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Good News for Students!
With the rising cost of tuition, students may need all the breaks they can get. Here are some tax breaks that may help.
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Everyday Tax Solutions
Having problems getting a tax matter resolved?
Don?t wait on a Problem Solving Day.
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Where's My Refund?
Get the lowdown on your refund now. Secure access anytime from anywhere. What a deal!
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| Frequently Asked Questions | |
- How to Search and find Electronic Filing Providers in your Area?
Go to the following website:
www.irs.gov/taxpros/providers
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- How long does it take after you've filed to receive a refund?
You can have a refund check mailed to you, or you
can have your refund deposited directly to your
checking or savings account. In general, a refund
check should be issued within 6 to 8 weeks of
filing a paper return. If you have elected on
your paper return to receive a direct deposit,
the refund should take a week less time to issue.
With e-file, your refund will be issued in half
the time as when filing on paper (even faster if
you choose direct deposit). Most refunds are
issued within 3 weeks. In many cases, you can
receive your refund in about 14 days,
particularly if you choose direct deposit.
If you do not get your refund within 4 weeks
after filing your return, you can call TeleTax at
800-829-4477 24 hours a day to check on your
refund status. In some cases, TeleTax may not
have refund information until 6 weeks after you
file.
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- How long does it take to get a refund back by direct deposit?
In general, a refund check should be issued within 6 to 8 weeks of filing a paper return. If you have elected on your paper return to receive a direct deposit, the refund should take a week less time to issue.
With e-file, your refund will be issued in half the time as when filing on paper (even faster if you choose direct deposit). Most refunds are issued within 3 weeks. In many cases, you can receive your refund in about 14 days, particularly if you choose direct deposit.
If you do not get your refund within 4 weeks after filing your return, you can call TeleTax at 800-829-4477 24 hours a day to check on your refund status. In some cases, TeleTax may not have refund information until 6 weeks after you file.
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- Can you direct deposit your refund into someone else's bank account if you do not have a bank account?
No. The account has to be in your name.
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- Will I be notified when my direct deposit is made or will I have to check with my bank to find out?
You will need to contact your bank to determine when the deposit was made. The deposit will be recorded in your bank statements. However, if you use an automated system to check on your bank account balance, you will know that your refund has been deposited when your balance has increased by the amount of your expected refund.
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- I check on my refund status via Internet?
Yes! There is now a way you can check on your refund. Go to "Where's my refund?" to begin this process.
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- How can I check on the status of my refund?
Refund information does not become available until it has been 6 weeks since you filed your tax return (3 weeks if you filed electronically or through TeleFile). After waiting the appropriate number of weeks, one of the fastest ways to find out about your current year refund is to call the Automated Refund Service at 800-829-4477. Be sure to have a copy of your return available since you will need to know the first social security number shown on your return, the filing status, and the exact whole dollar amount of your refund. The IRS updates refund information every seven days. Refer to Tax Topic 152, Refunds - How Long They Should Take, for additional information.
A new method of checking on your refund is by the Internet. Once you are on IRS Internet Server, go to "Where's my refund?" for additional information.
References:
Tax Topic 152, Refunds - How Long They Should Take
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- I still owe taxes from a previous year and am getting a refund this year. I would like to apply this refund to the taxes I owe. How do I go about doing this?
You may not get all of your refund if you owe certain past-due amounts, such as federal tax, state tax, a student loan, or child support. Your refund will automatically be applied to any outstanding balances.
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- Can my refund be used to pay other debts?
Under the law, state and Federal agencies refer to the IRS the names of taxpayers who are behind in their support payments, taxes, and loans. Your tax refund may not be refunded to you if you are delinquent in child support payments, have a past due Federal debt (such as a student loan), or owe state income taxes. Therefore, your refund may be used to pay other debts you owe. For additional information, refer to Tax Topic 203, Failure to Pay Child Support and Other Federal Obligations.
References:
Tax Topic 203, Failure to Pay Child Support and Other Federal Obligations
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- Can a person receive a tax refund if they are currently in a payment plan for prior year's federal taxes?
You may not get all of your refund if you owe certain past-due amounts, such as federal tax, state tax, a student loan, or child support. The IRS will automatically apply the refund to the taxes owed. If the refund does not take care of the tax debt; you must continue the installment agreement.
