IRS question

Discussion in 'Service Academy Parents' started by baseballmom09, Apr 4, 2009.

  1. baseballmom09

    baseballmom09 Member

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    I never thought of this before, and someone at work asked me the other day. Can my husband and I still claim my sons as dependents even though they will be at USNA starting on July 1? It seems as though we still provide support/financial etc., so it never crossed my mind. Thanks for any info.
     
  2. J Collins

    J Collins Founding Member

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    I think this year you can still claim them as they were with you over 6 months.. but next year I dont think so as they will be away at college with an income...
     
  3. tndad

    tndad Member

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    Two of the criteria for being able to claim a child as a dependent are: they have to live with you for more than half of the year and you have to provide more than half their support. (IRS Publication 17) Son is a plebe at USMA and we could not claim him.
     
    Last edited: Apr 4, 2009
  4. mom3boys

    mom3boys Parent

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    tndad is spot on...unless you are very well to do, chance are you can not legally claim your cadet/mid. The time they live with you is only part of the equation...you have to be able to prove that you provided over half of the financial support for that 1/2 year...the number USMA gave us was around $37K. There is no way I provided $37K worth of support to my cadet last year. If I had sent him to a very expensive private school that cost me a bundle, maybe...but otherwise, how can you prove that? However, many people are not forthright on their taxes. A dad at our parents' club was a private practice CPA for years before going to work for the IRS. He explained it like this: It's YOUR tax return. YOU can put whatever YOU want on it. HOWEVER if you are audited, you better be able to prove that it's correct. Although we would have saved $$$$$ on what we had to pay this year if we had claimed our cadet, we could not...first, it's illegal (I know, people in Washington do it all the time...), and second, we did not want to put ourselves at risk for an audit. USMA provided a tax info letter to parents...USNA probably does the same. My friend's accountant took one look at the letter and removed his son's info from the file. He said, "I don't see how anyone, unless they are a Rockefeller, can get away with claiming a cadet." So, sorry for the long answer to your short question...as Jiminy Cricket says, "Let your conscience be your guide."
     
  5. Luigi59

    Luigi59 Banned

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    Different accounting experts give different advice.

    A very high-priced K-Street accounting firm told me "All of his support, for half of the year" is considered by the IRS to meet the "half of his support" test and therefore they can be claimed.

    They told me "it's not a contest where you add up what the Academy provided for the second half of the year and try to match it."

    He said as long as he lived in your home for half of the year and you were his sole means of support during those 6 months, you can claim him.

    Your mileage may vary.

    :cool:
     
  6. baseballmom09

    baseballmom09 Member

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    Thanks all

    Great info...good thing we're paying a bundle and 1/2 for my daughter's college education, so we'll still have her as a dependent, right through medical school! Thanks for the info.
     
  7. mom3boys

    mom3boys Parent

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    That is why I went with what the IRS accountant told me.
     
  8. Luigi59

    Luigi59 Banned

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    This is why I use an accountant instead of relying on the IRS for my tax advice. :wink:

    Can you turn to the IRS for tax help?

    "The IRS has over 400 offices nationwide where you can walk in and get help. They're called Taxpayer Assistance Centers, and you can find the one closest to you by calling (800) 829-1040.

    Here again, you're dealing with people who are supposed to know the law. Unfortunately, you may have a better shot at finding the right answer in the MSN Money Tax Corner community.

    In a 2005 test of the system by the Treasury Inspector General, 35% of answers were incorrect. The Treasury Inspector General tested the system again to measure the quality of the taxpayer assistance during the 2005 filing season."

    ---MSN Moneycentral

    :cool:
     
  9. mom3boys

    mom3boys Parent

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    Again, it's YOUR return. Do whatever YOU want. Heck, Washington is full of people (on either side of the aisle) who don't bothering with silly things like tax returns!

    :scratch: :scratch: :scratch:
     
  10. Stealth_81

    Stealth_81 Super Moderator Moderator Founding Member

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    The other side to look at is how you claiming your cadet/midshipman affects their tax return. Our son had work income of his own, plus investment income, plus his cadet pay. If we would have claimed him as a dependent, he would have not been able to claim himself, and would have paid more in taxes. We felt that we could do without the deduction in order to have him get more back.

    Of course, as Luigi pointed out, your situation may vary. Check out how it works for your financial picture, since all are different.

    Stealth_81
     
  11. J Collins

    J Collins Founding Member

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    on your taxes it asks if your child has lived with you for over 6 months...

