Ask The Expert #4

Q.  My son will be going to college and moving out of state next year.  Will I be able to claim him on my tax return?

A.  Many people fail to claim their kids in college, and it can make a big difference on your tax return.  If a child is under the age of 24 and a full-time student for at least five months, you can claim them on your return if you provided over half of their support.  Support includes amounts paid for expenses such as food, clothes, lodging, medical, and education.  You may be eligible for a tuition credit for as much as $2,500.


Q.  I received a 1099-C Cancelation of debt.  Is that amount required to be reported as income on my tax return?

A.  In general, if you have cancellation of debt income it is taxable income.  However, debt canceled during insolvency is not taxable.  A taxpayer is insolvent when his or her total liabilities exceed his or her total assets.  It is possible that all of the canceled debt or a partial amount of the canceled debt is not taxable.  You will need to calculate whether any of it the debt is taxable, and report it on your return.  For more information, see IRS Pub 4681.


Q.  My son is 17 and son received a 1099-MISC for $600.  That is his only income.  Is he required to file a tax return?

A.  Yes.  You have to file an income tax return if your net earnings from self-employment were $400 or more.  This is because self-employment tax starts if you earn $400 or more.  If your son has business expenses that reduce his profit to less than $400, he won’t have to pay self-employment tax.  However, since the IRS has no idea what his business expenses are, he will need to file his return.  His 1099-MISC income and any business expenses will be reported on Schedule C. 

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