITC?


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Reminder: Oct. 15 deadline approaching for taxpayers who requested extensions

IRS YouTube Videos:
Reminders for Extension Filers-Oct. 15English | Spanish | ASL

WASHINGTON — Taxpayers who requested the six-month filing extension should complete their tax returns and file on or before the Oct. 15 deadline. Convenient electronic filing options, including IRS  Free File, are still available.

Filing electronically is easy, safe and the most accurate way to file taxes. There are a variety of electronic filing options. Those options include having tax returns prepared at a Volunteer Income Tax Assistance or Tax Counseling for the Elderly site, purchasing commercial software or choosing a reputable tax professional who is also an authorized e-file provider.

About 15 million taxpayers filed for an extension this year. Although Oct. 15 is the last day for most people to file, some may have more time. They include:

  • Members of the military and others serving in a combat zone. They typically have 180 days after they leave the combat zone to file returns and pay any taxes due.
  • Taxpayers in federally-declared disaster areas who already had valid extensions. For details, see the disaster relief page on IRS.gov.

Extension filers can file when they are ready and don’t have to wait until Oct. 15 to file. Taxpayers who did not request an extension and have yet to file a 2018 tax return can generally avoid additional penalties and interest by filing the return as soon as possible and paying any taxes owed.

New Form 1040
Form 1040 has been redesigned for tax year 2018. The revised form consolidates Forms 1040, 1040A and 1040-EZ into one form that all individual taxpayers will use to file their 2018 federal income tax return.

The new form uses a “building block” approach that can be supplemented with additional schedules as needed. Taxpayers with straightforward tax situations will only need to file the Form 1040 with no additional schedules. People who use tax software will still follow the steps they’re familiar with from previous years. Since nearly 90 percent of taxpayers now use tax software, the IRS expects the change to Form 1040 and its schedules to be seamless for those who file electronically.

Recordkeeping and adjusted gross income
As a reminder, taxpayers should keep a copy of their tax returns and supporting documents for a minimum of three years. Some taxpayers using a tax-filing software product for the first time may need their adjusted gross income amount from their prior-year tax return to verify their identity.

Taxpayers using the same tax software they used last year will not need to enter their prior year information to electronically sign their 2018 tax return. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.

Payment options
IRS Direct Pay offers taxpayers a fast way to pay what they owe. Direct Pay is free and allows individuals to securely pay their tax bills or make quarterly estimated tax payments online directly from checking or savings accounts without any fees or pre-registration.

Taxpayers can also pay by debit or credit card. While the IRS does not charge a fee for this service, the payment processer does. Other payment options include the Electronic Federal Tax Payment System (enrollment is required) and electronic funds withdrawal which is available when e-filing. Taxpayers can also pay what they owe using the IRS2Go mobile app. Those choosing to pay by check or money order should make the payment out to the “United States Treasury.”

Eligible taxpayers can set up an online payment agreement in a matter of minutes to pay tax, interest and penalties they may owe. There is no application fee to setup payment plans lasting 120 days or less. In 2019, over 1 million agreements were set up by taxpayers online.

Individual taxpayers can go to IRS.gov/account and login to view their balance, payment history, pay their taxes and access tax records through Get Transcript. Before setting up an account, taxpayers should review Secure Access: How to Register for Certain Online Self-Help Tools to make sure they have the information needed to verify their identities.

Prepare for next year − Do a ‘Paycheck Checkup’ now
The IRS also urges extension filers to do a “Paycheck Checkup” now. It helps make sure the right amount is being withheld from their checks following tax reform. If a change is needed, there’s still time to adjust withholding during the last quarter of the year.

Taxpayers can use the Tax Withholding Estimator to approximate their 2019 income taxes and proper withholding. The tool compares the estimate to current withholding to help taxpayers decide if they want to change that amount with their employer. Taxpayers should have their 2018 tax return available when using the tool to estimate income, deductions, adjustments and credits for 2019. They will also need their most recent pay stub to compute the amount of withholding so far this year.

With major changes made by the Tax Cuts and Jobs Act, the IRS encourages taxpayers seeking more information on tax reform to review Publication 5307, Tax Reform: Basics for Individuals and Families, and Publication 5318, Tax Reform What’s New for Your Business. For other tips and resources, visit IRS.gov/taxreform. The IRS reminds taxpayers they have a variety of options to get help filing and preparing their tax returns on IRS.gov, the official IRS website. Taxpayers can find answers to their tax questions and resolve tax issues online. The Let Us Help You page helps answer most tax questions, and the IRS Services Guide links to these and other IRS services.

Taxpayers can explore several tax help options before visiting an IRS office

Some taxpayers may think they need to visit an IRS office for help in person with their tax issues. However, many of these people may actually find what they need online or by phone. In fact, many questions can be answered without ever having to visit to an IRS Taxpayer Assistance Center.

Finding answers to their tax questions.
Taxpayers can use several resources to find answers:

Checking on their tax refund status.
Taxpayers have two options to check on their refund:

Making a payment.
Taxpayers have several options for submitting a payment to IRS:

Viewing online accounts.
Taxpayers can view account information online at IRS.gov/account. From this page, taxpayers can:

  • View the amount they owe and get the total payoff amount for the current calendar day.
  • Connect to other online tools, such as Direct Pay and Get Transcript, without having to log in again.
  • Get key information about their current year tax return as it was originally filed.

Visiting an IRS office.
If a taxpayer decides they want a face-to-face interaction, they need to first take these two steps:

  • Use the Contact Your Local Office tool on IRS.gov. This tool helps taxpayers find the closest IRS Taxpayer Assistance Center, the days and hours of operation, and a list of services the TAC provides.
  • Make an appointment. The taxpayer will need to call 844-545-5640 to make an appointment. Taxpayers will then receive an email confirming the day and time of their appointment.

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National Association of Tax Professionals