Best tax advice for 2015?

I know filing your taxes can be hectic, and if your like me and do your own taxes, (because I don't want to pay) these are just some of the Q&A's that generally come up during tax season. There are of course a host more, but hopefully this starts a forum where others can get a general tip or two that could assist them. So I put together just some that pertain to me directly....

Get Answers to your tax questions before filing for 2014

1. Q: If I'm paying child support for my children but they don't live with me, can I claim them as dependents?

A: When claiming a child, the amount of support you provide usually doesn't matter. Instead, to qualify as a dependent, the child must not provide more than half of his or her own support for the year.
The child must live with you more than half of the year. So, the child of divorced or separated parents is usually the qualifying child of the parent the child lived with the longest. This is the custodial parent according to the tax law.
However, the child can be the qualifying child of the noncustodial parent if all of these are true:
• One or both parents provided more than half of the child's total support for the year.
• One or both parents have custody of the child for more than half of the year.
• The parents are divorced, legally separated, or lived apart at all times during the last six months of the year.
In the above situation, the noncustodial parent can take the dependency exemption if one of these is true:
• The custodial parent gives up the exemption by signing a Form 8332: Release / Revocation of Release of Claim to Exemption for Child by Custodial Parent. The noncustodial parent must attach the Form 8332 to the return.
• The noncustodial parent attaches an agreement that took effect from 1985-2008. The agreement must say:
o That the noncustodial parent can claim the child without regard to any condition, like payment of support
o Which years the noncustodial parent can claim the child
o That the custodial parent won't claim the child for those years

2. Beware Obamacare When Filing Taxes This Year
The Affordable Care Act seems less and less affordable and hardly easy to administer. When you add taxes, it can be like lemon juice in a paper cut. Yet some people can avoid some of the tax hits or minimize their impact.
One of the biggest tax hits for individuals is the net investment income tax. It’s a new 3.8% tax to help pay for Obamacare, there’s a new 3.8% tax. Actually, it applied in 2013 too, but you may not have noticed. It’s an add-on to other taxes you pay. A 20% long-term capital gain becomes 23.8%. The 3.8% rate applies to the lesser of your net investment income or the amount by which your modified adjusted gross income exceeds a threshold based on your filing status. For single or head of household, it’s $200,000. For married filing jointly its $250,000.
If you owe it, you must file Form 8960. If you had too little tax withheld or did not pay sufficient estimated taxes, you may have to pay an estimated tax penalty. The IRS website has details here. You can also check out the IRS’s questions and answers on the Net Investment Income Tax. If you want even more, see IRS Tax Topic 559.
Can you avoid it? It’s hard to do if you have investment income and meet the income tests. There is still some ambiguity in the application, and still some kinds of income that escape–or arguably escape–the 3.8% tax. Besides, it will be a while before the IRS is geared up to fully interpret this new law.
Another tax hit is the health insurance penalty. There’s a ‘mandate’ requiring most Americans to carry insurance: If you don’t you may face a penalty. For 2014, the penalty is the higher of $95 per adult and $47.50 per child, or 1 percent of taxable household income. In 2015, the penalty goes up to the higher of $325 per adult and $162.50 per child, or 2 percent of household income.
It gets even worse if you fail to get coverage in 2016, when penalties will jump to $695 for adults, $347.50 for children, or 2 ½ percent of household incomes. For the 2014 filing season, many people expect the IRS to be lax about enforcing the penalty. So if you don’t answer the question, or even if you admit you have no coverage, you still might not get a bill. Even so, TurboTax maker Intuit says the average Obamacare tax penalty for 2014 will be $301. Even then, not everyone has to pay according to Intuit.
The company estimates that 20 million people who lack insurance in 2014 may be exempt. Potential exemptions include being a Native American, hardships like bankruptcy, homelessness or domestic violence. Medical expenses can be enough too. Unfortunately, many people in these situations may not seek formal exemptions. If you must pay a penalty, you pay it as part of your tax bill. Still, the flak from people who got subsidies but are getting smaller refunds than they thought–or even owing money–may be greater.

