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Mi 1040x

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Mi 1040x

Mi 1040x Publication 15 - Introductory Material Table of Contents Future Developments What's New Reminders Electronic Filing and Payment Forms in Spanish Hiring New Employees Paying Wages, Pensions, or Annuities Information Returns Nonpayroll Income Tax Withholding Recordkeeping Change of Business Address or Responsible Party Private Delivery Services Telephone Help Ordering Employer Tax Forms and Publications Filing Addresses Dishonored Payments Photographs of Missing Children Calendar Introduction Future Developments For the latest information about developments related to Publication 15 (Circular E), such as legislation enacted after it was published, go to www. Mi 1040x irs. Mi 1040x gov/pub15. Mi 1040x What's New Social security and Medicare tax for 2014. Mi 1040x  The social security tax rate is 6. Mi 1040x 2% each for the employee and employer, unchanged from 2013. Mi 1040x The social security wage base limit is $117,000. Mi 1040x The Medicare tax rate is 1. Mi 1040x 45% each for the employee and employer, unchanged from 2013. Mi 1040x There is no wage base limit for Medicare tax. Mi 1040x Social security and Medicare taxes apply to the wages of household workers you pay $1,900 or more in cash or an equivalent form of compensation. Mi 1040x Social security and Medicare taxes apply to election workers who are paid $1,600 or more in cash or an equivalent form of compensation. Mi 1040x 2014 withholdng tables. Mi 1040x  This publication includes the 2014 Percentage Method Tables and Wage Bracket Tables for Income Tax Withholding. Mi 1040x Withholding allowance. Mi 1040x  The 2014 amount for one withholding allowance on an annual basis is $3,950. Mi 1040x Voluntary withholding on dividends and other distributions by an Alaska Native Corporation (ANC). Mi 1040x  A shareholder of an ANC may now request voluntary income tax withholding on dividends and other distributions paid by an ANC. Mi 1040x A shareholder may request voluntary withholding by giving the ANC a completed Form W-4V, Voluntary Withholding Request. Mi 1040x For more information see Notice 2013-77, 2013-50 I. Mi 1040x R. Mi 1040x B. Mi 1040x 632, available at www. Mi 1040x irs. Mi 1040x gov/irb/2013-50_IRB/ar10. Mi 1040x html. Mi 1040x Change of responsible party. Mi 1040x  Beginning January 1, 2014, any entity with an employer identification number (EIN) must file Form 8822-B, Change of Address or Responsible Party — Business, to report the latest change to its responsible party. Mi 1040x Form 8822-B must be filed within 60 days of the change. Mi 1040x If the change in the identity of your responsible party occurred before 2014, and you have not previously notified the IRS of the change, file Form 8822-B before March 1, 2014, reporting only the most recent change. Mi 1040x For a definition of “responsible party,” see the Form 8822-B instructions. Mi 1040x Same-sex marriage. Mi 1040x  For federal tax purposes, individuals of the same sex are considered married if they were lawfully married in a state (or foreign country) whose laws authorize the marriage of two individuals of the same sex, even if the state (or foreign country) in which they now live does not recognize same-sex marriage. Mi 1040x For more information, see Revenue Ruling 2013-17, 2013-38 I. Mi 1040x R. Mi 1040x B. Mi 1040x 201, available at www. Mi 1040x irs. Mi 1040x gov/irb/2013-38_IRB/ar07. Mi 1040x html. Mi 1040x Notice 2013-61 provides special administrative procedures for employers to make claims for refunds or adjustments of overpayments of social security and Medicare taxes with respect to certain same-sex spouse benefits before expiration of the period of limitations. Mi 1040x Notice 2013-61, 2013-44 I. Mi 1040x R. Mi 1040x B. Mi 1040x 432, is available at www. Mi 1040x irs. Mi 1040x gov/irb/2013-44_IRB/ar10. Mi 1040x html. Mi 1040x Reminders Additional Medicare Tax withholding. Mi 1040x  In addition to withholding Medicare tax at 1. Mi 1040x 45%, you must withhold a 0. Mi 1040x 9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year. Mi 1040x You are required to begin withholding Additional Medicare Tax in the pay period in which you pay wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. Mi 1040x Additional Medicare Tax is only imposed on the employee. Mi 1040x There is no employer share of Additional Medicare Tax. Mi 1040x All wages that are subject to Medicare tax are subject to Additional Medicare Tax withholding if paid in excess of the $200,000 withholding threshold. Mi 1040x For more information on what wages are subject to Medicare tax, see the chart, Special Rules for Various Types of Services and Payments , in section 15. Mi 1040x For more information on Additional Medicare Tax, visit IRS. Mi 1040x gov and enter “Additional Medicare Tax” in the search box. Mi 1040x Work opportunity tax credit for qualified tax-exempt organizations hiring qualified veterans. Mi 