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Thursday, March 29, 2012

Whacky Liberal or Perfectly Reasonable Person??

By JC Leahy

What do you think about this?   I had lunch yesterday with a Liberal woman who FIRMLY believes that George Bush arranged the 9/11 World Trade Center attacks. Her names is W.  I asked W why she believes that Bush planned the WTC attacks. She exclaimed emphatically that (1) "George Bush used to work for the CIA", (2) "It's all about the oil, Honey", and (3) "After all, what do 3,000 lives matter in the 'Big Picture'".  To her, this trio of assertions, if repeated with enough energy and conviction, constitutes airtight proof that George Bush arranged the World Trade Center attacks.  Do you think many people share this kind of belief system??  Your comment please.

PS -- No, I did NOT make up W.  She also believes that George Bush is responsible for nearly everything  blamed on President Obama, that Obamacare is good for America, that anyone who disagrees with Obama is  racist, and that the Black Panther Party shall rise again!!!  W makes a fascinating lunch date!!

Thursday, March 8, 2012

Abandoned Spouse Rule: Filing Your Federal Income Tax with Filing Status Head of Household

By JC Leahy,  MA, Accounting
Twitter@TaxHelpWhenNeed



Income Tax Question from Virginia:
Although I’m still married, can I file my Form 1040 Federal income tax return as Head of Household rather than Married Jointly or Married Separately? Robert's income still comes in to help provide for us, even though we've been separated for over a year and the kids live exclusively with me.  We have not drawn up any formal separation papers, but that didn't seem necessary for the status.  Me and my two daughters are going to be in college next year (me and Anna are currently)  We filled out the FAFSA stating that Robert and I are separated and I believe that if I file the taxes as "married filing jointly" again this year it may affect the help we get with tuition (which we definitely need!). 

Answer from JC Leahy:
Yes, Virginia,  you can file your Federal income tax return with the filing status Head of Household if you are considered what they call an "abandoned spouse".  To be an "abandoned spouse" you need to meet these requirements:

1. You file a separate return
2. You must maintain a home where the child for whom you may CLAIM AS DEPENDENCY DEDUCTION lives for more than half of the year
3. You must pay more than half the cost of maintaining that home, and
4. During the lat 6 months of the year, your spouse must not live in the same house as you.

To claim the dependency, in turn, you must pay MORE THAN HALF THE COST of maintaining the child OR have an agreement approved by a divorce court that says you get the dependency exemption.

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Sunday, March 4, 2012

What Educational Expenses Qualify for Federal Educational Tax Credits?

 By JC Leahy,  MA, Accounting
Twitter@TaxHelpWhenNeed

There are 2 educational Federal tax credits currently available: They are the American Opportunities Credit and the Lifetime Learning Credit.  The Hope Credit, which was established along with the Lifetime Learning Credit in 1997, has morphed into the American Opportunities Credit for tax years from 2009 through 2012.  So, currently there are two educational credits.

Both educational credits are based on what they call "qualified educational expenses."  The tricky thing is that different educational expenses "qualify" depending on which credit you choose.

The American Opportunity Credit  is a maximum of $2,500 per student.  Qualified expenses only include the first four years of post-high school study in a program of study leading to a college degree -- NOT graduate study or any other study beyond 4 years of college study.  Tuition is a qualified education expense, of course. Additionally,   books, supplies and equipment are also qualified expenses if the student needs them for his particular course of study.   Room, board, insurance, medical fees, transportation, and non-academic fees are not qualified expenses for the American Opportunity Credit.

The Lifetime Learning Credit is up to $2,000 per return.  Graduate and postgraduate studies qualify, as well as vocational study expenses Obviously, tuition is a qualified expense.  Books, supplies and equipment are NOT qualified expenses unless the student had to purchase them directly from the college as a condition for enrollment or attendance.  Room, board, insurance, medical fees, transportation, and non-academic fees are not qualified expenses for the Lifetime Learning Credit.