3. Tax Deductions for Renters
If you rent an apartment or house, you probably wonder if you can get some type of tax break for your monthly rent payment. While you cannot deduct rent you paid while renting a home from your federal return, some states offer a deduction for this. Below we cover the renter’s deduction and other federal tax deductions you may be able to take.
a. Federal Deductions You May Be Able to Take
Most renters are disappointed that they cannot deduct their rent payments from their federal income taxes. However, if you pay property taxes as part of your lease agreement, you can deduct that portion of your rent or any property tax you pay directly. You can also deduct property losses or cost of damage of your property from fire, theft, flood or other accidents or natural disasters, as long as you are not reimbursed for those losses by your insurance provider.

b. Business Use of Your Home
If you work from home, expenses related to your business are deductible from your federal and state taxes. You can deduct the amount of rent represented by the portion of your home used for business, as well as a prorated portion of utility payments like water, power, heating and gas. Learn more about claiming the Home Office Tax deduction.
c. Renters Deduction
While you cannot deduct rent you paid from your federal return, some states offer a deduction for this. Some states offer a renters tax credit, which usually represents an amount that, that particular state has determined to be the portion of the rent that the landlord collects in order to pay property taxes. To see if your state offers this credit, you would need to contact your state directly.
State Contact Information
If you have questions about state tax laws or about your state return, you may need to contact your state revenue or taxation agency. If you do need to contact your state, below are links to each state's contact information. Most states provide telephone numbers that you may call to speak with a representative. However, some states only provide contact information through email. If this is the case and you would prefer to speak with an individual, you may want to visit your local office in person.
• ALABAMA: Alabama Department of Revenue
• ARIZONA: Arizona Department of Revenue
• ARKANSAS: Arkansas Department of Finance & Administration
• CALIFORNIA: Franchise Tax Board of the State of California
• COLORADO: Colorado Department of Revenue
• CONNECTICUT: State of Connecticut Department of Revenue Services
• DELAWARE: Delaware Department of Finance: Division of Revenue
• DISTRICT OF COLUMBIA: Washington, D.C. Office of Tax and Revenue (OTR)
• GEORGIA: Georgia Department of Revenue
• HAWAII: State of Hawaii Department of Taxation
• IDAHO: Idaho State Tax Commission
• ILLINOIS: Illinois Department of Revenue
• INDIANA: Indiana Department of Revenue
• IOWA: Iowa Department of Revenue
• KANSAS: Kansas Department of Revenue
• KENTUCKY: Kentucky Department of Revenue
• LOUISIANA: Louisiana Department of Revenue
• MAINE: State of Maine Revenue Services: Department of Administrative & Financial Services
• MARYLAND: Comptroller of Maryland
• MASSACHUSETTS: Massachusetts Department of Revenue
• MICHIGAN: Michigan Department of Treasury
• MINNESOTA: Minnesota Department of Revenue
• MISSISSIPPI: Mississippi State Tax Commission
• MISSOURI: Missouri Department of Revenue
• MONTANA: Montana Department of Revenue
• NEBRASKA: Nebraska Department of Revenue
• NEW HAMPSHIRE: New Hampshire Department of Revenue Administration
• NEW JERSEY: New Jersey Department of the Treasury: NJ Taxation
• NEW MEXICO: New Mexico Taxation & Revenue Department: Revenue Processing Division
• NEW YORK: New York State Department of Taxation and Finance
• NORTH CAROLINA: North Carolina Department of Revenue
• NORTH DAKOTA: North Dakota Office of State Tax Commissioner
• OHIO: Ohio Department of Taxation
• OKLAHOMA: Oklahoma Tax Commission
• OREGON: Oregon Department of Revenue
• PENNSYLVANIA: Pennsylvania Department of Revenue
• RHODE ISLAND: State of Rhode Island Department of Revenue: Division of Taxation
• SOUTH CAROLINA: South Carolina Department of Revenue
• UTAH: Utah State Tax Commission
• VERMONT: Vermont Department of Taxes
• VIRGINIA: Virginia Department of Taxation
• WEST VIRGINIA: West Virginia State Tax Department
• WISCONSIN: Wisconsin Department of Revenue

