When you think of taxes during this time of year, your individual income tax return is probably the one that comes to mind first. But you may be responsible for filing other returns as well.
Here are two common situations: Dependents.
Did your dependent children earn more than $5,150 of wages, tips, or taxable scholarship grants during 2006? If so, they'll have to file a federal tax return. Even if your child's income was lower than the $5,150 threshold, filing is the only way to get a refund of federal income tax withheld.
If your under-age-18 child had "unearned income" such as interest and dividends in excess of $850 during 2006, a return may also be required.
Gifts.
You'll generally have to file a 2006 gift tax return if you gave property with a value of more than $12,000 to one individual, or if you and your spouse chose to make a joint gift during the year. Known as gift splitting, this election lets you apply two annual exclusions to the same gift, for a total of $24,000.
Other situations that may require filing a return include gifts given with "strings" that prevent the recipient from currently enjoying unrestricted benefits and gifts with an undeterminable value.
With certain exceptions, a gift tax return is not required for transfers between spouses. In addition, medical expenses or qualifying tuition paid directly to providers for the benefit of someone else are not subject to gift tax, so no return is necessary.
Additional federal and state returns may also be required. As you gather your income tax information, make note of any special circumstances. Contact our office for any assistance you need in meeting all your filing obligations.
Questions for our Financial Expert?
E-Mail us at: finance@ClevelandSeniors.Com
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