    I know that why my DD goes off to CGAS it will be a few days short of the 8the month... I am pretty sure that I have supplied her with over 50% of her care for the year..

    but it will be more interesting with the CGA Scholars stuff about her deductions from her salary.....
     
  12. Luigi59

    Luigi59 Banned

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    Perhaps if I'm audited and they disallow my claim, I can ask President Obama to simply allow me a "do-over" and forgive any penalties or prosecution.

    After all, it worked for most of his cabinet appointees.

    :cool:
     
  13. mom3boys

    mom3boys Parent

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    Luigi, I was so angry after doing taxes the other night to read about another cabinet appointee who "forgot" to pay. However, getting these Washington big-wigs to pay is creating an influx of revenue into our sour economy. :thumb: Before this becomes a "I cannot believe mom is bashing the president" thread, I am not...I know of people on both sides in Washington have been accused of tax evasion. After all, taxes are something the "little people" deal with. Heck, I had a chiropractor years ago who refused to pay taxes; he thought they were against all he believed. However, to appease the IRS, he made a contribution toward the running of the government each year.
     
  14. Just_A_Mom

    Just_A_Mom Member

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    Seriously folks - this forum really is not the place to go for tax advice but the rules for dependency appear to be clear:
    http://www.irs.gov/newsroom/article/0,,id=133298,00.html

    ALL four tests must be satisfied. The confusion comes in the "support" question. The "More than one-half of support" refers to monetary support of that child.
    For most college students the parents are providing more that one half the support - except for a few heavy scholarship winners.

    For kids at academies - the monetary value of support includes the cadets/mids pay, loan advance, tuition, room and board.
    Your child's academy should be able to provide you with these figures.
    If all of that adds up to LESS than what you spent to support them - their share of housing, board, clothing, any tuition etc. Then you have a case.
    With the case of USMA the Cadet who entered on or about 1 July incurred over $50,000 of expenses and pay that accounted for their portion of "support" for the year.

    To be fair to your accountant you should request those figures and present them when asking for advice about the "support" question.
     
  15. Luigi59

    Luigi59 Banned

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    :scratch:

    Far from it.
     
  16. Capt MJ

    Capt MJ Member

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    More fuel for the fire...

    I have watched this question bubble for many years now... especially the dependency status during the half year. When USNA's I-day falls on 1 July, it's a split right down the middle of that first year. It's much clearer once the midshipmen and cadets have spent a full year as an independent military member.

    These links might be helpful. I believe it would apply to all SA's except USMMA, whose midshipmen do not receive DFAS pay.

    http://www.usafa.af.mil/superintendent/cma/newsletters/2009/09 Mar.pdf
    Good walk-thru of various things, but USAFA cannily offers a caveat that it's informative only and not an official IRS position.

    http://www.drsm.org/WPPC/WP_TaxInfo2004.pdf
    There's probably an updated version of this, but essentially the same story.

    I'm not sure this helps... but the AFA link gives some pointers on how to calculate the support.

    Wish we had a former military JAG with a service academy background, active duty time and who now specializes in federal tax law and IRS interpretations...:confused::confused::confused:
     
  17. GoNavyMom

    GoNavyMom Member

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    Taxes

    Is it possible that a plebe ends up owing money if they only have a standard deduction?
     
  18. J Collins

    J Collins Founding Member

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    Last edited: Apr 5, 2009
  19. mom3boys

    mom3boys Parent

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    JCollins, not sure if CGA offers this service, but USMA offers tax services to cadets who have never done their own taxes before. The walk them through the steps and make sure everything is filled out correcty. Of course, some cadets would prefer to send it home for parents to do, or for parents' accountants to do. You will find out about whether or not CGA offers help once your DD is there.
     
  20. Just_A_Mom

    Just_A_Mom Member

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    Go ahead but I would be wary of any tax advice found on an anonymous internet forum. Just remember it's worth what you paid for it.

    Why would monetary support not matter? If the child lived with Mom for 6 months and 1 day, went to public school, had no medical bills etc. then moved in with Dad for 5 months and 29 days yet dad paid $15,000 for private school tuition, braces etc..... then Dad would meed the test. (except of course where dependency is court ordered)

    Anyway - it's not worth arguing about here, you can claim your cat if you like. It only matters if you are audited. Then you argue your case to the IRS - not some high priced accounting firm.
    You just have to do what you think you can explain until the IRS comes out with an official explanation.

    Here is the current memo:
     

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