12 Ways to Save on Taxes Through Life’s Transitions

Tax Deductions and Credits twinbabies

Although taxes haven’t advanced to the point the Beatles envisioned when they said that if you take a walk they’ll tax your feet, like it or not, taxes are a part of almost everything we do in life. There are, however, ways to save on your taxes through life’s transitions. Here are 12 tax tips to help you save through major life events.

Education

  1. Deduct your tuition. Education expenses may be tax deductible if they maintain or improve skills required in your employment.
  2. Invest in a 529 plan to save for your children’s education. You won’t get a tax deduction, but there won’t be a tax on the earnings and growth of those funds if they are used for education.
  3. Tally the cost of books and supplies purchased for your education. Expenses directly related to your college education may be tax-deductible and may put more money back in your pocket.

The Working World

  1. Invest in 401(k)s and IRAs as soon as possible. Small contributions growing from an early age are more valuable than large contributions made years later.
  2. Learn about your company’s fringe benefits, such as tuition assistance plans, free employee counseling, mass transit commuting assistance, Medical Savings Accounts and other tax-free perks.
  3. Get next year’s refund now by adjusting your withholding so that you break even with the IRS at the end of the year. If you need help saving, have money automatically deposited to savings from each paycheck.
  4. Only borrow from your 401(k) in an emergency. The interest you pay on the loan won’t be tax deductible, and you will lose the capital appreciation you’d enjoy if you’d left it invested in the plan.

Family Life

  1. Put tax-free money into your employer’s dependent care plan. Though this will reduce your child and dependent care credit, it’s still a good financial move for most taxpayers.
  2. Claim the Child Tax Credit on your taxes. It is an additional $2,000 credit you may be able to claim for each of your dependent children under 17. Married couples with income up to $400,000 and a single parent with income up to $200,000 may be eligible for the tax credit. TurboTax will ask you questions about your dependents and give you the deductions and credits related to your dependents that you’re eligible for.
  3. Gather your receipts for dependent care. You may be able to claim the Child and Dependent Care Credit even if you don’t work, if your spouse works and you are a full-time student or disabled. Don’t overlook expenses eligible for the child and dependent care credit such as nursery school, private kindergarten, after school programs, and daycare.
  4. File jointly. Married couples filing separately are barred from many tax deductions and credits, so unless you are trying to distance yourself from a tax-evading spouse or a soon-to-be-ex, a joint tax return is your best move. TurboTax helps you select the filing status that you are eligible for based on your entries.
  5. Take advantage of the Other Dependent Credit for non-child dependents. If you take care of a non-child dependent like a parent, grandparent or even a friend you may be able to claim the new Other Dependent Credit that is $500 per eligible dependent.

TurboTax will ask you simple questions about your life events when you file your taxes and will give you the tax deductions and credits you’re eligible for based on your answers. If you have questions, you can connect live via one-way video to a TurboTax Live CPA or Enrolled Agent and get your tax questions answered. TurboTax Live CPAs and Enrolled Agents are available in English and Spanish and can also review sign and file your tax return.

Comments (289) Leave your comment

  1. I need information about receiving a 1099 after selling my residence! Why did I get a 1099 and how do I use my deductions? thank you
    Denise

    1. Congratulations! Yes. For the whole year. And you should be able to claim medical expenses, prescriptions, round trip mileage to the doctors’ offices and hospital.

  2. I have a 19 year old son that has lived with me all year and work, but I provide him with shelter and food. My question is can I file him on my taxes and does he also file taxes. What is the correct proccess for this situation?

  3. Hi I got married in October 2013 in Greece and will be filing for him to come. Haven’t changed my name yet. Do I file as married although haven’t applied for him to come as of yet?

