my parents still claim me as dependent
how do i go about paying my taxes if they do this? Before recently I wasn't working a lot or making a significant enough amount of money for this topic to even matter. Should I just not have them claim me next year? Or wait one year until I am out of college and they can't claim me anymore? I do not plan on buying anything big, I'm just saving my money. I don't want to get screwed by the irs so i am being very careful, but i think at least by 6 mos to a year i should start paying taxes on my $$ bc i will proably buy a house in 2 years or so.
Re: my parents still claim me as dependent
If you make more than a certain amount of money, then your parents cannot legally claim you. Also, if you want to buy a house, you will have to prove that all of the money you saved during the years you didn't file taxes could have been made in the years that you did claim taxes. You would also have to make sure that your club will not send out a 1099 for you. If they do, then your parents cannot claim you...and you will get busted by the IRS.
Re: my parents still claim me as dependent
I have the same situation. My mom told me "Im going to claim you for the next 3 years"..My eyes lit up w/ worry. Thanks VG those are some good tips on how to deal w/ this.
So when my mom goes to file her taxes she will automactically try to claim me. Maybe I can go back to the tax guy and "fix" my taxes separate from hers? You see of course Im not trying to tell her I dance. Im really trying to avoid it all costs....I was thinking of telling her I do free lance make up artist work for model shoots?? I hope that works lol
Re: my parents still claim me as dependent
Well actually, you will have to go and do your taxes before your mom. That way, when she goes to file, and they enter your social, they will say, "nope sorry this person has already claimed theirself"
I don't see why you all just dont tell your moms that you want to claim yourselves? Are you still living at home, is she taking care of you? Or do you have ur own place, car, or if you do live home, are you helping out with the bills?
When you file your own taxes, you are letting the govt know, Hey, I'm grown now, I got this lol...
Re: my parents still claim me as dependent
Quote:
Originally Posted by VenusGoddess
If you make more than a certain amount of money, then your parents cannot legally claim you. Also, if you want to buy a house, you will have to prove that all of the money you saved during the years you didn't file taxes could have been made in the years that you did claim taxes. You would also have to make sure that your club will not send out a 1099 for you. If they do, then your parents cannot claim you...and you will get busted by the IRS.
Sorry...wanted to add something. If you saved, say, $50,000 over the few years of working and not paying taxes...you are going to have to *somehow* claim making the money that you made *plus* the $50,000. It's going to put you into a much higher tax bracket and you will have to pay more taxes to cover your butt.
It's just so much easier to pay taxes when they're due and not worry about being audited. :shrug:
I'd really consider going to an accountant who specializes in this so you can get those taxes filed and whatnot.
It's one thing not to tell your parents that you are a dancer...but it's a whole other ball game to let them claim you, try to squeeze by without paying...and then get ALL of you in trouble if you ever get audited.
Re: my parents still claim me as dependent
There are even more ramifications to this situation if you are a student. Grant and loan eligibility are based on 'family' financial data. If you are 'emancipated' i.e. living on your own and earning your own money and filing your own tax return reporting significant income, then your grant and loan eligibility may be better than if you keep your earnings low enough to still qualify as a 'dependent' on your parents return, but must then count your parents' income on the grant applications.
And the ability to be claimed as a dependent on someone else's tax return is not altogether a free choice. The basic question is which person provides for more than 1/2 of the supposed dependent's financial support. If you as a dancer are earning $20-30k a year, then for your parents to pass the 50% test they must be earning enough money that they can still give you MORE than $20-30k a year AFTER they pay their own bills i.e. mortgage payments car payments and basic cost of living. If your parents attempt to claim you as a dependent, and you also report significant earnings on your own tax return, even if you don't attempt to claim yourself this may still prompt an audit of both you and your parents.
Basically, if you are earning anything above the $20k-$30k a year mark as a dancer, you will personally be much better off financially speaking if you declare yourself 'emancipated'. However, this will require that your parents pay a couple of extra thousand dollars in income tax on their own tax return by being unable to claim you as a dependent.
PLUS the IRS has a new reporting rule in force this year. All college tuition payments must be automatically reported to the IRS by the college as well as reported to the person who made the tuition payments. Thus if you are being claimed as a dependent on your parents' tax return, the automatic report is going to show that your parents paid $14,000 or whatever in tuition last year. If however, you paid your tuition out of unreported dancing earnings, your parents are at risk of IRS computers looking at your parents' tax return and saying 'hmmm, reported income $60,000, after tax income $45,000, mortgage payments $12,000, car payments probably $6,000, cost of living $20,000, means there is not enough reported income left over to afford making a $14,000 tuition payment besides".
Re: my parents still claim me as dependent
Great point VG and Melonie. I can see the ramifications if I take certain actions.
CK...I think Im going to try to post the idea of telling my mom I want to file my own taxes this year so that no one gets in trouble. If she doesnt like the idea then I might have to try a different route.......
Re: my parents still claim me as dependent
Quote:
If she doesnt like the idea then I might have to try a different route.......
Well, the only way that your mother is actually safe in claiming you as a dependent is if you agree to only earn 1/3rd as much as she does, or less, in 2005. If you do report earnings of 1/2 as much or more than your mother reports, then no matter what she chooses to do with her tax return, and no matter what you agree to do in terms of your own tax filing status, the IRS may have other plans when they audit both of you.
Re: my parents still claim me as dependent
thanks everyone
melonie you are the best!
my mom makes enough to pay my school and pay all that, and she cosigned for my apt, bc i have no reported income, so i wont get caught with that. I'm playing it very safe until I figure out exactly how to go about doing what i have to do and how to tell my mom. Is it that i have to make less than 1/3 of my parents COMBINED income? cause i could claim that and be semi close to what i earn since they are earning a lot now.
Re: my parents still claim me as dependent
Candygrrl,
It is straight arithmetic. Make a sheet with two columns
Mom me
tuition income
+other cash + any scholarships
contributions
+in kind (like living
at home part year)
Cosigning means squat to the IRS unless mom pays the rent.
If Mom is smaller than your income she can't claim you. Flat out. If you do not pay taxes on your income, you get penealties and interest if you get caught. Mom gets penalties and interest and put in the list of people who get audited all the time. Technically even jail (very remote possibility).
The bank is going to want 2 years income tax returns and want to make sure the IRS is not going to put a lein on your house. they are going to want to make sure your downpayment came from you an is not a secret loan from mom which could interfere with your ability to pay them.