4. Special Tax Considerations for Veterans:
Disabled veterans may be eligible to claim a federal tax refund based on:
• an increase in the veteran's percentage of disability from the Department of Veterans Affairs (which may include a retroactive determination) or
• The combat-disabled veteran applying for, and being granted, Combat-Related Special Compensation, after an award for Concurrent Retirement and Disability.
To do so, the disabled veteran will need to file the amended return, Form 1040X, Amended U.S. Individual Income Tax Return, to correct a previously filed Form 1040, 1040A or 1040EZ. An amended return cannot be e-filed. It must be filed as a paper return. Disabled veterans should include all documents from the Department of Veterans Affairs and any information received from Defense Finance and Accounting Services explaining proper tax treatment for the current year.
Please note: It is only in the year of the Department of Veterans Affairs reassessment of disability percentage (including any impacted retroactive year) or the year that the CRSC is initially granted or adjusted that the veteran may need to file amended returns.
Under normal circumstances, the Form 1099-R issued to the veteran by Defense Finance and Accounting Services correctly reflects the taxable portion of compensation received. No amended returns would be required, since it has already been adjusted for any non-taxable awards.
If needed, veterans should seek assistance from a competent tax professional before filing amended returns based on a disability determination. Refund claims based on an incorrect interpretation of the tax law could subject the veteran to interest and/or penalty charges.

5. Earned Income Credit
This credit is for people who work and have a qualifying child or who meet other qualifications. You can get the credit if your adjusted gross income for 2014 is less than:
• $14,590 ($20,020 for married filing jointly) if you do not have a qualifying child,
• $38,511 ($43,941 for married filing jointly) if you have one qualifying child,
• $43,756 ($49,186 for married filing jointly) if you have two qualifying children, or
• $46,997 ($52,427 for married filing jointly) if you have three or more qualifying children.
To figure the credit, use the worksheet in the instructions for Form 1040, 1040A, or 1040EZ. If you have a qualifying child, also complete Schedule EIC, Earned Income Credit, and attach it to your Form 1040 or 1040A. You cannot use Form 1040EZ if you have a qualifying child.
Qualifying child. To be a qualifying child, your child must be younger than you (or your spouse if married filing jointly) and under age 19 or a full-time student under age 24 at the end of 2014, or permanently and totally disabled at any time during 2014, regardless of age.
Earned income. If you are retired on disability, benefits you receive under your employer's disability retirement plan are considered earned income until you reach minimum retirement age. However, payments you received from a disability insurance policy that you paid the premiums for are not earned income.
More information. For more information, including all the requirements to claim the earned income credit, see the instructions for Form 1040, line 66a; Form 1040A, line 42a; Form 1040EZ, line 8a; and Publication 596, Earned Income Credit (EIC).

6. Filing Taxes When a Service Member Is Deployed

Filing state and federal income taxes may be the last thing you want to deal with right now, especially if you or your service member is deployed. But as overwhelming as it may seem, filing your tax return should not be difficult. The Internal Revenue Service recognizes that service members and their families often face special circumstances and has taken measures to make this annual obligation easier.
Getting started
If you are a service member or are filing on behalf of one, there are a few things you should know before getting started.