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- If you are under a Chapter 13 bankruptcy plan and due a refund, do you still get it?
If you are in Chapter 13 bankruptcy, you should check with your bankruptcy trustee for the status of your refund.
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- I lost my refund check. How do I get another?
Call the IRS at 800-829-1040. If your refund check has not been cashed, we can normally provide a replacement within 6 to 8 weeks. If your refund check has been cashed, the IRS will provide procedures for you to verify the signature on the cancelled check before determining whether another can be issued.
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- Do you have to meet the tax filing deadline if you are getting a refund?
While you may file the original tax return at any time, the amount of any refund cannot be more than any tax paid within the 3-year period (plus any extension of time for filing your return) immediately before you filed the claim. (The time you file your claim may be based on the postmark date for this purpose.). Income tax withheld from wages and estimated income tax payments (made before the due date without regard to estensions of the original return) are consideredp paid on the due date.
If there is a subsequent adjustment to a late filed return that results in an underpayment of tax, you may be assessed a penalty for failure to file on time. The penalty is usually 5% for each month or part of a month that the return is late, but not more than 25%. An example of a subsequent adjustment that results in an underpayment of tax is an examination of your return with changes that increase your total tax owed.
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- I filed a joint return and am expecting a refund. What happens if one party forges the signature to get the refund?
You may request a copy of the front and back of the cancelled refund check that was issued in your name. You may also request a copy of the original tax return filed under your name. Call 800-829-1040 and follow the IRS representative's instructions for verifying the signature on your tax return or cancelled refund check.
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- Is it possible to find out if a federal tax refund check has ben cashed?
If you need to know whether a federal tax refund check that was issued to you has been cashed, you can call 800-829-1040 and request Form 3911 (PDF), Taxpayer Statement Regarding Refund.
If you are inquiring about a check that was issued to someone other than yourself, the IRS is not allowed under the Privacy Act of 1974 to disclose any information.
References:
Form 3911 (PDF), Taxpayer Statement Regarding Refund
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- Does IRS permit the U.S. Post Office to forward refund checks?
Yes, however many U.S. Post Offices choose not to forward refund checks. You should check with your local Post Office for their procedures.
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- If our tax refund is being taken for back child support my husband owes, how can I file to get back my portion of the refund?
When a joint return is filed and only one spouse owes past-due child support, the other spouse can be considered an injured spouse and may request his or her share of the joint refund. If this situation applies to you, file Form 8379 (PDF), Injured Spouse Claim and Allocation, to recover your share of the joint refund.
You are considered an injured spouse if you:
file a joint tax return,
have received income (such as wages, interest, etc.)
have made tax payments (such as withholding)
report the income and tax payments on the joint return, and
have a refund due, all or part of which was, or is expected to be, applied against your spouse's past-due amount.
Refer also to our Frequently Asked Question section on Injured Spouse in the IRS Procedures section.
References:
Form 8379 (PDF), Injured Spouse Claim and Allocation
Tax Topic 203, Failure to Pay Child Support and Other Federal Obligations
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- What is the legal procedure I need to follow in order to obtain my ex-spouse's tax refund or refunds due to unpaid child support?
You must file a claim with your local office of child support enforcement. For more information, follow the state link at the U.S. Department of Health and Human Services Administration for Children & Families Office of Child Support Enforcement.
References:
U.S. Department of Health and Human Services Administration for Children & Families Office of Child Support Enforcement
Tax Topic 203, Failure to Pay Child Support and Other Federal Obligations
The Child Support Enforcement Agency said I would get my ex-spouse's federal income tax refund if he has one. He owes me child support. I still have had no word about any refund. How can I find out if he filed at all this year?
An individual's tax return is protected under the Privacy Act of 1974. Therefore, the IRS is restricted from releasing information concerning your ex-spouse's account. However, if your state office of child support enforcement has notified the Treasury of a past-due child support obligation, the refund will be offset to pay the debt.
References:
U.S. Department of Health and Human Services Administration for Children & Families Office of Child Support Enforcement
Tax Topic 203, Failure to Pay Child Support and Other Federal Obligations
If I file jointly and my husband owes back child support, will my refund be applied towards his obligation until his debt with children services is paid?