    1. What might be deductible would be any special equipment (computer, headphones, monthly internet connection, cell phone, cell phone service) depending on how you are paid … if as a 1099 employee it is much simpler to claim these expenses, but they can also be claimed as a regular W2 employee.
      You can further complicate your return by claiming the percentage portion of the house (mortgage or rent expense) that you dedicate to your job, and identical percentage portions of electrical, water, gas, alarm systems support that you pay monthly. I have heard that these types of business expenses catch the attention of IRS agents and therefore, make your return more likely to be audited, however that may be changing as time goes on.

  4. I was diagnosed with bird fanciers des ease this year and had to pay for some expensive med that was not covered also had to replace all my carpet and replace some furniture and some bedding with feathers in them etc. would I be able to claim these expensive on my taxes this year

  5. Mary Ellen,
    My husband and I retired in 2013, sold our home and moved from Wi. To Az. We are married filing jointly. Do we file for both states, We were 5 months in Wi. 7 months in Az. We have not earned any wages in Az. but I do receive SS and pension. Also can I claim my health insurance premiums that we pay our of pocket? Lastly, is the fee that we paid the realtor for selling our home tax deductible?
    Thanks,
    Janet Bartels

  6. Can I claim my granddaughter as a dependent she is 23yrs.old. She has not work at all I support her and grand kids there 2 and 6 yrs they all live with me.

  7. I have have a question. I would full time at a bank and my husband works part time and a restaurant as a server. should be fill jointly or married but separate?

  8. My husband passed away in November 2013. Do I file widow or do I still have to file jointly? after that how many years can I file as a widow?

  9. I sold a house in 2013 for 85,000 to a couple for which I took 20,000 as a down payment on a seller backed loan. They currently make monthly mortgage payments to me with 5% interest. The home is on a 3yr balloon so they have to refinance before the three year mark. How will this look on my taxes, will I receive a 1099 from the title company for the home sale? I assume I have to pay taxes on the mortgage interest. Not sure where to start on this. Thanks

  10. will turbo tax be able too help me if i was unemployed from march? and i need to file jointly with my wife and claim my kids?

  11. I’ve been separated from my husband since the beginning of 2013 and I have my children leaving with me. I am in the process of filing for divorce. Under which status should I file my taxes. Is filing as single the same thing as head of household?

  12. My 29 year old son is disabled but he works partime- he doesnt collect disability or ss- I support him- he does not pay us any rent- he is on medicaid through the state and has food stamps- can I claim him as a dependent even tho he works? And how do I do that ?

  13. I had a double lung transplant 8-2013 and even though I have Medicare and BC/BS, there are still a great deal to pay for what medicare will not cover on some of my meds I take for anti-rejection. We also have to travel to another city that is 3 hours away every month for follow up care of my new lungs. Is any of this something I can claim as a deduction? Thank you, Cheri Cisneros

    1. Cheri,

      Yes, any out-of-pocket expense for prescription medicine is deductible as a medical expense. Medical travel is also deductible. TurboTax will have a place to enter your prescriptions and your mileage for calculating your deductions.

      Mary Ellen

    2. Yes, count everything — round trip mileage to every appointment and medical event including overnight hotel stays, excluding meals, including prescriptions, co-pays, and all out of pocket deductibles.

    1. Kelsey,

      A spouse is never claimed as a dependent on a tax return. They are co-filers, and two exemptions are allowed if they are filing a joint tax return, even if one does not have income.

      Mary Ellen

    2. You would file as Married Filing Jointly and you both sign the return. Of course, there are many credits for which you may be eligible since you have a child or children. Your children are your dependents as are any other relatives who live with you, or for whom you provide more than 50% of their support.

  14. Hello, my question is over being a foster parent for a child for a little over 6 months. We received no goverment assistance from DCS. How can we claim him for those six months?

    Thanks

    1. Whitely,

      You cannot claim an unrelated individual unless they lived with you all year. If he stays with you all of 2014, you will be able to claim him then.

      Mary Ellen

  15. Roger I retired in April and am on medcare. My wife didn`t turn 65 until Dec. so I cobraed her from my employers hospitalization. Can I deduct the cost?