• File returns in your permanent home state. If you are stationed somewhere other than your permanent home address, in most cases you will still pay state taxes to your home state. For instance, if your legal state of residency is Kansas, but you are stationed in California, you will file state taxes with Kansas, if applicable. In most cases, spouses working outside their home of record will also have to file a state tax return for the state in which they are employed. However, the Military Spouse Residency Relief Act changed the rules so that military spouses do not have to pay income taxes to the current state where they are employed, if they live with their service member in that state because of military orders. Visit the IRS and Military OneSource websites for more specific information regarding the MSRRA, to see if you qualify for this relief.
• Access your tax statement online. As a member of the military services, you can view and print out your W-2 form before it is mailed to you. Go to myPay. You will need your personal identification number to access your W-2 form.
• Be sure to have power of attorney if filing for a deployed service member. Attach a copy of your power of attorney to your tax return. You may use IRS Form 2848, Power of Attorney and Declaration of Representative.
• Find answers to your questions on the IRS website. Visit the IRS Armed Forces' Tax Guide.
Combat zone and hazardous duty deadline extensions
The IRS extends filing deadlines for members of the military services for the following reasons:
• You or your spouse are serving in a combat zone or in direct support of those in the combat zone and receive hostile fire or imminent danger pay. The deadline for filing income taxes is 180 days after your last day in the combat zone or hazardous duty area. The IRS defines specific geographic areas at Combat Zones. In addition to the 180 days, the extension includes the number of days left in the filing period when you entered the combat zone or hazardous duty area. The filing period is generally Jan. 1 through April 15 (exceptions to the April 15 deadline may be made in a given year if the 15th falls on a Saturday or Sunday). So, if you or your spouse entered the combat zone on March 31, you would add 15 days to your 180-day tax filing extension.
• You or your spouse is hospitalized outside of the United States as a result of injuries suffered in a combat zone or hazardous duty area. The deadline is 180 days after discharge from the hospital. Note that the extension does not apply to the spouse if the service member is hospitalized in the United States.
Your command will have notified the IRS of your deployment to a combat zone but you may want to notify the IRS directly through its special email address. Email the deployed member's name, stateside address, date of birth and date of deployment to [login to see] , or call the IRS main helpline at [login to see] . If the IRS sends a notice regarding a collection or examination, return it to the IRS with the words "combat zone" and the deployment date in red at the top of the notice so the IRS will suspend the action. Write "combat zone" on the envelope as well.
Getting help with your taxes
Service members and their families can get help at many installations through the Voluntary Income Tax Assistance program. Check with your legal assistance office to see if this service is available at your installation. Voluntary Income Tax Assistance program volunteers will help you file your taxes at no cost to you or your eligible family members. Go as early before the filing deadline as possible to avoid long waits. If you decide to see a private tax preparer, make sure he or she is familiar with the IRS Armed Forces' Tax Guide and has experience filing returns for service members and their eligible family members. When you go, bring the following with you:
• Military ID
• All W-2 and 1099 forms
• Social Security cards for all family members
• Deductions and credit information
• Bank account and routing numbers (if you choose to receive your refund by direct deposit)
• Receipts for child care expenses
• Last year's tax return, if available
• Special power of attorney authorizing you to do business on behalf of the deployed service member
• Any document you think may be necessary to file your taxes such as those involving investments, rental properties and mortgages
Before sending in your completed tax forms, double-check your figures and make sure all Social Security numbers are entered correctly. And remember, unless you qualify for an extension, the filing deadline for federal income taxes is April 15. For state income taxes, filing deadlines vary from state to state so check with the local county tax office for the filing deadline in your state.

7. Education Credits
Education tax credits can help offset the costs of education. The American Opportunity (Hope Credit extended) and the Lifetime Learning Credit are education credits you can subtract in full from the federal income tax, not just deduct from taxable income.
American Opportunity Tax Credit
Update May 31, 2013 — This page has been updated to reflect the fact that the American Opportunity Tax Credit, which was to expire at the end of 2012, was extended through December 2017 by the American Taxpayer Relief Act of 2012.

Update November 9, 2011 — this page has been updated to reflect the fact that the American Opportunity Tax Credit, which was to expire at the end of 2010, was extended for an additional two years through December 2012 by the Tax Relief and Job Creation Act of 2010.

Under the American Recovery and Reinvestment Act (ARRA), more parents and students will qualify for the American Opportunity Tax Credit to help pay for college expenses.

