Will IRS figure the amount of tax and credits
for taxpayers?
If you choose, the IRS will figure your tax on Form 1040EZ, Form
1040A, or Form 1040. Refer to Tax Topic 552, Tax
and Credits Figured by IRS, for more 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 included investment income, such as interest and dividends, and
totals more than $700. 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,
Tax Rules for Children and Dependents.
In addition to my regular job, I had a part-time
business fixing cars. Do I have to report the money I made fixing cars?
Yes. This is self-employment income. You must report it on Schedule
C or C-EZ, Form 1040. You
may also have to file Schedule SE and pay self-employment tax. For more
information, refer to Tax Topic 554, or Publication
533, Self-Employment Tax.
What are the tax options for lump-sum distributions
from retirement plans?
Special tax computations are allowed for qualifying recipients of
certain lump-sum distributions from retirement plans. Refer to Topic
412 which discusses Lump-Sum Distributions, or Publication
575, Pension and Annuity Income.
What is alternative minimum tax?
The tax laws give preferential treatment to certain kinds of income
and allow special deductions and credits for some kinds of expenses. The
alternative minimum tax attempts to ensure that all individuals who benefit
from these tax advantages will pay at least a minimum amount of tax. The
alternative minimum tax is a separate tax computation that, in effect,
reduces the benefit of certain deductions and credits, thus creating a
tax liability for an individual who would otherwise pay little or no tax.
You may have to pay the alternative minimum tax if your taxable income
for regular tax purposes, plus any of the adjustments and preference items
that apply to you, is more than a specified exemption amount. To determine
if you may be subject to the alternative minimum tax, see the Form 1040
instructions for line 48, or refer to Form
6251, Alternative Minimum Tax - Individuals.
How do I deduct the administration expenses
of my parent's estate?
Expenses of administering an estate can be deducted either from the
gross estate in figuring the federal estate tax on Form 706 or from the
estate's gross income in figuring the estate's income tax on Form 1041.
However, these expenses cannot be claimed for both estate tax and income
tax purposes. In most cases, this rule also applies to expenses incurred
in the sale of property by an estate (not as a dealer).
For more information, see Publication
559, Survivors, Executors, and Administrators, designed to help
those in charge of the property (estate) of an individual who has died.
Also, see Publication 950,
Introduction to Estate and Gift Taxes.
Administration expenses include: fees paid to the fiduciary for administering
the estate; attorney, accountant, and return preparer fees; expenses incurred
for the production or collection of taxable income; expenses incurred for
the management, conservation, or maintenance of property held for the production
of taxable income; expenses in connection with the determination, collection,
or refund of any tax.
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