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From dependent credit to filing jointly, WalletPop experts take on your questions

tax helpThe tax code is over 18,000 pages long. And it's so complex that even Wall Street wizs like Treasury Secretary Tim Geithner make mistakes on their tax returns. WalletPop's experts are on hand to help answer your questions and correct mistakes before it's time to file.

I have been filing single with one dependent. I make less than $17,000 a year. My daughter is single, 19 years old and graduated high school May of 2009. She has worked and probably made less than $10,000 last year. I really need to claim her on my taxes if I can. She lived with me for over six months last year. I am getting conflicting advice. Some say that I can claim her all year and she can claim zero on her taxes. Some say that I can only claim her for six months, but I am not sure how that works -- how does she claim herself on her taxes?
--Elizabeth Weber, 43, Marana, AZ

Answer from Ralph Hymans, CPA based in Charleston, SC
With the facts presented, you should file your return as the head of household with one dependent. Your daughter must file her own return as a single because of her income in 2009, and she cannot take an individual deduction for herself.

You are allowed to do this because she is a dependent; your daughter is under the age of 19. Filing as head of household gives you your greatest tax benefit. The fact that your daughter lived with you for less than 12 months in 2009 is not relevant to the issue. The key issues are your daughter's status as single and her age of 19.


My husband and I filed Chapter 13 to save our home, and it was approved in August 2009. Our taxes now have to be submitted through our attorney's office. Once our Chapter 13 was approved, our attorney's assistant said we could no longer owe the IRS. Well, we always owe the IRS, and we usually get a small refund from the state. Because of what the assistant said, I am having anxiety, for our tax appointment is approaching. Will there be problems if we owe the IRS because we filed Chapter 13? Are we eligible for a payment plan to IRS to pay what's owed before 2010 ends?

--Cathy Lewis, 51, Lancaster, CA

Answer from Barbara Weltman of the J.K. Lasser Institute
Filing Chapter 13 in bankruptcy means you pay the debts you owe under a repayment plan over five or more years. If you owe back taxes, some may be dischargeable (forgiven in bankruptcy); others remain an outstanding debt to be repaid. Whether you can retain a tax refund owed to you depends on whether you have any outstanding tax bill and if you've filed all your tax returns on time. If you owe taxes and/or have not filed on time, your refund may be applied toward this debt or retained by the bankruptcy trustee for other purposes. You can learn about what happens to federal income taxes in bankruptcy in IRS Publication 908, Bankruptcy Tax Guide.

If you owe taxes, you may be able to work out an arrangement to pay less than the full amount owed. This is called an offer in compromise. Find more information about this from the IRS.

I just started a new job this year working road construction. The job is 18 months at this location then will move to another. Can I deduct my commute to and from this location?
--Lori Gower

Answer from Bob Meighan, CPA and vice president of TurboTax
This is a good question and one with some ambiguity. Nevertheless, I believe your commuting costs are not deductible.

The general rule for deducting commuting costs for temporary work locations is this: If you have one or more regular work locations away from your home and you commute to a temporary work location, you can deduct the expenses of the daily round-trip transportation between your home and the temporary location, regardless of distance. However, temporary is generally defined as employment that is realistically expected to last for one year or less. In your case, you have an expectation that it will last significantly longer than a year.

There are some rules for those who have no regular place of work, but the IRS again denies the costs of commuting when the employment at the remote location exceeds one year.

However, not all is lost. If your temporary work location is beyond the general area of your regular place of work and you stay overnight, you are traveling away from home. You may have deductible travel expenses.


I have always filed married filing jointly. This year, my wife started receiving Social Security. No taxes are taken out, so this puts me in a higher bracket. I usually pretty much break even but fear this may cause me to owe money. Could we file married filing separately, and if so, what are the pitfalls or do's and don'ts when filing this way?
--Thomas Price, Bunker Hill, West VA

Answer from Scott Testa, professor of business administration at Cabrini College in Philadelphia
In some cases, filing separate returns can reduce the combined taxes. However, in most cases, filing a joint return results in lower taxes, because the rate on the combined income will be lower than the individual rates when filing separately. In addition, some credits -- such as educational, earned income, and child care -- are not available unless you file jointly. The best approach is to try doing the tax returns jointly and separately to see which results in lower taxes. You also may have additional tax preparation expense for doing two versus one tax return.

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Cities with the Lowest Tax Rates

The total amount of tax you pay reaches far beyond what you owe the federal government. Depending on where you live, most likely you're required to pay additional taxes, including property and sales tax. The disparity between the amount of tax you pay in a low-tax city and that in a high-tax city can be dramatic. Living in any of these 10 cities could save you a bundle, although the exact amount may fluctuate based on your income and lifestyle choices.

Cities with the Highest Tax Rates

Much ado is made in the press about federal tax brackets, but cities can carry a tax bite of their own. Even if you live in a state that has no income tax, your city may levy a variety of taxes that could eat away the entire benefit of living in an income tax-free state, including property taxes, sales taxes and auto taxes. Consider all the costs before you move to one of these cities, and understand that rates may change based on your family's income level.

Great Ways to Get Charitable Tax Deductions

Generally, when you give money to a charity, you can use the amount of that donation as a deduction on your tax return. However, not all charities qualify as tax-deductible organizations. While there are many types of charities, they must all meet certain criteria to be classified by the IRS as tax-deductible organizations. There are legitimate tax-deductible organizations in many popular categories, such as those listed below.

A Freelancer's Guide to Taxes

Freelancing certainly has its benefits, but it can result in a few complications come tax time. The Internal Revenue Service considers freelancers to be self-employed, so if you earn income as a freelancer you must file your taxes as a business owner. While you can take additional deductions if you are self-employed, you'll also face additional taxes in the form of the self-employment tax. Here are things to consider as a freelancer when filing your taxes.

Tax Deductions for Voluntary Interest Payments on Student Loans

Most taxpayers who pay interest on student loans can take a tax deduction for the expense ? and you can do this regardless of whether you itemize tax deductions on your return. The rules for claiming the deduction are the same whether the interest payments were required or voluntary.

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August 12 2011 at 10:24 AM Report abuse rate up rate down Reply