1040x  The work opportunity tax credit is available for eligible unemployed veterans who began work on or after November 22, 2011, and before January 1, 2014. Mi 1040x Qualified tax-exempt organizations that hire eligible unemployed veterans can claim the work opportunity tax credit against their payroll tax liability using Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans. Mi 1040x For more information, visit IRS. Mi 1040x gov and enter “work opportunity tax credit” in the search box. Mi 1040x Outsourcing payroll duties. Mi 1040x  Employers are responsible to ensure that tax returns are filed and deposits and payments are made, even if the employer contracts with a third party to perform these acts. Mi 1040x The employer remains responsible if the third party fails to perform any required action. Mi 1040x If you choose to outsource any of your payroll and related tax duties (that is, withholding, reporting, and paying over social security, Medicare, FUTA, and income taxes) to a third-party payer such as a payroll service provider or reporting agent, visit IRS. Mi 1040x gov and enter “outsourcing payroll duties” in the search box for helpful information on this topic. Mi 1040x COBRA premium assistance credit. Mi 1040x  The credit for COBRA premium assistance payments applies to premiums paid for employees involuntarily terminated between September 1, 2008, and May 31, 2010, and to premiums paid for up to 15 months. Mi 1040x See COBRA premium assistance credit under Introduction. Mi 1040x Federal tax deposits must be made by electronic funds transfer. Mi 1040x  You must use electronic funds transfer to make all federal tax deposits. Mi 1040x Generally, electronic fund transfers are made using the Electronic Federal Tax Payment System (EFTPS). Mi 1040x If you do not want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make electronic deposits on your behalf. Mi 1040x Also, you may arrange for your financial institution to initiate a same-day wire payment on your behalf. Mi 1040x EFTPS is a free service provided by the Department of Treasury. Mi 1040x Services provided by your tax professional, financial institution, payroll service, or other third party may have a fee. Mi 1040x For more information on making federal tax deposits, see How To Deposit in section 11. Mi 1040x To get more information about EFTPS or to enroll in EFTPS, visit www. Mi 1040x eftps. Mi 1040x gov or call 1-800-555-4477 or 1-800-733-4829 (TDD). Mi 1040x Additional information about EFTPS is also available in Publication 966, Electronic Federal Tax Payment System: A Guide To Getting Started. Mi 1040x You must receive written notice from the IRS to file Form 944. Mi 1040x  If you have been filing Forms 941, Employer's QUARTERLY Federal Tax Return (or Forms 941-SS, Employer's QUARTERLY Federal Tax Return—American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the U. Mi 1040x S. Mi 1040x Virgin Islands, or Formularios 941-PR, Planilla para la Declaración Federal TRIMESTRAL del Patrono), and believe your employment taxes for the calendar year will be $1,000 or less, and you would like to file Form 944, Employer's ANNUAL Federal Tax Return, instead of Forms 941, you must contact the IRS to request to file Form 944. Mi 1040x You must receive written notice from the IRS to file Form 944 instead of Forms 941 before you may file this form. Mi 1040x For more information on requesting to file Form 944, visit IRS. Mi 1040x gov and enter “file employment taxes annually” in the search box. Mi 1040x Employers can request to file Forms 941 instead of Form 944. Mi 1040x  If you received notice from the IRS and have been filing Form 944 but would like to file Forms 941 instead, you must contact the IRS to request to file Forms 941. Mi 1040x You must receive written notice from the IRS to file Forms 941 instead of Form 944 before you may file these forms. Mi 1040x For more information on requesting to file Form 944, visit IRS. Mi 1040x gov and enter “file employment taxes annually” in the search box. Mi 1040x Aggregate Form 941 filers. Mi 1040x  Agents must complete Schedule R (Form 941), Allocation Schedule for Aggregate Form 941 Filers, when filing an aggregate Form 941. Mi 1040x Aggregate Forms 941 may only be filed by agents approved by the IRS under section 3504 of the Internal Revenue Code. Mi 1040x To request approval to act as an agent for an employer, the agent files Form 2678, Employer/Payer Appointment of Agent, with the IRS. Mi 1040x Aggregate Form 940 filers. Mi 1040x  Agents must complete Schedule R (Form 940), Allocation Schedule for Aggregate Form 940 Filers, when filing an aggregate Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return. Mi 1040x Aggregate Forms 940 can be filed by agents acting on behalf of home care service recipients who receive home care services through a program administered by a federal, state, or local government. Mi 1040x To request approval to act as an agent on behalf of home care service recipients, the agent files