Ask a CPA

You are allowed to deduct medical expenses paid on behalf of your parents even if they aren't your dependents.

The parent having custody of the child is always entitled to the dependency deduction, unless the custodial parent waives his or her right.

Alimony or separate maintenance payments must be included on your tax return as income in the year received. Child support is not taxable and not reportable. Likewise your ex-spouse can deduct the alimony but cannot deduct the child support.

In a divorce settlement, retirement funds are subject to division between the spouses. A Qualified Domestic Relations Order is a legal directive to the administrator of the pension, IRA or other retirement funds, to pay a specified amount of money to a former spouse or child. These payments are exempt from the early withdrawal penalty. If payments are made to the former spouse, the spouse may defer tax on the payments if they are rolled into an IRA within 60 days. If a payment is made to a child, that amount is taxable to the former spouse whose retirement funds were taken.

The cost basis of assets transferred from one former spouse to another is the donor's basis. The recipient spouse may have to pay tax if there is appreciation of the asset at the time it is sold.

The Kiddie Tax refers to the tax parents pay for their dependent children under the age of 19, when the child is taxed at their parents' tax bracket.
The current tax law imposes the "Kiddie Tax" on a dependent child under 19 by the last day of the tax year whose investment income(interest, dividends and capital gains) exceeds $2,000.
The tax is computed using the parents' income tax bracket on the amount of income over the $2,000 threshold.
For the current year the investment income of children under age 14 will get more of a tax break. The first $1,000 of investment income will be tax free and the next $1,000 will be taxed at the child's tax rate. Amounts in excess of $2,000 will be taxed at the parent's rate.

Not necessarily. Cohabitation may be technically illegal in your state. The IRS will follow the state law in determining whether your relationship is in violation of any state domestic law. When no local law is violated, a dependency exemption is allowed.

There are a few issues here. First of all, to claim a child as a dependent who earns more than $3700, he must be under age 19 as of the end of the year, unless he is in college full-time. Children under the age of 24 can be claimed as a dependent without an income limitation provided they are full-time college students. Since your child attends college at night, he could be considered full-time only if he takes the number of classes that is required during the day to be considered a full-time student. We advise you to meet with a CPA in your community to ascertain whether it is in your best interest to claim your child. Often students can qualify for financial aid who claim themselves independent from their parents.

You will need to file form SS-5. Contact your local Social Security office or go on the Internet http://www.ssa.gov/ssnumber/ and download the form.
If you are expecting a child to be born this year, keep in mind that you will not be able to take a deduction for your new baby without the social security number.
Most hospitals are aware of this and provide the forms along with birth records.

Transfers of any property between spouses that are incident to a divorce are treated as tax-free exchanges, and as a result, it is not reportable or taxable.