The American Opportunity Tax Credit modifies the existing Hope Credit. The AOTC makes the Hope Credit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. It also adds required course materials to the list of qualifying expenses and allows the credit to be claimed for four post-secondary education years instead of two. Many of those eligible will qualify for the maximum annual credit of $2,500 per student.

The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and Lifetime Learning Credits.

The AOTC applied to tax years 2009 and 2010 under ARRA. The credit was extended to apply for tax years 2011 and 2012 by the Tax Relief and Job Creation Act of 2010. The American Taxpayer Relief Act of 2012 extended the AOTC for five years through December 2017.

8. Five Ways to Offset Education Costs
IRS Tax Tip 2010-30

College can be very expensive. To help students and their parents, the IRS offers the following five ways to offset education costs.

a. The American Opportunity Credit This credit can help parents and students pay part of the cost of the first four years of college. The American Recovery and Reinvestment Act modifies the existing Hope Credit for tax years 2009 and 2010, making it available to a broader range of taxpayers. Eligible taxpayers may qualify for the maximum annual credit of $2,500 per student. Generally, 40 percent of the credit is refundable, which means that you may be able to receive up to $1,000, even if you owe no taxes.

b. The Hope Credit The credit can help students and parents pay part of the cost of the first two years of college. This credit generally applies to 2008 and earlier tax years. However, for tax year 2009 a special expanded Hope Credit of up to $3,600 may be claimed for a student attending college in a Midwestern disaster area as long as you do not claim an American Opportunity Tax Credit for any other student in 2009.

c. The Lifetime Learning Credit This credit can help pay for undergraduate, graduate and professional degree courses – including courses to improve job skills – regardless of the number of years in the program. Eligible taxpayers may qualify for up to $2,000 – $4,000 if a student in a Midwestern disaster area – per tax return.

d. Enhanced benefits for 529 college savings plans certain computer technology purchases are now added to the list of college expenses that can be paid for by a qualified tuition program, commonly referred to as a 529 plan. For 2009 and 2010, the law expands the definition of qualified higher education expenses to include expenses for computer technology and equipment or Internet access and related services.

e. Tuition and fees deduction Students and their parents may be able to deduct qualified college tuition and related expenses of up to $4,000. This deduction is an adjustment to income, which means the deduction will reduce the amount of your income subject to tax. The Tuition and Fees Deduction may be beneficial to you if you do not qualify for the American opportunity, Hope, or lifetime learning credits.

You cannot claim the American Opportunity and the Hope and Lifetime Learning Credits for the same student in the same year. You also cannot claim any of the credits if you claim a tuition and fees deduction for the same student in the same year. To qualify for an education credit, you must pay post-secondary tuition and certain related expenses for yourself, your spouse or your dependent. The credit may be claimed by the parent or the student, but not by both. Students who are claimed as a dependent cannot claim the credit.

For more information, see Publication 970, Tax Benefits for Education, which can be obtained online at IRS.gov or by calling the IRS at 800-TAX-FORM [login to see] ).

9. Is the first-time homebuyer tax credit still available?
Unfortunately, the answer is no. The first-time homebuyer tax credit has been expired for several years.
First-time homebuyer state programs
However, there are state homebuyer assistance programs geared toward first-time homebuyers. Each state has specific programs headed up by their housing finance agencies that offer some sort of home buying assistance.
First-time homebuyers, or anyone looking for mortgage or real estate assistance, should log onto their state’s website and search for the section on housing and real estate information. Most states have more than one program targeted at homebuyers.
It’s important to understand that each state offers different and unique programs, and the specific programs have different parameters as to who can qualify, how to qualify and what the particular benefits are.
Many state-run housing assistance programs have no set expiration date, rather they expire when the money allocated to the particular effort runs out--first come, first serve.
A first-time homebuyer is defined in all 50 states as "someone who has never owned a home or hasn’t been a homeowner in the last three years."