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Divorced Parents
Your entitlement or dependency exemptions for your children does not depend on the relative contributions you and your former spouse make to the child's support. Instead, the general rule is that the parent who has custody of the child is entitled to a deduction unless he or she relinquishes it to the other parent. Your year-end tax planning should include a consideration of which parent would most benefit from the dependency exemption and the effect this may have on the amount of child support to be paid. Remember, the Child Credit is based on who takes the dependency exemption.
See us for specific details on the definition of a "child".
Auto Deduction - Fraud?
"Donate your car instead of selling it! Save money on taxes! Get a large donation for a car that has to be towed away!" Sounds too good to be true? It may be a legitimate deduction, but then again, it may be fraud. Some charities are under investigation by the IRS for incorrectly valuing cars given to them for donations. Make sure that your value is realistic and that you have good support for your donation. Check out the value of your car at the library or look on the Internet.
The IRS suggests that you use the "Private Party Sale" value for your automobile from Kelly Blue Book. Their web site is: www.kbb.com . The IRS is more likely to accept this valuation in the case of an audit.
Remember: Any donation valued at over $500.00 MUST have a statement from the charity.
Nursing Home Costs
If you or your dependent is in a nursing home because of medical care, costs are tax deductible.
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