    1. Roger,

      If you paid for the premiums out of pocket, you can claim them as a medical expense, as well as claim your Medicare premiums.

      Mary Ellen

  16. I live in a state where same-sex marriage is not legal (Indiana), but we did get married (Vermont). My question is, we’ve got to file separately for state and jointly for federal, does TurboTax handle this situation?

    1. Tim,

      TurboTax will help you with this situation. You will actually prepare three tax returns, one joint for your federal taxes, then you will prepare two separate returns for Indiana, and not file the federal returns associated with those returns.

      Mary Ellen

      1. What? Filing a joint return for the federal and separate returns for the state. Didn’t think you could due that. I’m in Ohio, dues that matter?

  17. My husband had a heart attack this past year, and I have several thousand dollars worth of medical bills. Is this in any way deductible on my taxes?

    1. Sue,
      Any bills you have paid because insurance does not cover them are deductible as medical expenses.

      If you haven’t paid the bill, it will be deductible in the year you pay it.

      TurboTax has a section for medical expenses to help you claim the maximum deduction allowed.

      Mary Ellen

    2. Also included are prescriptions, co-pays and round-trip mileage to doctors’ offices and medical facilities. What is, unfortunately, not deductible is your monthly insurance premium which shows up on your pay stub as either a pre- or post-tax deduction.

  18. Hi,
    I’m permanent resident in USA and I’m married. But I married in my country. My wife and my son are outside of the U.S.A. Could I still claim them as my dependents? I applied for them as alien petitioner but it takes time to bring them here. And they don’t have SSN. please help with your opinions. Thank you.

  19. I was married in July but my new husband passed away in December . Do I file as single or what else do I need to do? We were both retired.
    Thank you for your help.

    1. Carol,

      I am sorry for your loss.

      You can file a joint tax return with your husband, or you can file as married filing separately. If you file separately, someone will also need to prepare a final tax return for your husband, also married filing separately.

      Mary Ellen

    2. Your filing status for Tax Year 2013 would be Married Filing Jointly, which is the most advantageous filing status. Married Filing Separately gives you absolutely no tax advantage, as your standard deduction is reduced and certain credits are not allowed per that status. Your filing status for Tax Year 2014 will be Single, or Head of Household if you have dependents.

  20. I have been supporting my sister for over a year and she finally got approved for social security disability. I have paid her mortgage, food, medications, etc. Can I claim her as a disabled dependent.

  21. I am retired,age 63,and we sold our house last year.We had to pay via certified check $3,000
    at time of settlement to break even.This amount is listed on settlement papers as cash provided
    by the seller.I itemize deductions,and want to know if I can and how to include this.Capital asset losses,such as the loss when selling a personal residence is not deductable.Is this the
    same as a loss,

    1. John,

      The $3,000 you paid to settle the sale of your house is added to the purchase price of your house to determine if you have a gain or loss on the sale. You can make a profit of up to $250,000 ($500,000 if married filing a joint return) without having to pay any tax.

      As you said, there is no deduction for the loss on the sale of a personal residence.

      Mary Ellen

  22. My husband and I have been living apart for over 12 months but we are not legally divorced. Can I file head of household with my daughter. He is providing no support

    1. Teresa,

      As long as you were living apart for the last six months of the year, and you provided more than half the cost of your daughter’s home, you can file as head of household.

      Mary Ellen

    1. Melissa,

      You can file your 2013 tax return before you file your 2012 return, but you should prepare your 2012 return as soon as you possibly can. If you have a refund coming, you don’t want the IRS sitting on your return, and if you owe tax, you are accruing interest every day the tax is not paid.

      Mary Ellen

    2. You can, however if you are due a Refund the IRS will hold that Refund until such time as all previous Tax Years have been filed. When filing your 2013 taxes, you are eligible to file original tax returns or refile amendments for Tax Years 2010 through 2012.