Form 2678 with the IRS. Mi 1040x Electronic Filing and Payment  Now, more than ever before, businesses can enjoy the benefits of filing and paying their federal taxes electronically. Mi 1040x Whether you rely on a tax professional or handle your own taxes, the IRS offers you convenient programs to make filing and payment easier. Mi 1040x Spend less time and worry about taxes and more time running your business. Mi 1040x Use e-file and the Electronic Federal Tax Payment System (EFTPS) to your benefit. Mi 1040x For e-file, visit www. Mi 1040x irs. Mi 1040x gov/efile for additional information. Mi 1040x For EFTPS, visit www. Mi 1040x eftps. Mi 1040x gov or call EFTPS Customer Service at 1-800-555-4477 or 1-800-733-4829 (TDD). Mi 1040x For electronic filing of Forms W-2, Wage and Tax Statement, visit www. Mi 1040x socialsecurity. Mi 1040x gov/employer. Mi 1040x If you are filing your tax return or paying your federal taxes electronically, a valid EIN is required. Mi 1040x If a valid EIN is not provided, the return or payment will not be processed. Mi 1040x This may result in penalties and delays in processing your return or payment. Mi 1040x Electronic funds withdrawal (EFW). Mi 1040x  If you file Form 940, Form 941, Form 944, or Form 945 electronically, you can e-file and e-pay (electronic funds withdrawal) the balance due in a single step using tax preparation software or through a tax professional. Mi 1040x However, do not use EFW to make federal tax deposits. Mi 1040x For more information on paying your taxes using EFW, visit the IRS website at www. Mi 1040x irs. Mi 1040x gov/e-pay. Mi 1040x A fee may be charged to file electronically. Mi 1040x Credit or debit card payments. Mi 1040x  For information on paying your taxes with a credit or debit card, visit the IRS website at www. Mi 1040x irs. Mi 1040x gov/e-pay. Mi 1040x However, do not use credit or debit cards to make federal tax deposits. Mi 1040x Forms in Spanish You can provide Formulario W-4(SP), Certificado de Exención de Retenciones del Empleado, in place of Form W-4, Employee's Withholding Allowance Certificate, to your Spanish-speaking employees. Mi 1040x For more information, see Publicación 17(SP), El Impuesto Federal sobre los Ingresos (Para Personas Físicas). Mi 1040x For nonemployees, Formulario W-9(SP), Solicitud y Certificación del Número de Identificación del Contribuyente, may be used in place of Form W-9, Request for Taxpayer Identification Number and Certification. Mi 1040x Hiring New Employees Eligibility for employment. Mi 1040x  You must verify that each new employee is legally eligible to work in the United States. Mi 1040x This includes completing the U. Mi 1040x S. Mi 1040x Citizenship and Immigration Services (USCIS) Form I-9, Employment Eligibility Verification. Mi 1040x You can get the form from USCIS offices or by calling 1-800-870-3676. Mi 1040x Contact the USCIS at 1-800-375-5283, or visit the USCIS website at www. Mi 1040x uscis. Mi 1040x gov for more information. Mi 1040x New hire reporting. Mi 1040x  You are required to report any new employee to a designated state new hire registry. Mi 1040x A new employee is an employee who has not previously been employed by you or was previously employed by you but has been separated from such prior employment for at least 60 consecutive days. Mi 1040x Many states accept a copy of Form W-4 with employer information added. Mi 1040x Visit the Office of Child Support Enforcement website at www. Mi 1040x acf. Mi 1040x hhs. Mi 1040x gov/programs/cse/newhire for more information. Mi 1040x W-4 request. Mi 1040x  Ask each new employee to complete the 2014 Form W-4. Mi 1040x See section 9. Mi 1040x Name and social security number. Mi 1040x  Record each new employee's name and number from his or her social security card. Mi 1040x Any employee without a social security card should apply for one. Mi 1040x See section 4. Mi 1040x Paying Wages, Pensions, or Annuities Correcting Form 941 or Form 944. Mi 1040x  If you discover an error on a previously filed Form 941 or Form 944, make the correction using Form 941-X, Adjusted Employer's QUARTERLY Federal Tax Return or Claim for Refund, or Form 944-X, Adjusted Employer's ANNUAL Federal Tax Return or Claim for Refund. Mi 1040x Forms 941-X and 944-X are stand-alone forms, meaning taxpayers can file them when an error is discovered. Mi 1040x Forms 941-X and 944-X are used by employers to claim refunds or abatements of employment taxes, rather than Form 843, Claim for Refund and Request for Abatement. Mi 1040x See section 13 for more information. Mi 1040x Income tax withholding. Mi 1040x  Withhold federal income tax from each wage payment or supplemental unemployment compensation plan benefit payment according to the employee's Form W-4 and the correct withholding table. Mi 1040x If you have nonresident alien employees, see Withholding income taxes on the wages of nonresident alien employees in section 9. Mi 1040x Withhold from periodic pension and annuity payments as if the recipient