Year End Tax Tips 2008 Q&A - Dependents
Tax Tips Q&A
Read Kevin McCormally's answers to tax questions submitted by NBR's viewers.
Click on a tax topic to explore related questions and answers.
This feature is intended to provide general information and education and should not be considered as investment or tax advice. Each individual should consult his or her own tax, financial, or investment advisor.
Dependents
QUESTION:
My father earns about $6000.00 per and he and my mother
live with me and I pay for all their needs. May I claim both of them as
dependents on my tax return?
-- Jimmyli, San Francisco, CA
ANSWER:
It sounds like your mother qualifies but your father's
income might disqualifying him. Basically, to qualify as a dependent as
a "qualifying relative", the person can't have more than $3,400 of taxable
income (Social Security benefits don't count). Check out this IRS publication
for all the rules that apply: http://www.irs.gov/publications/p501/ar02.html#d0e3763
-- Kevin McCormally, Editorial Director, Kiplinger Washington Editors
QUESTION: Claiming Child's Gain On Parent's Return
We have a UTMA custodian account for our 11 year old daughter. In 2001, we had a gain on the account, IRS told we need report that gain on our 2001 tax. So we did. This year we have a loss on the same account. Can we claim the loss on our 2008 tax? Thanks!
-- Flora, Vestal, NY
ANSWER:
First, it sounds like you got some bad advice on that 2001 gain. A parent can not report a child's capital gain on the parents' return. The UTMA belongs to the child . . . and so do any taxable gains.
The same goes for the loss suffered in the account this year. It should be on a tax return for your daughter. Even if she doesn't have to file a return and has no income to offset the loss, you may want to file a return anyway to establish her right to carryover the loss to future years when it might have a tax value.
-- Kevin McCormally, Editorial Director, Kiplinger Washington Editors