    1. Here are some benefits:

      1.Lifetime Learning Credit

      Table 3-1. Overview of the Lifetime Learning Credit
      Maximum credit Up to $2,000 credit per return
      Limit on modified adjusted gross income (MAGI) $127,000 if married filling jointly;
      $63,000 if single, head of household, or qualifying widow(er)
      Refundable or nonrefundable Nonrefundable—credit limited to the amount of tax you must pay on your taxable income
      Number of years of postsecondary education Available for all years of postsecondary education and for courses to acquire or improve job skills
      Number of tax years credit available Available for an unlimited number of years
      Type of program required Student does not need to be pursuing a program leading to a degree or other recognized education credential
      Number of courses Available for one or more courses
      Felony drug conviction Felony drug convictions do not make the student ineligible
      Qualified expenses Tuition and fees required for enrollment or attendance (including amounts required to be paid to the institution for course-related books, supplies, and equipment)
      Payments for academic periods Payments made in 2013 for academic periods beginning in 2013 or beginning in the first 3 months of 2014.

      2. Many Grandparents are parenting their grandchildren, which are qualifying children. Earned Income Credit allowed until age 65.

      Here are the 2013 tax year income limits, maximum EITC amount and the EITC-related tax law changes for the 2013 Tax Year

      Earned Income and adjusted gross income (AGI) must each be less than:

      $46,227 ($51,567 married filing jointly) with three or more qualifying children
      $43,038 ($48,378 married filing jointly) with two qualifying children
      $37,870 ($43,210 married filing jointly) with one qualifying child
      $14,340 ($19,680 married filing jointly) with no qualifying children

      Tax Year 2013 maximum credit:

      $6,044 with three or more qualifying children
      $5,372 with two qualifying children
      $3,250 with one qualifying child
      $487 with no qualifying children

      Investment income must be $3,300 or less for the year.

      For more information on whether a child qualifies you for the EITC, see Qualifying Child Rules or Publication 596, Rules if You Have a Qualifying Child.

      The American Tax Relief Act of 2012 extends the relief for married taxpayers, the expanded credit for taxpayers with three or more qualifying children, and other provisions to December 31, 2017.

      3. You may want to consult with a retirement planner for issues such a placing large investments (such as your home, rental property and businesses) in Trust in order to avoid losing money to estate taxes of property transferrence through inheritance.

      4. Retirement Catch-up
      Should you decide to return to work, and have not contributed much to your retirement after age 50 you are allowed to “catch-up” on retirement contributions, thereby increasing the annual limit.

  23. I am 61, sold my home of 40 years to pay off dept avoiding bankruptcy. I had enough left to buy a fixer upper forever home, paid cash, and exhausted all funds on replacing furnace/plumbing/electric/ watertank….. Totally broke now in 2014. How or what do I file this year?(form)….do I even file? I have no job either…….getting food stamps. can’t find work.
    It all went so fast,…..

    1. Sandra,

      You will receive a 1099 from the sale of your house. If you are single and you sold the house for less than $250,000 profit (more than you purchased the house for), you will not have to pay tax. If you are married you get $500,000 tax free. You can use TurboTax to prepare your tax return. We will ask all about the sale of your home and report everything properly.

      Mary Ellen

  24. I have always filed my sons taxes for him. All of 2013 he has been in a Fed. Prison Camp and will be for the next year also. Do I still need to file taxes for him? Also, he has a balance left to pay from 2012. Should I notify the IRS?

    1. Christy,
      If your son’s income is less than $10,000, he does not have a filing requirement.

      If he receives a bill from the IRS regarding his tax bill, he should respond to let them know his current situation and when he should be able to start making payments again.

