Taxation of Alimony Under Internal Revenue Code Simplified

taxation of alimoneyAlimony is the amount associated with divorce . A painful arrangement , but that is a fact of life. Another fact is that the IRS desires its share out of such money received by you .In other words alimony is taxable income in recipient’s hand. At the same time, the payment of alimony is also deductible for the person paying . Yes, the amounts paid under divorce or separate maintenance decrees or written separation agreements entered into between you and your spouse or former spouse are considered alimony.However Internal Revenue Code provides a number of condition that must be consulted before you can claim the payment for separation as deduction from taxable income of the tax year.

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Qualified Educational Expense Explained Through 8 FAQs!

qualified educational expenseIn orde to claim education credit or deduction, one of the most important condition is that the exepnse on education should be within the Qualified Education Expense defined under Internal Revenue Code. So what does the term Qualified Educational Expense mean ? Generally , a  qualified education expenses are amounts paid for tuition, fees and other related expenses for an eligible student.A close examination reveal that there are many conditions that needs to be satisfied before one can claim an expense for the purpose of educational credit. So here are five frequently asked questions which will cover almost all the necessary issues related to qualified educational expense.

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When A Dependent Must File Tax Return ?

dependentUnder US Tax code , a tax payer gets tax exemption , deductions and tax credits for the qualified dependents. for example , you may have qualified child dependents or parents who are claimed as dependent in your return. They may have independent source of income i.e they may have earned income or unearned income . As per 26 US Code ,  the claim of tax relief on account of dependent in your return also enjoins upon the dependent to check if filing of tax return is obligatory under the law. Internal Revenue Code provides different parameters for -single dependents and married dependents- deciding about the condition of filing tax return by them.

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Is Your Child or Relative Dependent For Tax Purpose ? Check Out Rules !

dependent meaningInternal Revenue Code not only provides you personal exemption to all individual tax payer , but additional personal exemption for all dependents- qualifying child or relatives or even non-relatives- are also allowed provided you fulfill the conditions for such claim.So ,here are the check list of conditions you must fulfill if you desire to claim anyone as dependent.

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Child & Dependent Tax Credit Simplified !

dependent tax creditChild and Dependent Care Credit are part of tax credits which you can utilize to reduce the tax payable for a tax year. As you must be aware that while tax deductions and tax exemptions reduces your taxable income , the tax credit directly reduces the tax payable . So , it is quite advantageous to get tax credits. There are many types of tax credits available , but this post is devoted to tax credit you can enjoy for certain types of expense on child and dependents’ care. 

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How to Find a Qualifying Child ?

qualifying childA qualifying child will entitle you tax tax exemption and also tax deduction . One tax exemption for one qualifying child . Further , Internal Revenue Code provides other benefits if you have qualifying child dependents . for example , you can chose filing status as Head of Household  or claim  the Child Tax Credit, or the Credit for Child and Dependent Care Expenses or a higher Earned Income Credit, etc . These extras are certainly requires extra rules to fulfill .

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Who Does Not Need to File Tax Return ?

filing tax return

filing tax returnThe very basic question haunts almost every first time earners of income – do I need to file tax return ? Yea, it is true that under the US tax law , filing of tax return is as important as paying taxes . But , the Internal Revenue Code does not make necessary to file tax return for every types of taxpayer . While one of the basic criteria for filing tax return is earning of income , it is not so for all kinds of tax payers . Whether there is legal requirements for filing tax return, depends on the whether you are –

  1. An individual
  2. A dependent person on some one
  3. You are  below 19 years college going or full time students
  4. Self employed persons
  5. Person who is an alien or non-citizen of USA . 

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How to Know Your Filing Status ?

filing statusFiling of tax return under US tax law requires that you first ascertain your filing status. Under the Internal Revenue Code , there are five types of status under which you can file tax return. Filing status will actually determine what  tax rate or the the basic tax exemption or standard deductions and a whole lots of other relief and conditions  applies to you. So , this post is devoted on the ways you can find out exact filing status that applies to you .

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5 IRS Tax Tips for Persons Earning Tips Income!

tax tipsInternal Revenue Code tax tips same way it treats any other income under the principle that all receipts are income unless clearly provided that an income is not taxable. Tips receipts by employee are taxable income under IRC . US tax law  requires that employers in certain sectors like food and restaurant , bars, casino where it is custom to tip the employee to submit an annual report about the tips . From the information out of such report , IRS can compare the tips reported in the W2 to find out unreported tips . Therefore , it is legally important to tell the employer about the tips received by the employee. Please note that not only the tip receipt is taxable income , it is also subject to Social Security and Medicare tax withholding. So, every time one under reports , he/she also prevents unlawfully withholding tax on such income .

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4 Extended Tax Breaks You Can Claim for Tax Year 2015

extended tax breaksThe tax breaks list always changes . So the tax year 2015 is no different . Here are four  tax breaks that are officially expired on December 31, 2014, , but the Congress extended for tax year 2015 . If you are eligible to claim the following four tax breaks and you thought that the tax year has passed , don’t do the mistake. Claim these tax breaks while filing the IRS tax return for tax year 2015

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Tax Effect of Nonresident Alien Spouse Chosen As Tax Resident of US Simplified !

nonresident alienInternal Revenue Code allows a US citizen or a resident alien to treat his/her spouse as tax resident of US . This is an option granted to him/her. There maybe various situation in which during a tax year, one spouse is nonresident alien and one is resident alien . Choosing your partner (spouse ) who is nonresident as tax resident of USA may effect your taxation and also certain other legal obligation arise. 

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Who Can File IRS Tax Return as Head of Household ?

Head of HouseholdIRS tax return under US tax laws can be filed in four ways-as Single person, as married couple filing jointly or as  widow(er) , or married  filing separately and  as as Head of Household . The tax brackets for each of these types of filing of tax return are different. The deductions and exemptions are also fixed differently for these types of filing of IRS tax return. The Head of Household status is for a single or unmarried person who actually share certain kinds of person living with him. IRS calls those persons as qualifying persons . In the instant post , certain points related to filing of tax return as Head of Household is explained .

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How to Find if You Are Tax Resident of USA ?

residential statusIn order to determine the  tax laibility of a persons who visits USA or stays in USA or works in USA or earns any income connected to USA , the first and foremost creteria is to find out the residential status of the person as per Internal Revenue Code . This is so , because the law for residents anbd non -residents are quite different. So , how do you determine if you are resident as per US tax laws ? Well the Internal Revenue Code (26 US Code )  7701

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