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Todd's Tax Service LLC

I just got married. What should I claim on my W-4 at work?  As a general rule, the higher earning spouse should claim Married -0-. The other spouse should claim Single -0- if this is a dual earner household. This is a VERY general rule.

I am not married but am thinking of tieing the knot. What should I expect in the way of tax changes if I do decide to get married?  The tax implications of marriage  can vary widely from one couple to the next. If you are accustomed to receiving the Earned Income Tax Credit as a single parent, beaware that this credit (which is often substantial) can disappear on a joint tax return with 2 incomes. (Filing by yourself as married individual will not "save the credit").

My significant other hasn't filed in years. Should I still plan on going ahead with our marriage plans?  Of course this is a very personal decision. Marrying someone with significant tax problems is not for the faint of heart!

What is the "marriage penalty"?  Couples all across America experience this on a daily basis. Okay, I'm kidding here, but seriously, when it comes to taxes, the "penalty" hits only certain families. (See FAQ above regarding potential loss of the Earned Income Tax Credit.) For folks not eligible for the EIC, the "penalty" isn't usually that significant, if it exists at all.

Should we file separate returns?  Our software will automatically determine if filing separate returns would result in lower overall tax. (In most situations, it does not). If one spouse has significant tax issues, filing separate may be advisable.

My spouse owes back child support. What should I do?  Since filing a joint return is usually advantageous (higher overall refund), filing an injured spouse form 8379 will flag the IRS to split the refund and only the spouse with the debt will have their portion of the refund offset to pay toward the debt. The injured spouse form slows down the processing of the return.

How do I release the exemption for my child to his other parent?  Sign form 8332, release of exemption and keep a copy for your records. Generally, a divorce decree can no longer be used by the non-custodial parent to substantiate the exemption for a dependent that does not live with the parent.

What are the implications of releasing the exemption for my child to the other parent? The exemption and child tax credit go hand in hand and are what you are releasing. The earned income tax credit, daycare credit and Minnesota K-12 credit may still be claimed if you meet all of the other qualifications as the custodial parent. You may also claim head of household (higher standard deduction) even though the exemption is released, assuming of course that the child lives in a home that you provide more than 50% of the support for.

I live with my boyfriend/girlfriend. Can I claim him or her as a dependent? Maybe. If the boyfriend/girlfriend lived with you ALL year and has income less than 1 exemption amount, and you provided more than 50% of that individual's support, than yes, you most likely can claim the person as a dependent.

We lived in a "blended household"? Who claims who? As a general rule, each adult will claim their own children. Both may potentially get the EIC if they meet all of the requirements. Living with another adult in the same household doesn't rule out the EIC. Generally, the adult with the higher income will get the Head of Household filing status with the other adult filing single. Both may claim their dependents (children) and qualify for the various tax benefits associated with their children. The difference between a filing status of head of household and single is usually not that great.

My child lives with me and I intend to claim him on my tax return as a dependent. I'm afraid that the other parent is going to claim the child when in fact he/she is not eligible to do this. What should I do?  There isn't much you can do except file an accurate return. If you file electroncially, the return may be rejected by IRS if the dependent on your return has already been claimed by another taxpayer. This will cause you to have to file a paper return. You will still receive your tax refund but processing will be delayed. IRS will contact both parties and conduct a mini-audit.

I have a child going off to college. What are some of the things I should be aware of?
Tuition, books and fees are qualifying expenses for the education credits. Room and board
costs do not qualify for any type of credit. Student loan interest paid is tax deductible.

How can I protect my family in case something happens to me?  Purchase 20 Year Level Term life
insurance through your insurance agent or through the Link to Matrix This product provides affordable protection at a fixed premium with the policy proceeds tax free. Term life is an easy product to understand. Other types of life insurance are confusing and difficult to analyze.

Family FAQ