"Students are exempt" from filing taxes, right? Wrong. That is a common myth and a trap that many people fall into. Students, regardless of whether they are in college or high school full or part time, do need to file taxes if they have earned income. The student will need to file a tax return and report all of the income they've earned during the course of the year. Also, when it comes to students' filing taxes, keep in mind that even if they file their own return you can still claim them as a dependent on your tax return. The myth that you cannot claim your student if he or she files his or her own return is just that, a myth. As long as you provided more than 50% of that students support, you are still allowed to claim them on your taxes as a dependent.
Don't fall into the myth that if you're 55-years-old or older that you can sell your primary residence and reap the rewards of the sale tax free. Many years ago, this was the case, but not any more. Many years ago, the 55-year-old home seller was able to exclude up to $125,000 in profits realized as a one-time deduction on a home sale. The home had to be your primary residence to qualify. The age exemption no longer factors into being allowed this exemption.
The, I'm married so I have to file a joint tax return myth simply isn't true either. While the tax benefits may be more favorable to file as married filing joint than to choose another status, it is not a requirement. If, for example, a spouse has a high level of medical expenses, it may be more advantageous to file separately because of the medical expense exclusion amount. As a married filing separate return, the individual with the medical expenses - if he or she has a lower income - could reap the benefits of this filing status.
Qualifying for the first time home buyer credit means you can never have owned a home before, right? This is yet another myth. Individuals who purchased homes through September 2010 were eligible to apply for a first-time home buyer credit of up to $8,000. To qualify, you had have no ownership interest in a principal residence for three years prior to closing on a newly purchased home. There is an additional way to qualify for a first time home buyer credit was to have owned and lived in a home as your primary residence for five years, Then, when you purchased a new home, you could have been eligible to apply for a credit of up to $6,500.
Tax filing is a complicated undertaking and when you think of the myths that abound, they become even more confusing. Talk to a tax professional about tax filing and tax resolution before you fall into the tax filing myths.
Don't fall into the myth that if you're 55-years-old or older that you can sell your primary residence and reap the rewards of the sale tax free. Many years ago, this was the case, but not any more. Many years ago, the 55-year-old home seller was able to exclude up to $125,000 in profits realized as a one-time deduction on a home sale. The home had to be your primary residence to qualify. The age exemption no longer factors into being allowed this exemption.
The, I'm married so I have to file a joint tax return myth simply isn't true either. While the tax benefits may be more favorable to file as married filing joint than to choose another status, it is not a requirement. If, for example, a spouse has a high level of medical expenses, it may be more advantageous to file separately because of the medical expense exclusion amount. As a married filing separate return, the individual with the medical expenses - if he or she has a lower income - could reap the benefits of this filing status.
Qualifying for the first time home buyer credit means you can never have owned a home before, right? This is yet another myth. Individuals who purchased homes through September 2010 were eligible to apply for a first-time home buyer credit of up to $8,000. To qualify, you had have no ownership interest in a principal residence for three years prior to closing on a newly purchased home. There is an additional way to qualify for a first time home buyer credit was to have owned and lived in a home as your primary residence for five years, Then, when you purchased a new home, you could have been eligible to apply for a credit of up to $6,500.
Tax filing is a complicated undertaking and when you think of the myths that abound, they become even more confusing. Talk to a tax professional about tax filing and tax resolution before you fall into the tax filing myths.
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