is married claiming three withholding allowances, unless he or she has provided Form W-4P, Withholding Certificate for Pension or Annuity Payments, either electing no withholding or giving a different number of allowances, marital status, or an additional amount to be withheld. Mi 1040x Do not withhold on direct rollovers from qualified plans or governmental section 457(b) plans. Mi 1040x See section 9 and Publication 15-A, Employer's Supplemental Tax Guide. Mi 1040x Publication 15-A includes information about withholding on pensions and annuities. Mi 1040x Zero wage return. Mi 1040x  If you have not filed a “final” Form 941 or Form 944, or are not a “seasonal” employer, you must continue to file a Form 941 or Form 944 even for periods during which you paid no wages. Mi 1040x The IRS encourages you to file your “Zero Wage” Forms 941 or 944 electronically using IRS e-file at www. Mi 1040x irs. Mi 1040x gov/efile. Mi 1040x Employer Responsibilities Employer Responsibilities: The following list provides a brief summary of your basic responsibilities. Mi 1040x Because the individual circumstances for each employer can vary greatly, responsibilities for withholding, depositing, and reporting employment taxes can differ. Mi 1040x Each item in this list has a page reference to a more detailed discussion in this publication. Mi 1040x   New Employees: Page     Annually (By January 31 of the current year, Page □ Verify work eligibility of new employees 3     for the prior year):   □ Record employees' names and SSNs from     □ File Form 944 if required (pay tax with return if     social security cards 4     not required to deposit) 29 □ Ask employees for Form W-4 3     Annually (see Calendar for due dates):     Each Payday:     □ Remind employees to submit a new Form W-4   □ Withhold federal income tax based on each       if they need to change their withholding 20   employee's Form W-4 20   □ Ask for a new Form W-4 from employees   □ Withhold employee's share of social security       claiming exemption from income tax     and Medicare taxes 23     withholding 20 □ Deposit:     □ Reconcile Forms 941 (or Form 944) with Forms     • Withheld income tax       W-2 and W-3 31   • Withheld and employer social security taxes     □ Furnish each employee a Form W-2 7   • Withheld and employer Medicare taxes 24   □ File Copy A of Forms W-2 and the transmittal     Note:Due date of deposit generally depends       Form W-3 with the SSA 8   on your deposit schedule (monthly or semiweekly)     □ Furnish each other payee a Form 1099 (for example, Form 1099-MISC, Miscellaneous Income) 7   Quarterly (By April 30, July 31, October 31, and January 31):     □ File Forms 1099 and the transmittal Form   □ Deposit FUTA tax if undeposited amount       1096 8   is over $500 35   □ File Form 940 7 □ File Form 941 (pay tax with return if not     □ File Form 945 for any nonpayroll income tax     required to deposit) 29     withholding 8 Information Returns You may be required to file information returns to report certain types of payments made during the year. Mi 1040x For example, you must file Form 1099-MISC, Miscellaneous Income, to report payments of $600 or more to persons not treated as employees (for example, independent contractors) for services performed for your trade or business. Mi 1040x For details about filing Forms 1099 and for information about required electronic filing, see the General Instructions for Certain Information Returns for general information and the separate, specific instructions for each information return you file (for example, Instructions for Form 1099-MISC). Mi 1040x Generally, do not use Forms 1099 to report wages and other compensation you paid to employees; report these on Form W-2. Mi 1040x See the General Instructions for Forms W-2 and W-3 for details about filing Form W-2 and for information about required electronic filing. Mi 1040x If you file 250 or more Forms 1099, you must file them electronically. Mi 1040x If you file 250 or more Forms W-2, you must file them electronically. Mi 1040x SSA will not accept Forms W-2 and W-3 filed on magnetic media. Mi 1040x Information reporting customer service site. Mi 1040x  The IRS operates the Enterprise Computing Center—Martinsburg, a centralized customer service site, to answer questions about reporting on Forms W-2, W-3, 1099, and other information returns. Mi 1040x If you have questions related to reporting on information returns, call 1-866-455-7438 (toll free), 304-263-8700 (toll call), or 304-267-3367 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability). Mi 1040x The center can also be reached by email at mccirp@irs. Mi 1040x gov. Mi 1040x Do not include tax identification numbers (TINs) or attachments in email correspondence because electronic mail is not secure. Mi 1040x Nonpayroll Income Tax Withholding Nonpayroll federal income tax withholding (reported on Forms 1099 and Form W-2G) must be reported on Form 945, Annual Return of Withheld Federal Income Tax. Mi 1040x Separate