If you are due a refund but have not paid certain amounts you owe, such as child support, all or part of your refund may be used to pay all or part of the past-due amount. This applies to a joint return. When a joint return is filed and only one spouse owes past-due child and spousal support or a federal debt, the other spouse can be considered an injured spouse and may request his or her share of the joint refund. If this situation applies to you, file Form 8379 (PDF), Injured Spouse Claim and Allocation, to recover your share of the joint refund.
References:
Form 8379 (PDF), Injured Spouse Claim and Allocation
Tax Topic 203, Failure to Pay Child Support and Other Federal Obligations
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I am a student attending college and working part-time. Do I have to file a tax return?
If you are an individual who may be claimed as a dependent on another person's return and you are single and under age 65, you must file a return if any of the following circumstances apply: first, your unearned income was more than $700. Unearned income includes taxable interest, dividends, capital gains, and trust distributions of interest, dividends, capital gains, and survivor annuities. If you had an investment loss, your unearned income could be a negative amount. Second, your earned income was more than $4,400. Earned income includes wages, tips, taxable scholarship and fellowship grants, and salaries. Third, your total income was more than the larger of $700 or your earned income (up to $4,150) plus $250. If you file Form 1040EZ (PDF), Income Tax Return for Single and Joint Filers With No Dependents, your total income is the same as your adjusted gross income. If you are 65 or older, or married, refer to the instructions in your tax package or Publication 929 (PDF), Tax Rules for Children and Dependents, or Publication 501 (PDF), Exemptions, Standard Deduction, and Filing Information.
References:
- Publication 501 (PDF), Exemptions, Standard Deduction, and Filing Information
- Publication 929 (PDF), Tax Rules for Children and Dependents
- Form 1040EZ (PDF), U.S. Individual Income Tax Return for Single and Joint Filers with No Dependents
How much does a student have to make before he or she has to file an income tax return?
If you are an unmarried dependent, you must file a tax return for 2000 if you have earned income of more than $4,400, unearned income of more than $700, or if your gross income is more than $700 and exceeds your earned income by more than $250.
Even if you do not have to file, you should file a federal income tax return to get money back if any of the following apply:
You had income tax withheld from your pay.
You qualify for the earned income credit.
You qualify for the additional child tax credit. Refer to Publication 501 (PDF), Exemptions, Standard Deduction and Filing Information, for an explanation of the five exemption tests and filing requirement rules.
References:
- Publication 501 (PDF), Exemptions, Standard Deduction and Filing Information
My daughter is my dependent and receives dividend income. Does she need to file a federal income tax return?
A federal income tax return usually must be filed for a child whose income includes investment income, such as interest and dividends, and totals more than $700. For more information, refer to Tax Topic 351, Who Must File. There are special rules that affect the tax on certain investment income of a child under age 14. For more information, refer to Tax Topic 553, Tax On A Child's Investment Income, or Publication 929 (PDF), Tax Rules for Children and Dependents.
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Frequently Asked Tax Questions And Answers
Itemized Deductions/Standard Deductions -
Interest, Investment, Money Transactions (Alimony, Bad Debts, Applicable Federal Interest Rate, Gambling, Legal Fees, Loans, etc.) |
Is the interest amount that we paid to the IRS deductible?
No, only mortgage or investment interest is deductible on Schedule A. Interest paid to the IRS is considered personal interest and nondeductible. It would be the same as interest on a credit card or automobile loan. Refer to Items You Cannot Deduct in Chapter 25 of Publication 17, Your Federal Income Tax.
References:
Can you tell me where on the Internet I can find the AFR, Applicable Federal Rate, for the months in 2000?
The Applicable Federal Rates for each month can be found in the first Internal Revenue Bulletin (IRB) published for that month. Internal Revenue Bulletins are located under Tax Information for You.
References:
A family member has offered a low interest loan to me for purchasing a home. Where can I find information on rates for private loans?
To calculate the lowest rate of interest for federal tax law, you must use the Applicable Federal Rates (AFR) that applies to the terms and time of your loan. The applicable federal rates are published monthly in the Internal Revenue Bulletin.
