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Free Income Tax

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Free Income Tax

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

Free income tax 3. Free income tax   Reporting Rental Income, Expenses, and Losses Table of Contents Which Forms To UseSchedule E (Form 1040) Schedule C (Form 1040), Profit or Loss From Business Qualified Joint Venture Limits on Rental LossesAt-Risk Rules Passive Activity Limits Casualties and Thefts Example Figuring the net income or loss for a residential rental activity may involve more than just listing the income and deductions on Schedule E (Form 1040). Free income tax There are activities which do not qualify to use Schedule E, such as when the activity is not engaged in to make a profit or when you provide substantial services in conjunction with the property. Free income tax There are also the limitations which may need to be applied if you have a net loss on Schedule E. Free income tax There are two: (1) the limitation based on the amount of investment you have at risk in your rental activity, and (2) the special limits imposed on passive activities. Free income tax You may also have a gain or loss related to your rental property from a casualty or theft. Free income tax This is considered separately from the income and expense information you report on Schedule E. Free income tax Which Forms To Use The basic form for reporting residential rental income and expenses is Schedule E (Form 1040). Free income tax However, do not use that schedule to report a not-for-profit activity. Free income tax See Not Rented for Profit , in chapter 4. Free income tax There are also other rental situations in which forms other than Schedule E would be used. Free income tax Schedule E (Form 1040) If you rent buildings, rooms, or apartments, and provide basic services such as heat and light, trash collection, etc. Free income tax , you normally report your rental income and expenses on Schedule E, Part I. Free income tax List your total income, expenses, and depreciation for each rental property. Free income tax Be sure to enter the number of fair rental and personal use days on line 2. Free income tax If you have more than three rental or royalty properties, complete and attach as many Schedules E as are needed to list the properties. Free income tax Complete lines 1 and 2 for each property. Free income tax However, fill in lines 23a through 26 on only one Schedule E. Free income tax On Schedule E, page 1, line 18, enter the depreciation you are claiming for each property. Free income tax To find out if you need to attach Form 4562, see Form 4562 , later. Free income tax If you have a loss from your rental real estate activity, you also may need to complete one or both of the following forms. Free income tax Form 6198, At-Risk Limitations. Free income tax See At-Risk Rules , later. Free income tax Also see Publication 925. Free income tax Form 8582, Passive Activity Loss Limitations. Free income tax See Passive Activity Limits , later. Free income tax Page 2 of Schedule E is used to report income or loss from partnerships, S corporations, estates, trusts, and real estate mortgage investment conduits. Free income tax If you need to use page 2 of Schedule E, be sure to use page 2 of the same Schedule E you used to enter your rental activity on page 1. Free income tax Also, include the amount from line 26 (Part I) in the “Total income or (loss)” on line 41 (Part V). Free income tax Form 4562. Free income tax   You must complete and attach Form 4562 for rental activities only if you are claiming: Depreciation, including the special depreciation allowance, on property placed in service during 2013; Depreciation on listed property (such as a car), regardless of when it was placed in service; or Any other car expenses, including the standard mileage rate or lease expenses. Free income tax Otherwise, figure your depreciation on your own worksheet. Free income tax You do not have to attach these computations to your return, but you should keep them in your records for future reference. Free income tax   See Publication 946 for information on preparing Form 4562. Free income tax Schedule C (Form 1040), Profit or Loss From Business Generally, Schedule C is used when you provide substantial services in conjunction with the property or the rental is part of a trade or business as a real estate dealer. Free income tax Providing substantial services. Free income tax   If you provide substantial services that are primarily for your tenant's convenience, such as regular cleaning, changing linen, or maid service, you report your rental income and expenses on Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business. Free income tax Use Form 1065, U. Free income tax S. Free income tax Return of Partnership Income, if your rental activity is a partnership (including a partnership with your spouse unless it is a qualified joint venture). Free income tax Substantial services do not include the furnishing of heat and light, cleaning of public areas, trash collection, etc. Free income tax For information, see Publication 334, Tax Guide for Small Business. Free income tax Also, you may have to pay self-employment tax on your rental income using Schedule SE (Form 1040), Self-Employment Tax. Free income tax For a discussion of “substantial services,” see Real Estate Rents in Publication 334, chapter 5. Free income tax Qualified Joint Venture If you and your spouse each materially participate (see Material participation under Passive Activity Limits, later) as the only members of a jointly owned and operated real estate business, and you file a joint return for the tax year, you can make a joint election to be treated as a qualified joint venture instead of a partnership. Free income tax This election, in most cases, will not increase the total tax owed on the joint return, but it does give each of you credit for social security earnings on which retirement benefits are based and for Medicare coverage if your rental income is subject to self-employment