Thursday, January 1, 2009

Age for IRS purposes: December 31 or January 1?

As you are learning, there are a number of places in the tax law where age comes into play. For example, daycare tax credits are available for parents who need care for children under 13 (or disabled dependents of any age) in order to work, child tax credits are available for parents of children under age 17, qualifying children for dependent exemptions, earned income tax credit, or HoH filing status must be under 19 (or 24 if full-time students or any age if disabled), and there are other tax benefits available to taxpayers over 65 (such as the higher standard deduction for the elderly and a tax credit for low-income elderly and disabled.) And those are just the provisions in basic tax law. There are other age-dependent tax provisions in intermediate tax law, such as required minimum distributions from IRAs for people over 70 1/2.

Bed Buffalo Alert: To make matters even trickier, for some age-contingent provisions of tax law, the IRS considers you to be the age you were on December 31 of the tax year in question, but for a few other age-contingent provisions, the IRS considers you to be the age you were on January 1 of the following year! And for still other provisions, the critical cutoff birthdate is July 1 .

But don't be discouraged--you don't need to memorize all these technical points. If you are careful to type the correct birth dates into TaxWise for the taxpayer and all members of the household, TaxWise is programmed to calculate all the ages correctly for all relevant tax code provisions. Just be sure to double-check your data entry very careful on birth dates. At our VITA site, double-checking data entry for birth dates in TaxWise will be part of the Quality Review Process.

But if you are interested in more of the gory details, feel free to read more here

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