References:
I made a personal loan of $3,500 to a friend. She declared bankruptcy after only paying me back $500.00. Does the IRS allow any provision for my loss?
If someone owes you money you cannot collect, you have a bad debt. There are two kinds of bad debts - business and nonbusiness.
Bad debts are deductible only if the amount owed has been lent or previously included in your income. A business bad debt, generally, is one that comes from operating your trade or business.
All other bad debts are nonbusiness. Nonbusiness bad debts must be totally worthless to be deductible. You cannot deduct a partially worthless nonbusiness bad debt. You must establish you have taken reasonable steps to collect the debt and that the debt is worthless. You may take the deduction only in the year the debt becomes worthless. A debt becomes worthless when there is no longer any chance the amount owed will be paid. You do not have to wait until the debt comes due.
For more information on bad debts, refer to Publication 550, Investment Income and Expenses, and Publication 535, Business Expenses.
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Are the legal fees incurred (paid) for collection of Social Security Benefits deductible?Legal fees are claimed in the Miscellaneous section of the Form 1040 Schedule A (Itemized Deductions). The total amount of the miscellaneous deduction section is subject to a 2% limit of adjusted gross income (line 33 of Form 1040 for the year 2000). The amount above the limit is the amount of the allowable deduction. In order to deduct legal fees that were paid to collect your Social Security Benefits some of these benefits must be taxable. Since Social Security Benefits are never 100% taxable the deduction for the legal fees paid to receive them are never 100% deductible. You must prorate the legal expenses in the same ratio that the Social Security Benefits are taxable. Example: You receive $20,000.00 in total benefits, and of the benefits received, $12,000.00 are subject to tax. Based on this, 60% of your benefits are taxable (12,000/20,000 = 60%). You had legal fees of $5,000.00 to collect your Social Security Benefits. Your allowable deduction for legal fees would be $3,000.00 ($5,000.00 x 60% = $3,000.00). This is the amount that would be entered on line 22 of the Form 1040 Schedule A for the year 2000.
I went through a divorce last year and paid a lot of legal fees. Are these deductible on my tax return?
Legal fees for the divorce itself and for property settlement are not deductible. However, legal fees to collect taxable income, such as alimony, are deductible as miscellaneous itemized deductions on Form 1040, SCHEDULE A. Most miscellaneous itemized deductions are subject to the 2% limit. This means you can deduct the amount left after you subtract 2% of your adjusted gross income from their total. For additional information, refer to Tax Topic 508, Miscellaneous Expenses, and Publication 529, Miscellaneous Deductions.
References:
Can I deduct alimony paid to my former spouse?
If you are divorced or separated, you may be able to deduct the alimony or separate maintenance payments that you are required to make to your spouse or former spouse, or on behalf of that spouse. For additional information, refer to Tax Topic 452, Alimony Paid (this topic covers alimony under decrees or agreements after 1984), or Publication 504, Divorced or Separated Individuals.
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Where are fees and commissions for investments deducted?
If they are deductible, investment expenses are deductible as itemized deductions on Form 1040, SCHEDULE A, Itemized Deductions. The taxpayer has to itemize their deductions to deduct these expenses and that may not be as beneficial for the taxpayer as taking the standard deduction. They are deductible only to the extent that the total exceeds 2% of the taxpayer's adjusted gross income.
Commissions and fees for the acquisition or sale of an asset are added to the basis of that asset and are not deductible. For example, acquisition fees, sales commissions, and load charges paid in connection with the purchase or selling of mutual fund shares are not deductible. They can usually be added to the basis of the shares.
Fees for managing investments, such as custodial fees and management fees are deductible. Fees you pay a broker to collect taxable bond interest or stock dividends are deductible. Fees that pass through to you from nonpublicly offered mutual funds, partnerships, or trusts are deductible. All of these fees are subject to the 2% limit.
References:
Is a real estate investment considered investment property? Is the interest deductible as Investment Interest if you cannot deduct it as mortgage interest?
If you borrow money and use it to buy property you hold for investment, the interest you pay is investment interest. You can deduct investment interest subject to certain limits. However, you cannot deduct interest you incurred to produce tax-exempt income. Investment interest does not include any qualified home mortgage interest or any interest taken into account in computing income or loss from a passive activity.