      Mary Ellen

      1. Will I be able to talk to them on his behalf? He is unable to communicate with them while he is in prison.

  25. I have’t worked this last yr do to taking care of my elderly grandmother (passed on dec. 2013). My son (5yrs old) aunt has keep him and helped me provided for him at least 1/2 of 2013. Can I let he claim him since I haven’t made any income to claim to file taxes on this year? If so, that steps do I need to take to make it legal for her?

    1. She can claim him on the basis if he has lived with her more than 6 months out of the year. Anyone can claim a child once they have the child’s information. However a child cannot be claimed on more than one persons tax returns.

    2. Christy,
      You should sign Form 8332 to allow your sister (in-law?) to claim your son. Sign the section that allows her to claim him for one year, and not all future years. You can sign anther form next year if you need to.

      Mary Ellen

    1. If you can be claimed as a dependent by anyone, you would file as Married Filing Jointly for Federal Withholding purposes (if you are, say, 24 years old or younger AND a full-time college student). Otherwise, Married Filing Jointly is that tax filing status that will always support the majority of allowable credits. Married Filing Separately should only be used in extreme cases, since several credits are excluded. Additionally, the MFS standard deduction is much lower than MFJ.

  26. I don’t own a business, but I work from home about half the time. I’ve been told by others in my situation that you can deduct a certain expenses, such as out-of-pocket office supplies and a portion of your electric and heating bills. Is this true? Can these be deducted using a standard 1040, or do I need a form for business owners?

    1. Matt,

      To deduct home office expenses as an employee, you must be required to work from home by your employer. If you are required to work from home, then you must meet the other home office expense requirements, such as the area you use for work is only used for work, and not for personal bill paying, or kids homework, and the like. TurboTax covers this in Deductions, look for Home Office expenses.

      Out of pocket expenses for supplies are deductible. Use form 2106, Employee business expense to calculate the deduction. TurboTax includes this form in their deductions section. Look for Employee Business expense.

      Mary Ellen

    1. Using a Schedule C you will add your personal car, and any other business tools: computer, etc. unless you made less than $600 in which case your buisness may be considered a hobby and it would be entered as hobby income on Schedule A.

    1. You may be able to request a reprint of your last pay stub from your company’s HR or payables department. By law, W2s must be out by the end of January.

  27. My daughter completed her 1st semester in college before the end of 2013. Are the tuition costs deductible on my taxes?

      1. Thank you. I went to college but I never got a chance to ask my parents before they passed.

    1. Tuition, books purchased on-campus, round-trip mileage, lab fees, parking expense, registration fees, as well as all school related materials are deductible.

  28. I live in Canada and am a permanent resident there, but have retained US citizenship. I am retired and have no Canadian income. I file my taxes in the US on my US pension income. My spouse files taxes in Canada on his Canadian income. There would not be any benefit for us to file jointly, am I right? Is it even possible to file jointly in two countries?

    1. Arlyn,

      Even though your husband is not a US citizen, you must file as Married filing Jointly, or Married filing Separately. If you file jointly, you will need to include his income as well as your own. If you receive social security income, you may receive a reduction in the amount you must claim in your income.

      If you file separately, you only need to claim your income, but you will need to claim all of your social security income. There are other deductions and credits you may not qualify for.

      You can use TurboTax to determine which filing status will give you the best tax result.

      Mary Ellen

  29. My sister is disabled and moved in with Jan 2013. She receives a disability check to me for her. Can I claim her as a dependant?

    1. Kimberly,

      If your sister’s disability income is taxable (she will receive some kind of 1099 or W-2), then it must be under the personal exemption amount for the year, $3,900 for 2013.

      If her disability is not taxable, and she does not provide for more than half of her support, and she meets the other requirements for being a dependent, you can claim her as a dependent.

      TurboTax will ask you about you potential dependents and determine if someone qualifies as a dependent.

      Mary Ellen

    2. Remember to have a doctor’s note verifying her disability as paperwork back-up. If you provide more than 50% of her support, you can claim her as a dependent. She already meets the relationship test by being your sister.

