Your tax questions answered
Denisa Tova answers some of your tax questions.
Our Certified Financial Planner, Denisa Tova, is here to answer some of your most asked tax questions. One of the top questions is:
When can I claim my child as a dependent?
This is important because it can save you thousands of dollars on taxes. IRS has a set of tests to determine who qualified as a dependent.
Generally, you can claim your child as a dependent, if your child is younger than 19 at the end of the year (or younger than 24 if a full-time student) and you child receives at least half of his support from you. You can still claim your child as a dependent regardless of age if he or she earns less than $3,200 of income and you are providing support.
You can get more information about deductions and exemptions on IRS website www.irs.gov, specifically in the Publication 501.
Are my unemployment benefits taxable?
Unfortunately, unemployment benefits are taxable income on your federal return.
But if your income was low enough, you might not be required to file a federal return or to pay any federal taxes.
What are the tax consequences of withdrawing money from my 401(k)?
You will have to pay income tax and a 10 percent early withdrawal penalty if you are younger than 59. There are some exceptions to the penalty, like if you became totally disabled, used the funds to pay certain medical expenses, to name a couple.
See the IRS Publication 575
Again, you should consult a tax pro for advice about your situation.