tax. Free income tax If you make this election, you must report rental real estate income on Schedule E (or Schedule C if you provide substantial services). Free income tax You will not be required to file Form 1065 for any year the election is in effect. Free income tax Rental real estate income generally is not included in net earnings from self-employment subject to self-employment tax and generally is subject to the passive activity limits. Free income tax If you and your spouse filed a Form 1065 for the year prior to the election, the partnership terminates at the end of the tax year immediately preceding the year the election takes effect. Free income tax For more information on qualified joint ventures, go to IRS. Free income tax gov and enter “qualified joint venture” in the search box. Free income tax Limits on Rental Losses If you have a loss from your rental real estate activity, two sets of rules may limit the amount of loss you can deduct. Free income tax You must consider these rules in the order shown below. Free income tax Both are discussed in this section. Free income tax At-risk rules. Free income tax These rules are applied first if there is investment in your rental real estate activity for which you are not at risk. Free income tax This applies only if the real property was placed in service after 1986. Free income tax Passive activity limits. Free income tax Generally, rental real estate activities are considered passive activities and losses are not deductible unless you have income from other passive activities to offset them. Free income tax However, there are exceptions. Free income tax At-Risk Rules You may be subject to the at-risk rules if you have: A loss from an activity carried on as a trade or business or for the production of income, and Amounts invested in the activity for which you are not fully at risk. Free income tax Losses from holding real property (other than mineral property) placed in service before 1987 are not subject to the at-risk rules. Free income tax In most cases, any loss from an activity subject to the at-risk rules is allowed only to the extent of the total amount you have at risk in the activity at the end of the tax year. Free income tax You are considered at risk in an activity to the extent of cash and the adjusted basis of other property you contributed to the activity and certain amounts borrowed for use in the activity. Free income tax Any loss that is disallowed because of the at-risk limits is treated as a deduction from the same activity in the next tax year. Free income tax See Publication 925 for a discussion of the at-risk rules. Free income tax Form 6198. Free income tax   If you are subject to the at-risk rules, file Form 6198, At-Risk Limitations, with your tax return. Free income tax Passive Activity Limits In most cases, all rental real estate activities (except those of certain real estate professionals, discussed later) are passive activities. Free income tax For this purpose, a rental activity is an activity from which you receive income mainly for the use of tangible property, rather than for services. Free income tax For a discussion of activities that are not considered rental activities, see Rental Activities in Publication 925. Free income tax Deductions or losses from passive activities are limited. Free income tax You generally cannot offset income, other than passive income, with losses from passive activities. Free income tax Nor can you offset taxes on income, other than passive income, with credits resulting from passive activities. Free income tax Any excess loss or credit is carried forward to the next tax year. Free income tax Exceptions to the rules for figuring passive activity limits for personal use of a dwelling unit and for rental real estate with active participation are discussed later. Free income tax For a detailed discussion of these rules, see Publication 925. Free income tax Real estate professionals. Free income tax   If you are a real estate professional, complete line 43 of Schedule E. Free income tax      You qualify as a real estate professional for the tax year if you meet both of the following requirements. Free income tax More than half of the personal services you perform in all trades or businesses during the tax year are performed in real property trades or businesses in which you materially participate. Free income tax You perform more than 750 hours of services during the tax year in real property trades or businesses in which you materially participate. Free income tax If you qualify as a real estate professional, rental real estate activities in which you materially participated are not passive activities. Free income tax For purposes of determining whether you materially participated in your rental real estate activities, each interest in rental real estate is a separate activity unless you elect to treat all your interests in rental real estate as one activity. Free income tax   Do not count personal services you perform as an employee in real property trades or businesses unless you are a 5% owner of your employer. Free income tax You are a 5% owner if you own (or are considered to own) more than 5% of your employer's outstanding stock, or capital or profits interest. Free income tax   Do not count your spouse's personal services to determine whether you met the requirements listed earlier to qualify as a real estate professional. Free income tax However, you can count your spouse's participation in an activity in determining if you materially participated. Free income tax Real property trades or businesses. Free income tax   A real property trade or business is a trade or business that does any of the following with real property. Free income tax Develops or redevelops it. Free income tax Constructs or reconstructs it. Free income tax Acquires it. Free income tax Converts it. Free income tax Rents or leases it. Free income tax Operates or manages it. Free income tax Brokers it. Free income tax Choice to treat all interests as one activity. Free income tax   If you were a real estate