  30. I am enrolled in a federal loan repayment plan based on my income. I recently got married. If we file jointly, will it effect my repayment plan?

  31. My husband passed away 1/18/13 and when I filed my taxes last year I was able to file still as married filing joint as he was alive all of 2012. How should I file this year since he has passed? I was told you could still file for the first 2 years after they pass as married filing joint, and then you would have to change. What would it change to then?

    1. Hi Carmella,

      I am sorry for your loss.

      Even though your husband passed away in January of 2013, as long as you did not remarry in 2013, you can file a joint tax return with him for 2013.

      For 2014, if you have dependent children, you can file as a Qualifying Widow (which gives you the tax breaks of a married couple). If you do not have dependent children, you will file as single.

      Mary Ellen

    2. You would file as Married Filing Jointly for Tax Year 2013. If you have children, then you would file as a Widower for Tax Years 2014 and 2015. Widower receives the same standard deduction as Married Filing Jointly.

      More info:
      Taxpayers whose spouse has died may be eligible for a special filing status.

      In the year that the spouse died, the surviving spouse may choose to file either jointly with his or her deceased spouse or file a separate return. In the two subsequent years, the surviving spouse may be able to use the Qualifying Widow/Widower With Dependent Child filing status.

      The Qualifying Widow/Widower with Dependent Child filing status is available for taxpayers whose spouse has died in either of the two preceding tax years and who are maintaining a household for a son or daughter.

      The criteria for being eligible for this filing status:

      The taxpayer was eligible to file a joint return with his or her spouse for the year during which the spouse died, whether or not a joint return was filed.
      The taxpayer’s spouse died during either of the two immediately preceding tax years.
      The taxpayer has not remarried during the tax year.
      The taxpayer maintains a home for at least one dependent who is a son, daughter, stepson or stepdaughter, whether related by blood or adoption. This dependent resides with the taxpayer for the entire tax year except for temporary absences.

      Two Year Rule for Qualifying Widow/Widower Status
      A surviving spouse may be eligible for the Qualifying Widow/Widower status for the two years following the year in which his or her spouse died. For the tax year 2012, for example, the surviving spouse may be eligible if his or her spouse died in either 2011 or 2010. After two years, the surviving spouse would not longer be eligible as Qualifying Widow/Widower, and would need to choose another filing status.

      Types of Dependents that Qualify a Taxpayer for Qualifying Widow/Widower Status
      The surviving spouse must be eligible to claim his or her son or daughter or stepson or stepdaughter as a dependent. This is true whether the child is related by blood or adoption. However, foster children are not included in the definition, nor are other types of dependents included in this definition. That doesn’t mean a surviving spouse cannot claim these other types of dependents. What we’re looking at is whether a taxpayer is eligible for the Qualifying Widow/Widower filing status.

      Maintaining a Home for a Dependent Child
      To be eligible for the Qualifying Widow/Widower filing status, the taxpayer needs to maintain a home for a son or daughter or stepson or stepdaughter. Maintaining a home means that the taxpayer furnished over half the cost of keeping up the home. Costs of keeping up a home include rent or mortgage payments, property taxes, utilities, and groceries.

      Further, the child would need to reside in the same household as the taxpayer for the entire year, except for temporary absences. Temporary absences such as illness, education, business, vacation, or military service will not disqualify a taxpayer for the Qualifying Widow/Widower status.

  32. Can me and my husband file together if he is collecting social security disability. he pays no taxes. I work and he gets a disability check.

    1. Hi Brinda,
      Yes, you and your husband may file a joint tax return, even if he does not have taxable income.

      Filing separately may cause his social security disability to be taxable based on the rules for calculating how much social security taxes to include in income. TurboTax handles these calculations for you.

      Mary Ellen

    2. Since you’re married, you may always file as Married Filing Jointly, and receive more credits than any other filing status.