deposits are required for payroll (Form 941 or Form 944) and nonpayroll (Form 945) withholding. Mi 1040x Nonpayroll items include: Pensions (including distributions from tax-favored retirement plans, for example, section 401(k), section 403(b), and governmental section 457(b) plans) and annuities. Mi 1040x Military retirement. Mi 1040x Gambling winnings. Mi 1040x Indian gaming profits. Mi 1040x Certain government payments, such as unemployment compensation, social security, and Tier 1 railroad retirement benefits, subject to voluntary withholding. Mi 1040x Payments subject to backup withholding. Mi 1040x For details on depositing and reporting nonpayroll income tax withholding, see the Instructions for Form 945. Mi 1040x All income tax withholding reported on Form W-2 must be reported on Form 941, Form 943, Employer's Annual Federal Tax Return for Agricultural Employees, Form 944, or Schedule H (Form 1040), Household Employment Taxes. Mi 1040x Distributions from nonqualified pension plans and deferred compensation plans. Mi 1040x  Because distributions to participants from some nonqualified pension plans and deferred compensation plans (including section 457(b) plans of tax-exempt organizations) are treated as wages and are reported on Form W-2, income tax withheld must be reported on Form 941 or Form 944, not on Form 945. Mi 1040x However, distributions from such plans to a beneficiary or estate of a deceased employee are not wages and are reported on Forms 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Mi 1040x ; income tax withheld must be reported on Form 945. Mi 1040x Backup withholding. Mi 1040x  You generally must withhold 28% of certain taxable payments if the payee fails to furnish you with his or her correct taxpayer identification number (TIN). Mi 1040x This withholding is referred to as “backup withholding. Mi 1040x ” Payments subject to backup withholding include interest, dividends, patronage dividends, rents, royalties, commissions, nonemployee compensation, and certain other payments you make in the course of your trade or business. Mi 1040x In addition, transactions by brokers and barter exchanges and certain payments made by fishing boat operators are subject to backup withholding. Mi 1040x Backup withholding does not apply to wages, pensions, annuities, IRAs (including simplified employee pension (SEP) and SIMPLE retirement plans), section 404(k) distributions from an employee stock ownership plan (ESOP), medical savings accounts, health savings accounts, long-term-care benefits, or real estate transactions. Mi 1040x You can use Form W-9 or Formulario W-9(SP) to request payees to furnish a TIN and to certify the number furnished is correct. Mi 1040x You can also use Form W-9 or Formulario W-9(SP) to get certifications from payees that they are not subject to backup withholding or that they are exempt from backup withholding. Mi 1040x The Instructions for the Requester of Form W-9 or Formulario W-9(SP) includes a list of types of payees who are exempt from backup withholding. Mi 1040x For more information, see Publication 1281, Backup Withholding for Missing and Incorrect Name/TIN(s). Mi 1040x Recordkeeping Keep all records of employment taxes for at least 4 years. Mi 1040x These should be available for IRS review. Mi 1040x Your records should include the following information. Mi 1040x Your EIN. Mi 1040x Amounts and dates of all wage, annuity, and pension payments. Mi 1040x Amounts of tips reported to you by your employees. Mi 1040x Records of allocated tips. Mi 1040x The fair market value of in-kind wages paid. Mi 1040x Names, addresses, social security numbers, and occupations of employees and recipients. Mi 1040x Any employee copies of Forms W-2 and W-2c returned to you as undeliverable. Mi 1040x Dates of employment for each employee. Mi 1040x Periods for which employees and recipients were paid while absent due to sickness or injury and the amount and weekly rate of payments you or third party payors made to them. Mi 1040x Copies of employees' and recipients' income tax withholding allowance certificates (Forms W-4, W-4P, W-4(SP), W-4S, and W-4V). Mi 1040x Copies of employees' Earned Income Credit Advance Payment Certificates (Forms W-5 and W-5(SP)). Mi 1040x Dates and amounts of tax deposits you made and acknowledgment numbers for deposits made by EFTPS. Mi 1040x Copies of returns filed and confirmation numbers. Mi 1040x Records of fringe benefits and expense reimbursements provided to your employees, including substantiation. Mi 1040x Change of Business Address or Responsible Party To notify the IRS of a change in business address or responsible party, file Form 8822-B. Mi 1040x Do not mail Form 8822-B with your employment tax return. Mi 1040x Private Delivery Services You can use certain private delivery services designated by the IRS to mail tax returns and payments. Mi 1040x The list includes only the following: DHL Express (DHL): DHL Same Day Service. Mi 1040x Federal Express (FedEx): FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2Day, FedEx International Priority, and FedEx International First. Mi 1040x United Parcel Service (UPS): UPS Next Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A. Mi 1040x M. Mi 1040x , UPS Worldwide Express Plus, and UPS Worldwide Express. Mi 1040x For the IRS mailing address to use if you are using a private delivery service, go to IRS. Mi 1040x gov and enter “private delivery service” in the search box. Mi 1040x Your private delivery service can tell you how to get written proof of the mailing date. Mi 1040x   Private delivery services cannot deliver items to P. Mi 1040x O. Mi 1040x boxes. Mi 1040x You must use the U. Mi 1040x S. Mi 1040x Postal Service to mail any item to an IRS P. Mi 1040x O. Mi 1040x box address. Mi 1040x Telephone Help Tax questions. Mi 1040x   You can call the IRS Business and Specialty Tax Line with your employment tax questions at 1-800-829-4933. Mi 1040x Help for people with disabilities. Mi 1040x  You may call 1-800-829-4059 (TDD/TTY for persons who are deaf, hard of hearing, or have a speech disability) with any tax question or to order forms and publications. Mi 1040x You may also use this number for assistance with unresolved tax problems. Mi 1040x Recorded tax information (TeleTax). Mi 1040x  The IRS TeleTax service provides recorded tax information on topics that answer many individual and business federal tax questions. Mi 1040x You can listen to up to three topics on each call you make. Mi 1040x Touch-Tone service is available 24 hours a day, 7 days a week. Mi 1040x TeleTax topics are also available on the IRS website at www. Mi 1040x irs. Mi 1040x gov/taxtopics. Mi 1040x Most tax topics listed below are also available in Spanish. Mi 1040x For a complete list of TeleTax topics in Spanish, visit the IRS website at www. Mi 1040x irs. Mi 1040x gov/Spanish/Índice-de-Temas-Tributarios-Año-2013. Mi 1040x A list of employment tax topics is provided next. Mi 1040x Select, by number, the topic you want to hear and call 1-800-829-4477. Mi 1040x For the directory of all topics, select Topic 123. Mi 1040x Teletax Topics Topic No. Mi 1040x Subject 751 Social Security and Medicare Withholding Rates 752 Form W-2—Where, When, and How to File 753 Form W-4—Employee's Withholding Allowance Certificate 755 Employer Identification Number (EIN)—How to Apply 756 Employment Taxes for Household Employees 757 Form 941 and Form 944—Deposit Requirements 758 Form 941—Employer's QUARTERLY Federal Tax Return and Form 944—Employer's ANNUAL Federal Tax Return 759 Form 940—Employer's Annual Federal Unemployment (FUTA) Tax Return—Filing and Deposit Requirements 760 Reporting and Deposit Requirements for Agricultural Employers 761 Tips—Withholding and Reporting 762 Independent Contractor vs. Mi 1040x Employee 763 The “Affordable Care Act” of 2010 Offers Employers New Tax Deductions and Credits Additional employment tax information. Mi 1040x  Visit the IRS website at www. Mi 1040x irs. Mi 1040x gov/businesses and click on the Employment Taxes link under Businesses Topics. Mi 1040x Ordering Employer Tax Forms and Publications You can order employer tax forms and publications and information returns online at www. Mi 1040x irs. Mi 1040x gov/businesses. Mi 1040x To order 2013 and 2014 forms, click on the Online Ordering for Information Returns and Employer Returns link. Mi 1040x You may also order employer tax forms and publications and information returns by calling 1-800-TAX-FORM (1-800-829-3676). Mi 1040x Instead of ordering paper Forms W-2 and W-3, consider filing them electronically using the Social Security Administration's (SSA) free e-file service. Mi 1040x Visit the SSA's Employer W-2 Filing Instructions & Information website at www. Mi 1040x socialsecurity. Mi 1040x gov/employer to register for Business Services Online. Mi 1040x You will be able to create Forms W-2 online and submit them to the SSA by typing your wage information into easy-to-use fill-in fields. Mi 1040x In addition, you can print out completed copies of Forms W-2 to file with state or local governments, distribute to your employees, and keep for your records. Mi 1040x Form W-3 will be created for you based on your Forms W-2. Mi 1040x Filing Addresses Generally, your filing address for Forms 940, 941, 943, 944, 945, and CT-1 depends on the location of your residence or principal place of business and whether or not you are including a payment with your return. Mi 1040x There are separate filing addresses for these returns if you are a tax-exempt organization or government entity. Mi 1040x See the separate instructions for Forms 940, 941, 943, 944, 945, or CT-1 for the filing addresses. Mi 1040x Dishonored Payments Any form of payment that is dishonored and returned from a financial institution is subject to a penalty. Mi 1040x The penalty is $25 or 2% of the payment, whichever is more. Mi 1040x However, the penalty on dishonored payments of $24. Mi 1040x 99 or less is an amount equal to the payment. Mi 1040x For