professional and had more than one rental real estate interest during the year, you can choose to treat all the interests as one activity. Free income tax You can make this choice for any year that you qualify as a real estate professional. Free income tax If you forgo making the choice for one year, you can still make it for a later year. Free income tax   If you make the choice, it is binding for the tax year you make it and for any later year that you are a real estate professional. Free income tax This is true even if you are not a real estate professional in any intervening year. Free income tax (For that year, the exception for real estate professionals will not apply in determining whether your activity is subject to the passive activity rules. Free income tax )   See the Instructions for Schedule E for information about making this choice. Free income tax Material participation. Free income tax   Generally, you materially participated in an activity for the tax year if you were involved in its operations on a regular, continuous, and substantial basis during the year. Free income tax For details, see Publication 925 or the Instructions for Schedule C. Free income tax Participating spouse. Free income tax   If you are married, determine whether you materially participated in an activity by also counting any participation in the activity by your spouse during the year. Free income tax Do this even if your spouse owns no interest in the activity or files a separate return for the year. Free income tax Form 8582. Free income tax    You may have to complete Form 8582 to figure the amount of any passive activity loss for the current tax year for all activities and the amount of the passive activity loss allowed on your tax return. Free income tax See Form 8582 not required , later in this chapter, to determine if you must complete Form 8582. Free income tax   If you are required to complete Form 8582 and are also subject to the at-risk rules, include the amount from Form 6198, line 21 (deductible loss) in column (b) of Form 8582, Worksheet 1 or 3, as required. Free income tax Exception for Personal Use of Dwelling Unit If you used the rental property as a home during the year, any income, deductions, gain, or loss allocable to such use shall not be taken into account for purposes of the passive activity loss limitation. Free income tax Instead, follow the rules explained in chapter 5, Personal Use of Dwelling Unit (Including Vacation Home). Free income tax Exception for Rental Real Estate With Active Participation If you or your spouse actively participated in a passive rental real estate activity, you may be able to deduct up to $25,000 of loss from the activity from your nonpassive income. Free income tax This special allowance is an exception to the general rule disallowing losses in excess of income from passive activities. Free income tax Similarly, you may be able to offset credits from the activity against the tax on up to $25,000 of nonpassive income after taking into account any losses allowed under this exception. Free income tax Example. Free income tax Jane is single and has $40,000 in wages, $2,000 of passive income from a limited partnership, and $3,500 of passive loss from a rental real estate activity in which she actively participated. Free income tax $2,000 of Jane's $3,500 loss offsets her passive income. Free income tax The remaining $1,500 loss can be deducted from her $40,000 wages. Free income tax The special allowance is not available if you were married, lived with your spouse at any time during the year, and are filing a separate return. Free income tax Active participation. Free income tax   You actively participated in a rental real estate activity if you (and your spouse) owned at least 10% of the rental property and you made management decisions or arranged for others to provide services (such as repairs) in a significant and bona fide sense. Free income tax Management decisions that may count as active participation include approving new tenants, deciding on rental terms, approving expenditures, and other similar decisions. Free income tax Example. Free income tax Mike is single and had the following income and losses during the tax year:   Salary $42,300     Dividends 300     Interest 1,400     Rental loss (4,000)   The rental loss was from the rental of a house Mike owned. Free income tax Mike had advertised and rented the house to the current tenant himself. Free income tax He also collected the rents, which usually came by mail. Free income tax All repairs were either made or contracted out by Mike. Free income tax Although the rental loss is from a passive activity, because Mike actively participated in the rental property management he can use the entire $4,000 loss to offset his other income. Free income tax Maximum special allowance. Free income tax   The maximum special allowance is: $25,000 for single individuals and married individuals filing a joint return for the tax year, $12,500 for married individuals who file separate returns for the tax year and lived apart from their spouses at all times during the tax year, and $25,000 for a qualifying estate reduced by the special allowance for which the surviving spouse qualified. Free income tax   If your modified adjusted gross income (MAGI) is $100,000 or less ($50,000 or less if married filing separately), you can deduct your loss up to the amount specified above. Free income tax If your MAGI is more than $100,000 (more than $50,000 if married filing separately), your special allowance is limited to 50% of the difference between $150,000 ($75,000 if married filing separately) and your MAGI. Free income tax   Generally, if your MAGI is $150,000 or more ($75,000 or more if you are married filing separately), there is no special allowance. Free income tax Modified adjusted gross income (MAGI). Free income tax   This is your adjusted gross income from Form 1040, U. Free income tax S. Free income tax Individual Income Tax Return, line 38, or Form 1040NR, U. Free income tax S. Free income tax Nonresident Alien Income Tax