References:
We took a margin loan from our investment money market account. Can the interest we paid be deducted?
If you are a cash method taxpayer, you can deduct interest on margin accounts to buy taxable securities as investment interest in the year you paid it. You are considered to have paid interest on these accounts only when you actually pay the broker or when payment becomes available to the broker through your account. Payment may become available to the broker through your account when the broker collects dividends or interest for your account, or sells securities held for you or received from you. You cannot deduct any interest on money borrowed for personal reasons.
References:
If I don't itemize my deductions can I still deduct my investment expenses such as margin interest?
Investment expenses (other than interest expenses) are deducted on Form 1040, SCHEDULE A, Itemized Deductions, as miscellaneous deductions subject to the 2% of your Adjusted Gross Income (AGI) limit.
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How do I deduct and substantiate my gambling losses?
You can deduct gambling losses only if you itemize deductions. Claim your gambling losses as a miscellaneous deduction on Form 1040, SCHEDULE A. However, the amount of losses you deduct cannot total more than the amount of gambling income you have reported on your return. It is important to keep an accurate diary or similar record of your gambling winnings and losses. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses.
The Service provides the following guidelines for proving gambling winnings and losses:
1. An accurate diary or similar record regularly maintained by the taxpayer, supplemented by verifiable documentation usually is acceptable evidence for substantiation of wagering winnings, and losses. In general, the diary should contain at least the following information
- a) date and type of specific wager or wagering activity;
- b) name of gambling establishment;
- c) address or location of gambling establishment; and
- d) name(s) of other person(s) present with you at gambling establishment.
- e) amount(s) won or lost.
2. Verifiable documentation includes, but is not limited to, wagering tickets, canceled checks, credit records, bank withdrawals, and statements of actual winnings or payment slips provided by the gambling establishment. When possible, the diary and available documentation by the placement and settlement of a wager should be supported by such documentation as hotel bills, airline tickets, gasoline credit cards, or affidavits or testimony from responsible gambling officials regarding the wagering activity.
Refer to Publication 529, Miscellaneous Deductions for information on record keeping. For additional information, refer to Publication 525, Taxable and Nontaxable Income.
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Can I claim the Child and Dependent Care Credit?
If you paid someone to care for your dependent under age 13 or your disabled dependent or spouse so that you could work or look for work, you may be able claim the credit for child and dependent care expenses. For specific information on how to qualify for this credit refer to Tax Topic 602, Child and Dependent Care Credit, or Publication 503 (PDF), Child and Dependent Care Expenses.
References:
My spouse and I both work and are eligible for the Child and Dependent Care Credit. May I include my 5 year old son's parochial school kindergarten tuition cost as a qualified expense in Form 2441, Child Care Expenses?
The expenses for kindergarten do not qualify for the dependent care credit if the kindergarten is primarily educational in nature. Expenses for school in the fist grade or higher do not qualify for the credit. However, you can count the part of the expenses of sending your child to school that is for your child's care if it can be separated from the expenses of education. For example, you may count the cost of an after school care program even though the school tuition does not qualify.
References:
I paid into a dependent care benefits plan and the amount is shown in Box 10 of the my Form W-2. However, the cost paid to the child care provider was more. Can the additional expense not paid into the dependent care benefits plan and not shown in Box 10 of the W-2 be claimed on Form 2441?
That depends on the amount you elected to have contributed to the flexible spending arrangement. The exclusion from income for employer-provided benefits can be as high as $5,000, while the credit for dependent care expenses is based on annual dollar limits of $2,400 for one person and $4,800 for two or more persons. You must reduce those dollar limits by the amount of excludible dependent care benefits. If you had expenses that you paid yourself and the employer provided benefits were less than the applicable dollar limit, you can also claim the credit. Complete Part III of either Form 2441 (PDF), Child and Dependent Care Expenses, or Form 1040A, Schedule 2 (PDF), Child and Dependent Care Expenses for Form 1040A Filers, to determine the excluded benefits and whether you can claim the credit.