example, a dishonored payment of $18 is charged a penalty of $18. Mi 1040x Photographs of Missing Children The IRS is a proud partner with the National Center for Missing and Exploited Children. Mi 1040x Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Mi 1040x You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Mi 1040x Calendar The following is a list of important dates. Mi 1040x Also see Publication 509, Tax Calendars. Mi 1040x   If any date shown below for filing a return, furnishing a form, or depositing taxes falls on a Saturday, Sunday, or legal holiday, use the next business day. Mi 1040x A statewide legal holiday delays a filing due date only if the IRS office where you are required to file is located in that state. Mi 1040x However, a statewide legal holiday does not delay the due date of federal tax deposits. Mi 1040x See Deposits on Business Days Only in section 11. Mi 1040x For any filing due date, you will meet the “file” or “furnish” requirement if the envelope containing the return or form is properly addressed, contains sufficient postage, and is postmarked by the U. Mi 1040x S. Mi 1040x Postal Service on or before the due date, or sent by an IRS-designated private delivery service on or before the due date. Mi 1040x See Private Delivery Services under Reminders for more information. Mi 1040x Introduction This publication explains your tax responsibilities as an employer. Mi 1040x It explains the requirements for withholding, depositing, reporting, paying, and correcting employment taxes. Mi 1040x It explains the forms you must give to your employees, those your employees must give to you, and those you must send to the IRS and SSA. Mi 1040x This guide also has tax tables you need to figure the taxes to withhold from each employee for 2014. Mi 1040x References to “income tax” in this guide apply only to “federal” income tax. Mi 1040x Contact your state or local tax department to determine if their rules are different. Mi 1040x Additional employment tax information is available in Publication 15-A. Mi 1040x Publication 15-A includes specialized information supplementing the basic employment tax information provided in this publication. Mi 1040x Publication 15-B, Employer's Tax Guide to Fringe Benefits, contains information about the employment tax treatment and valuation of various types of noncash compensation. Mi 1040x Most employers must withhold (except FUTA), deposit, report, and pay the following employment taxes. Mi 1040x Income tax. Mi 1040x Social security tax. Mi 1040x Medicare tax. Mi 1040x FUTA tax. Mi 1040x There are exceptions to these requirements. Mi 1040x See section 15 for guidance. Mi 1040x Railroad retirement taxes are explained in the Instructions for Form CT-1. Mi 1040x Comments and suggestions. Mi 1040x   We welcome your comments about this publication and your suggestions for future editions. Mi 1040x   You can write to us at the following address: Internal Revenue Service Tax Forms & Publications Division 1111 Constitution Ave. Mi 1040x NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Mi 1040x Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Mi 1040x   You can also send us comments from www. Mi 1040x irs. Mi 1040x gov/formspubs. Mi 1040x Click on More Information and then click on Comment on Tax Forms and Publications. Mi 1040x   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax forms, instructions, and publications. Mi 1040x Federal Government employers. Mi 1040x   The information in this publication, including the rules for making federal tax deposits, applies to federal agencies. Mi 1040x State and local government employers. Mi 1040x   Payments to employees for services in the employ of state and local government employers are generally subject to federal income tax withholding but not FUTA tax. Mi 1040x Most elected and appointed public officials of state or local governments are employees under common law rules. Mi 1040x See chapter 3 of Publication 963, Federal-State Reference Guide. Mi 1040x In addition, wages, with certain exceptions, are subject to social security and Medicare taxes. Mi 1040x See section 15 for more information on the exceptions. Mi 1040x   If an election worker is employed in another capacity with the same government entity, see Revenue Ruling 2000-6 on page 512 of Internal Revenue Bulletin 2000-6 at www. Mi 1040x irs. Mi 1040x gov/pub/irs-irbs/irb00-06. Mi 1040x pdf. Mi 1040x   You can get information on reporting and social security coverage from your local IRS office. Mi 1040x If you have any questions about coverage under a section 218 (Social Security Act) agreement, contact the appropriate state official. Mi 1040x To find your State Social Security Administrator, visit the National Conference of State Social Security Administrators website at www. Mi 1040x ncsssa. Mi 1040x org. Mi 1040x Disregarded entities and qualified subchapter S subsidiaries (QSubs). Mi 1040x   Eligible single-owner disregarded entities and QSubs are treated as separate