  33. I just recently married. My husband and I are not living in the same household and he is unemployed at the time. What will be my filing status?

    1. Two options: married filing jointly which will give you more tax credits or second option is married filing separately in which you both will have to prepare your own separate taxes. Also, if he is unemployed and collecting unemployment he may have to pay taxes on unemployment wages unless he opted to have taxes already taken from the unemployment checks…

    2. Lisa,
      You can file as Married, filing Jointly; Married, filing Separately; or if either of you provide the home for a child or parent, you can file as Head of Household.

      You can choose the method that provides the greatest tax savings for the two of you.

      Mary Ellen

    3. Married Filing Jointly, unless you are separated and have children who live with you in which case you would file as Head of Household. You receive a higher standard deduction (which reduces your taxable income) with MFJ

    1. If your doctor registers your pet as a service animal (for emotional reasons), then all maintenance of your pet is deductible. Additionally, your pet can stay with you in any hotel or rental property by virtue of being said service animal.

  34. Hi, I got married to my husband in 2013. I learned that he has back child support for his now adult children. He gets his wages attached and every year he gets his tax return taken. Now that we are married any return we file together I’m afraid will be taken. Is that the case? And if it is, what other options do I have?

    Sincerely,
    Juliet

    1. I know from experience that you can fill out a form protecting your share of your refund. Just not sure of the form number, sorry.

      1. Yes, initially they will take the entire refund but once you fill out the form and send it to them, as long as you are not owing child support, the IRS, or an federal government agency, the will issue your portion of the refund.

    2. You would file as Married Filing Jointly, the file for Innocent Spouse Relief, as follows:

      Injured or Innocent Spouse Tax Relief

      IRS Tax Tip 2012-60, March 28, 2012

      You may be an injured spouse if you file a joint tax return and all or part of your portion of a refund was, or is expected to be, applied to your spouse’s legally enforceable past due financial obligations.

      Here are seven facts about claiming injured spouse relief:

      1. To be considered an injured spouse; you must have paid federal income tax or claimed a refundable tax credit, such as the Earned Income Credit or Additional Child Tax Credit on the joint return, and not be legally obligated to pay the past-due debt.

      2. Special rules apply in community property states. For more information about the factors used to determine whether you are subject to community property laws, see IRS Publication 555, Community Property.

      3. If you filed a joint return and you’re not responsible for the debt, but you are entitled to a portion of the refund, you may request your portion of the refund by filing Form 8379, Injured Spouse Allocation.

      4. You may file form 8379 along with your original tax return or your may file it by itself after you receive an IRS notice about the offset.

      5. You can file Form 8379 electronically. If you file a paper tax return you can include Form 8379 with your return, write “INJURED SPOUSE” at the top left of the Form 1040, 1040A or 1040EZ. IRS will process your allocation request before an offset occurs.

      6. If you are filing Form 8379 by itself, it must show both spouses’ Social Security numbers in the same order as they appeared on your income tax return. You, the “injured” spouse, must sign the form.

      7. Do not use Form 8379 if you are claiming innocent spouse relief. Instead, file Form 8857, Request for Innocent Spouse Relief. This relief from a joint liability applies only in certain limited circumstances. However, in 2011 the IRS eliminated the two-year time limit that applies to certain relief requests. IRS Publication 971, Innocent Spouse Relief, explains who may qualify, and how to request this relief.

      For complete information on Injured and Innocent Spouse Tax Relief, visit IRS.gov.

  35. My wife and I are both on Social Security. In April I turned 66 and in July my wife turned 65. We both have an annuity from teaching. Is there anything we can claim to reduce our Tax

    1. Ron,
      Some states, like Louisiana, allow teachers to exclude their retirement income from tax.
      The normal itemized deductions of medical, tax, mortgage or investment interest, and charitable contributions may provide a reduction in your tax. If you do volunteer work for a non-profit organization, the miles you drive and any out of pocket expense can be a deduction as well.