References:
If my employer did not put the amount I paid into a flexible spending account for dependent care in box 10 on my Form W-2, can I claim the Child and Dependent Care Tax Credit?
If the omission was simply a clerical oversight, you may not claim the child care credit. If the flexible spending account was an eligible plan under Internal Revenue Code Section 125, the amount of the salary reduction that was contributed to your account should appear in box 10 of your Form W-2. Request a corrected Form W-2 from your employer.
You may claim the child care credit if the contribution to your flexible spending account was less than your annual dollar limitation for eligible expenses ($2,400 for one person, or $4,800 for two or more persons). Even if you cannot claim the credit, you must complete Part III of either Form 2441 (PDF), Child and Dependent Care Expenses, or Form 1040A, Schedule 2 (PDF), Child and Dependent Care Expenses for Form 1040A Filers, to exclude your employer provided benefits from your income. If the amount you paid into a flexible spending account reduced your wages in box 1 of Form W-2, it is considered an employer provided benefit.
References:
I was under the impression that a Dependent Care Benefit Plan would benefit me, not penalize me with an increase in taxes. How can my employer say they provided a benefit in the total amount of $3,000 in W-2, Block 10 when I had $3,000 in wages set aside for dependent care benefits?
The actual mechanism for this type of plan is an agreement to voluntarily reduce your salary in return for an employer-provided fringe benefit. These plans must be set up this way because you have a choice of whether to receive the cash wages or the benefits, which would make the benefit taxable to you. Therefore, the benefits are actually employer provided or funded. You are receiving a tax benefit because you are not paying taxes on the money that is set aside.
References:
How do I complete Form 2441 if I have flexible dependent care benefits through my employer?
You must complete Part III of Form 2441 (PDF), Child and Dependent Care Expenses, (or Form 1040A, Schedule 2 (PDF), Child and Dependent Care Expenses for Form 1040A Filers) to claim the exclusion of the benefits from income even if you cannot claim the credit. Enter your total employer-provided dependent care benefits on line 10 (this amount should appear in box 10 of your Form W-2) and your qualified expenses on line 13. The last five lines of Part III will determine whether you can also take the credit and what your dollar limit is on qualified expenses. Also Complete Part I, Persons or Organizations Who Provided the Care.
References:
I am self-employed, but did not have a net profit last year. Is it correct that we do not qualify for the Child Care Credit on our joint return even though my wife received dependent care benefits on her W-2 box 10?
Generally, yes. When you complete Part III of Form 2441 (PDF), Child and Dependent Care Expenses, which you must do to claim excluded benefits, line 17 asks you to enter the smallest of:
your dependent care benefits,
your qualified expenses,
your earned income, or
your spouse's earned income.
If you had a loss from self-employment and no other earned income, your earned income would be $0, unless you can use one of the optional methods on Form 1040, Schedule SE (PDF), Self-Employment Tax. That would mean that the amount in box 10 of your wife's Form W-2 would have to be included in income. (For more information on the optional methods of computing self-employment tax, refer to Publication 533 (PDF), Self-Employment Tax, or Instructions for Form 1040, Schedule SE, Self-Employment Tax.) If you were a full-time student during any five calendar months during the year, you are considered to have earned income of $200 per month for purposes of qualifying for the child care credit.
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Is a flexible spending account for dependent care a dependent care benefit?
Yes. If the flexible spending account is providing you with a dependent care benefit, then it should be reported in box 10 of your Form W-2. These accounts are funded through a salary reduction, so the contribution to the account is considered an employer contribution. When you receive a dependent care benefit from your employer, you must complete Part III of Form 2441 (PDF), Child and Dependent Care Expenses, (or Form 1040A, Schedule 2 (PDF), Child and Dependent Care Expenses for Form 1040A Filers) to see if the benefits are fully excluded from income. You may be able to also claim a credit for child and dependent care expenses if the excluded benefits are less than the dollar limit on qualified expenses for the credit.
References:
My divorce decree states that my ex-spouse can claim our daughter as an exemption on alternate years. I am the custodial parent and pay child care expenses. Can I claim child care expenses on the years he takes the exemption?
