The tax deadline is almost here, and with the tax deadline comes a wide range of tax questions from filers. These questions range from those asked routinely “can I claim my boyfriend/girlfriend as a dependent?” to those specific to disaster relief and tax reform. To help make the tax filing process as easy as possible, TurboTax has answered the most commonly asked tax questions for this tax season.
Who can I claim as a dependent?
Your significant other is probably many things to you—but is he or she also a tax deduction? The question of who you can claim as a dependent has confused taxpayers for years.
The short answer: You can claim a “qualifying child” or “qualifying relative” if they meet specific requirements related to residence, relationship to you, age, financial support provided and income. So, yes, you may be able to claim a girlfriend, boyfriend, domestic partner or friend as a qualifying relative in some cases. Claiming dependents can also make you eligible for other tax benefits like the New Other Dependent Credit and the Earned Income Tax Credit (EITC).
You may be able to take New Other Dependent Credit worth $500 if:
- You are providing support for a non-child dependent like another family member, boyfriend, girlfriend, domestic partner, or friend. You can also claim this credit for your kids 17 and over since you cannot claim the Child Tax Credit once they turn 17.
- They are a member of your household the entire year if they are a non-relative (relatives don’t need to live with you).
- The relationship between you and the dependent girlfriend/boyfriend does not violate the law, for example, you cannot still be married to someone else. (Also, check regarding your individual state law, as some states do not allow you to claim a boyfriend or girlfriend as a dependent even if your relationship doesn’t violate the law).
- You meet all the other criteria for “qualifying relatives” (gross income and support).
What is the Earned Income Tax Credit and How Do I Claim it?
The Earned Income Tax Credit is a tax credit for low to middle income wage earners that has lifted millions of people out of poverty, however many people still miss it. Why do so many people miss it? Many think they don’t make enough to file their taxes so they don’t claim it or their income changed but they are not aware that they can qualify. You have to file your taxes to get this valuable tax credit, which may help a family with three children who qualify receive a credit worth up to $6,431. Families without children may qualify for a credit up to $519.
Does health care reform still impact my taxes?
With tax reform enacted at the end of 2017 there have been questions around the requirements to have health care coverage. Changes to health care as a result of the new tax law do not begin until 2019. Beginning in 2019 taxpayers will no longer be required to pay a tax penalty for not having health insurance. Individuals with income over the federal poverty level are still required to have 2018 health care coverage or they may be subject to a tax penalty when they file their 2018 taxes. All of the exemptions (based on income, religious beliefs, and citizenship) are still in place.
Are unemployment benefits taxable?
Although unemployment income is taxable on the Federal level some states do not consider it as taxable income.
Can I deduct the cost of searching for a job? Are moving expenses for my new job tax deductible?
Unfortunately, for tax years 2018 through 2025, the tax deduction for job search expenses was eliminated along with all miscellaneous itemized tax deductions under the new tax law. The tax deduction for moving expenses for non-military taxpayers was also eliminated. In order to deduct certain moving expenses, you must be an active member of the military and moving due to a permanent change of duty station
What are the tax implications of withdrawing money early from a retirement account to pay bills or debt?
In difficult economic times, many people start eyeing their retirement accounts to pay off bills or debt. While it is your money, you may be unaware of the impacts of withdrawing from your nest egg. Withdrawing money early from a retirement account comes with a 10 percent tax penalty if you withdraw your money before 59-1/2 in addition to the regular income tax on the amount withdrawn. There can be other consequences, too. The retirement money may also bump you into a higher tax bracket, which can result in the taxation of other income, such as social security, that you may have not been taxed on otherwise.
In addition, there are tax breaks for victims of natural disasters who have withdrawn from retirement accounts. See below.
What are qualified education expenses?
College tuition skyrockets every year, but the U.S. government provides incentives with education credits and deductions. For example, the American Opportunity Tax Credit, benefits full-time and part-time college students in their first four years of college with a maximum $2,500 credit per student, provided you meet modified adjusted gross income requirements.
I started my own business; can I deduct my home office expenses?
Many entrepreneurs are reluctant to write off the business use of their home for fear of being audited. But home office expenses are legitimate tax deductions you shouldn’t miss out on. Keep in mind the space you claim as a home office should be used exclusively and regularly for that purpose. Don’t forget to include the square footage of your home office used for product storage or inventory.
I was impacted by a natural disaster in 2018. What tax breaks are available to me?
Prior to the new tax law, you were able to deduct most losses for uninsured casualty, disaster and theft losses. Under the new tax law, tax deductions for casualty and theft losses have changed for tax years 2018 through 2025. If you suffered a casualty or theft loss as a result of an unusual event like a flood, fire or some other unforeseen event, you can deduct the loss if the casualty is within a federally declared disaster area or the theft occurred as a result of a federally declared disaster.
In 2018, if you were a victim of either Hurricane Michael, California Wildfires (i.e. The Camp Fire) or other listed natural disaster, there are special rules allowing access to retirement funds, temporary suspension of limits on deductions for charitable contributions, allowance of tax deductions for personal casualty disaster losses, and special rules for measurement of earned income to help you qualify for the Earned Income Tax Credit.
Victims of the more recent California Wildfires beginning on November 8th are granted extended tax deadlines. This includes the 2018 individual income tax filing deadline and payments which would have been due on April 15, 2019, but have now been extended to April 30, 2019, for qualified individuals. If you were a victim of the recent California Wildfires and pay quarterly estimated income tax payments due on Jan. 15, 2019 and April 15, 2019, you will also receive an extension to pay until April 30, 2019.
What if I still have questions?
Don’t worry about knowing these tax laws. TurboTax has you covered and will ask simple questions and give you the tax deductions and credits you’re eligible for based on your entries. If you still have questions, you can connect live via one-way video to a TurboTax Live CPA or Enrolled Agent and get your tax questions answered. A TurboTax Live CPA or Enrolled Agent can also review, sign, and file your tax return.