entities for employment tax purposes. Mi 1040x Eligible single-member entities that have not elected to be taxed as corporations must report and pay employment taxes on wages paid to their employees using the entities' own names and EINs. Mi 1040x See Regulations sections 1. Mi 1040x 1361-4(a)(7) and 301. Mi 1040x 7701-2(c)(2)(iv). Mi 1040x COBRA premium assistance credit. Mi 1040x   The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) provides certain former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group rates. Mi 1040x COBRA generally covers multiemployer health plans and health plans maintained by private-sector employers (other than churches) with 20 or more full and part-time employees. Mi 1040x Parallel requirements apply to these plans under the Employee Retirement Income Security Act of 1974 (ERISA). Mi 1040x Under the Public Health Service Act, COBRA requirements apply also to health plans covering state or local government employees. Mi 1040x Similar requirements apply under the Federal Employees Health Benefits Program and under some state laws. Mi 1040x For the premium assistance (or subsidy) discussed below, these requirements are all referred to as COBRA requirements. Mi 1040x   Under the American Recovery and Reinvestment Act of 2009 (ARRA), employers are allowed a credit against “payroll taxes” (referred to in this publication as “employment taxes”) for providing COBRA premium assistance to assistance eligible individuals. Mi 1040x For periods of COBRA continuation coverage beginning after February 16, 2009, a group health plan must treat an assistance eligible individual as having paid the required COBRA continuation coverage premium if the individual elects COBRA coverage and pays 35% of the amount of the premium. Mi 1040x   An assistance eligible individual is a qualified beneficiary of an employer's group health plan who is eligible for COBRA continuation coverage during the period beginning September 1, 2008, and ending May 31, 2010, due to the involuntarily termination from employment of a covered employee during the period and elects continuation COBRA coverage. Mi 1040x The assistance for the coverage can last up to 15 months. Mi 1040x   Employees terminated during the period beginning September 1, 2008, and ending May 31, 2010, who received a severance package that delayed the start of the COBRA continuation coverage, may still be eligible for premium assistance for COBRA continuation coverage. Mi 1040x For more information see Notice 2009-27, 2009-16 I. Mi 1040x R. Mi 1040x B. Mi 1040x 838, available at www. Mi 1040x irs. Mi 1040x gov/irb/2009-16_irb/ar09. Mi 1040x html. Mi 1040x   Administrators of the group health plans (or other entities) that provide or administer COBRA continuation coverage must provide notice to assistance eligible individuals of the COBRA premium assistance. Mi 1040x   The 65% of the premium not paid by the assistance eligible individuals is reimbursed to the employer maintaining the group health plan. Mi 1040x The reimbursement is made through a credit against the employer's employment tax liabilities. Mi 1040x For information on how to claim the credit, see the Instructions for Form 941 or the Instructions for Form 944. Mi 1040x The credit is treated as a deposit made on the first day of the return period (quarter or year). Mi 1040x In the case of a multiemployer plan, the credit is claimed by the plan, rather than the employer. Mi 1040x In the case of an insured plan subject to state law continuation coverage requirements, the credit is claimed by the insurance company, rather than the employer. Mi 1040x   Anyone claiming the credit for COBRA premium assistance payments must maintain the following information to support their claim, including the following. Mi 1040x Information on the receipt of the assistance eligible individuals' 35% share of the premium, including dates and amounts. Mi 1040x In the case of an insurance plan, a copy of invoice or other supporting statement from the insurance carrier and proof of timely payment of the full premium to the insurance carrier required under COBRA. Mi 1040x In the case of a self-insured plan, proof of the premium amount and proof of the coverage provided to the assistance eligible individuals. Mi 1040x Attestation of involuntary termination, including the date of the involuntary termination for each covered employee whose involuntary termination is the basis for eligibility for the subsidy. Mi 1040x Proof of each assistance eligible individual's eligibility for COBRA coverage and the election of COBRA coverage. Mi 1040x A record of the SSNs of all covered employees, the amount of the subsidy reimbursed with respect to each covered employee, and whether the subsidy was for one individual or two or more individuals. Mi 1040x   For more information, visit IRS. Mi 1040x gov and enter “COBRA” in the search box. 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The Mi 1040x

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