      Mary Ellen

    1. Adelaide,

      The out-of-pocket cost for needles, insulin, prescription drugs and test strips are all deductible medical expenses.

      Mary Ellen

      Mary Ellen

  36. Some states allow a deduction of funds deposited in 529 plans from state taxable income. Illinois $20,000.00 for married and. $10,000.00 single.

  37. I have asked this question before but no answer. I am in my fourth year of college I have claimed the American Opportunity Credit four times is there any
    Other credit I can claim??

    1. Hi Shawna,
      Yes you may be eligible for the Lifetime Learning Credit or the Tuition and Fees deduction, however 2013 is the last year you can claim the Tuition and Fees deduction as it expired on 12/31/2013. TurboTax figures out which credit or deduction gives you the biggest tax refund.
      Thank you,
      Lisa Greene-Lewis

    2. Not knowing much about your case, here is some additional info:

      The Lifetime Learning Credit is a tax credit for any person who takes college classes. It provides a tax credit of 20% of tuition expenses, with a maximum of $2,000 in tax credits on the first $10,000 of college tuition expenses. You can claim the Lifetime Learning Credit on your tax return if you, your spouse, or your dependents are enrolled at an eligible educational institution and you were responsible for paying college expenses. Unlike the American Opportunity credit, you need not be in the first four years of undergraduate classes. Even if you took only one class, you may take advantage of the Lifetime Learning Credit.

      Eligible Educational Institutions
      All accredited colleges and universities are eligible educational institutions. Additionally, vocational schools and other post-secondary institutions are also eligible. Basically, if the institution is eligible to participate in federal student aid programs through the US Department of Education, then you may use tuition paid to the school for claiming the Lifetime Learning tax credit.

      Qualifying Expenses
      Qualifying expenses include amounts paid for tuition and any required fees (such as registration and student body fees). Qualifying expenses do not include any of the following: books, supplies, equipment, room and board, insurance, student health fees, transportation, or living expenses.

      You must be responsible for paying the college tuition and fees. You also need reduce your qualifying expenses when figuring your tax credit by the amount of financial assistance received from grants, scholarships, or reimbursements from your employer. You do not need to reduce your qualifying expenses, however, if you paid for college tuition using borrowed funds, including student loans, or by using gifts from family members.

      Who Can Claim the Education Credits?
      If your son or daughter is going to college and you claim him or her as a dependent, then you can claim the education credits on your tax return. If your son or daughter is no longer a dependent, then he or she should claim any education credits on his or her own tax return. If you pay the college expenses for someone who is not your dependent, you cannot claim any the tax credit.

      Income Limitations on Lifetime Learning Credit
      The amount of the Lifetime Learning Credit is limited over a phase-out range. If your adjusted gross income is below the phase-out, your credits are not reduced. If your income is in the middle of the phase-out range, your credits will be reduced. If your income exceeds the phase-out range, you are not eligible to claim the Lifetime Learning tax credit.

      For the year 2014, the income phase-out ranges are:

      $54,000 to $64,000 : Single, Head of Household, or Qualifying Widow
      $108,000 to $128,000 : Married Filing Jointly

      For the year 2013, the income phase-out ranges are:

      $53,000 to $63,000 : Single, Head of Household, or Qualifying Widow
      $107,000 to $127,000 : Married Filing Jointly

      For the year 2012, the income phase-out ranges are:

      $52,000 to $62,000 : Single, Head of Household, or Qualifying Widow
      $104,000 to $124,000 : Married Filing Jointly

      Compare this with the income limitations on the tuition and fees tax deduction. For 2012, the full $4,000 deduction is allowed if you earn less than $65,000 (single, head of household, qualifying widow) or less than $130,000 (married filing jointly). The deduction is limited to $2,000 if your income is between $65,000 and $80,000 (unmarried taxpayers) or is between $130,000 and $160,000 (married filing jointly).

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