How to Be Smart With Your Taxes and File Your Taxes and Prepare Your Taxes

Check with your parents to see if they
plan to claim you as a dependent on
their tax return. They’re entitled to do so if they pay
at least half of your expenses; however, if they claim
you and you also claim yourself, you’ll be hearing
from the IRS. Save yourself the grief by communicating
with your parents about this.

Besides the issue of whether your
parents claim you on their tax return
or you claim yourself, there are other tax issues to
coordinate with your parents.

Because they’re in a
higher tax bracket, they’ll benefit more from the
deductions and credits that may be available to you.
If that’s the case, taking those yourself would be
shortsighted. Why save hundreds of dollars when
you could save thousands?

If your parents claim you as a
dependent on their tax return, they
receive any tax credit or deduction you may be eligible
for; if nobody claims you on their return, you
can take the credit or deduction yourself. Make a
deal with your parents to let them take the credit
but slip you some of the savings in cash.

If you’re covered as a dependent on
your parents’ health insurance policy,
you could be risking your eligibility if you claim
yourself on your income tax return. You can’t be
your parents’ dependent for insurance purposes
and be independent for tax purposes.

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