Return, line 37, figured without taking into account: The taxable amount of social security or equivalent tier 1 railroad retirement benefits, The deductible contributions to traditional individual retirement accounts (IRAs) and section 501(c)(18) pension plans, The exclusion from income of interest from Series EE and I U. Free income tax S. Free income tax savings bonds used to pay higher educational expenses, The exclusion of amounts received under an employer's adoption assistance program, Any passive activity income or loss included on Form 8582, Any rental real estate loss allowed to real estate professionals, Any overall loss from a publicly traded partnership (see Publicly Traded Partnerships (PTPs) in the Instructions for Form 8582), The deduction allowed for one-half of self-employment tax, The deduction allowed for interest paid on student loans, The deduction for qualified tuition and related fees, and The domestic production activities deduction (see the Instructions for Form 8903). Free income tax Form 8582 not required. Free income tax   Do not complete Form 8582 if you meet all of the following conditions. Free income tax Your only passive activities were rental real estate activities in which you actively participated. Free income tax Your overall net loss from these activities is $25,000 or less ($12,500 or less if married filing separately and you lived apart from your spouse all year). Free income tax If married filing separately, you lived apart from your spouse all year. Free income tax You have no prior year unallowed losses from these (or any other passive) activities. Free income tax You have no current or prior year unallowed credits from passive activities. Free income tax Your MAGI is $100,000 or less ($50,000 or less if married filing separately and you lived apart from your spouse all year). Free income tax You do not hold any interest in a rental real estate activity as a limited partner or as a beneficiary of an estate or a trust. Free income tax   If you meet all of the conditions listed above, your rental real estate activities are not limited by the passive activity rules and you do not have to complete Form 8582. Free income tax On lines 23a through 23e of your Schedule E, enter the applicable amounts. Free income tax Casualties and Thefts As a result of a casualty or theft, you may have a loss related to your rental property. Free income tax You may be able to deduct the loss on your income tax return. Free income tax Casualty. Free income tax   This is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. Free income tax Such events include a storm, fire, or earthquake. Free income tax Theft. Free income tax   This is defined as the unlawful taking and removing of your money or property with the intent to deprive you of it. Free income tax Gain from casualty or theft. Free income tax   It is also possible to have a gain from a casualty or theft if you receive money, including insurance, that is more than your adjusted basis in the property. Free income tax Generally, you must report this gain. Free income tax However, under certain circumstances, you may defer paying tax by choosing to postpone reporting the gain. Free income tax To do this, you generally must buy replacement property within 2 years after the close of the first tax year in which any part of your gain is realized. Free income tax In certain circumstances, the replacement period can be greater than 2 years; see Replacement Period in Publication 547 for more information. Free income tax The cost of the replacement property must be equal to or more than the net insurance or other payment you received. Free income tax More information. Free income tax   For information on business and nonbusiness casualty and theft losses, see Publication 547. Free income tax How to report. Free income tax    If you had a casualty or theft that involved property used in your rental activity, figure the net gain or loss in Section B of Form 4684, Casualties and Thefts. Free income tax Follow the Instructions for Form 4684 for where to carry your net gain or loss. Free income tax Example In February 2008, Marie Pfister bought a rental house for $135,000 (house $120,000 and land $15,000) and immediately began renting it out. Free income tax In 2013, she rented it all 12 months for a monthly rental fee of $1,125. Free income tax In addition to her rental income of $13,500 (12 x $1,125), Marie had the following expenses. Free income tax Mortgage interest $8,000 Fire insurance (1-year policy) 250 Miscellaneous repairs 400 Real estate taxes imposed and paid 500 Maintenance 200 Marie depreciates the residential rental property under MACRS GDS. Free income tax This means using the straight line method over a recovery period of 27. Free income tax 5 years. Free income tax She uses Table 2-2d to find her depreciation percentage. Free income tax Because she placed the property in service in February 2008, she continues to use that row of Table 2-2d. Free income tax For year 6, the rate is 3. Free income tax 636%. Free income tax Marie figures her net rental income or loss for the house as follows: Total rental income received  ($1,125 × 12) $13,500 Minus: Expenses     Mortgage interest $8,000   Fire insurance 250   Miscellaneous repairs 400   Real estate taxes 500   Maintenance 200   Total expenses 9,350 Balance $4,150 Minus: Depreciation ($120,000 x 3. Free income tax 636%) 4,363 Net rental (loss) for house ($213)       Marie had a net loss for the year. Free income tax Because she actively participated in her passive rental real estate activity and her loss was less than $25,000, she can deduct the loss on her return. Free income tax Marie also meets all of the requirements for not having to file Form 8582. Free income tax She uses Schedule E, Part I, to report her rental income and expenses. Free income tax She enters her income, expenses, and depreciation for the house in the column for Property A and enters her loss on line 22. Free income tax Form 4562 is not required. Free income tax Prev  Up  Next   Home   More Online Publications