The Child and Dependent Care Credit can only be claimed by the custodial parent. This is true even if you cannot claim the child's exemption because the divorce decree allows the other parent to claim the exemption, or you have released the exemption on Form 8332. Refer to Publication 503 (PDF), Child and Dependent Care Expenses, for a complete discussion.
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My babysitter refused to provide me with her social security number. Can I still claim what I paid for child care on my taxes while I worked? If so, how?
Yes, assuming that you already meet the other requirements to claim the child care credit, but are missing the required ID number of the provider, you can still claim the credit by demonstrating "due diligence" in attempting to secure the needed information.
When the care provider refuses to give the identifying information, the taxpayer can still claim the credit and is instructed to provide whatever information is available about the provider (such as name and address) on the form used to claim the credit ( Form 2441 (PDF), Child and Dependent Care Expenses, or Form 1040A, Schedule 2 (PDF), Child and Dependent Care Expenses for Form 1040A Filers). The taxpayer should write "see page 2" in the columns calling for the missing information. He/she would write at the bottom of page 2 that the provider refused to give the requested information. This statement will show that the taxpayer used due diligence in trying to secure and furnish the necessary information.
References:
As a child care center, are we required to give out tax statements to any of our parents who request one? Can we refuse to give a tax statement to someone who has a past due balance with us?
As a care provider, you are required to give your correct name, address, and Taxpayer Identification Number (TIN) to customers who paid for child care services during the year. A valid TIN can be the Employer Identification Number (EIN) of the business or the social security number of a sole proprietor. Form W-10 (PDF), Dependent Care Provider's Identification and Certification, or a similar statement may be used for such purposes.
A care provider who does not give the customer a correct TIN is subject to a penalty of $50 for each failure unless the failure is due to reasonable cause and not willful neglect. The failure of a customer tol pay a bill in full would not normally constitute reasonable cause. The penalty does not apply to qualified tax exempt care providers.
When the care provider refuses to give the identifying information, the taxpayer can still claim the credit and is instructed to provide whatever information is available about the provider (such as name and address) on the form used to claim the credit ( Form 2441 (PDF), Child and Dependent Care Expenses, or Form 1040A, Schedule 2 (PDF), Child and Dependent Care Expenses for Form 1040A Filers). The taxpayer should write "see page 2" in the columns calling for the missing information. He/she would write at the bottom of page 2 that the provider refused to give the requested information. This statement will show that the taxpayer used due diligence in trying to secure and furnish the necessary information.
References:
I am thinking of having an au pair take care of my child. There is a $4,000 fee up front and I will be paying $150 a week to the au pair. What, if any, of this qualifies for the child and dependent care creditis deductible?
The up front fee may qualify as a child care expense if it is an expense you must pay in order to obtain care. However, you can only count it toward the credit proportionately over the duration of the greement to employ the au pair. The $150 per week as well as other work related expenses may qualify as a child and dependent care expense. Please refer to Publication 503 (PDF), Child and Dependent Care Expenses for a full discussion.
If your au pair works in your home, you may also be responsible for employment taxes. Refer to Publication 926 (PDF), Household Employers Tax Guide, for more information.
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If I send my child who was under the age of 13 to a day camp instead of a child care facility for the summer, do these deductible expenses?
The cost of day camp, including a camp that specializes in a particular activity such as soccer or computers, may qualify as child care expense, if your main purpose in sending your child is to assure the child's well-being and protection.
References:
I am thinking of having a family member baby-sit for my child full time in their own home while I work. Are either of us responsible for taxes on the money I would pay? Can I claim this money as a child care expense even though my family member is not a registered day care provider?
You may have qualified child care expenses if the family member is not your dependent or your child is under age 19 and you meet all the tests to claim the Child and Dependent Care Credit. Your family member will be responsible for paying taxes on the money earned and will be considered to be self-employed.
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Can elderly day care payments qualify for the child and dependent care credit?
Elderly day care payments may qualify as Child and Dependent Care Expenses. In order to be a qualifying person, the person receiving the elderly day care must be either your spouse who was physically or mentally not able to care for himself or your dependent who was physically not able to care for himself and for whom you can claim an exemption (or could claim an exemption except the person had $2,900 or more of gross income in the year 2001). All of the other criteria for claiming the Child and Dependent Care Credit must also be met.
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