Find answers to frequently asked questions about taxes. These Tax Topics contain general individual and business tax information. Visit often as we add and update more topics just for you!
To claim your child as your dependent, your child must meet either the qualifying child test or the qualifying relative test:
In addition to meeting the qualifying child or qualifying relative test, you can claim that person as a dependent only if these three tests are met:
If by the end of February, your Form W-2, Wage and Tax Statement has not been corrected by your employer after you attempted to have your employer or payer issue a corrected form, you can request that an IRS representative initiate a Form W-2 complaint. Call the IRS toll free at 800-829-1040 or make an appointment to visit an IRS Taxpayer Assistance Center (TAC).
Depending on the time of year, the IRS may have federal wage information in the form of a wage transcript. See Topic 159 for more information on how to get a transcript of W-2 information.
When you call the IRS or visit a TAC office, please have the following information available:
If you file your return and attach Form 4852, you’ll need to estimate the wages you earned, taxes withheld, and the period for which you did not receive or received an incorrect Form W-2. You should base the estimate on year-to-date information from your final pay stub, if possible. When filing a Form 4852 instead of a Form W-2, there may be delays processing your refund while we verify the information you gave us.
To help protect your social security benefits, keep a copy of Form 4852 until you begin receiving social security benefits, just in case there’s a question about your work record and/or earnings in a particular year. After September 30 following the date shown on Form 4852 line 4, use a my Social Security online account or contact your local SSA office to verify wages reported by your employer.
Although these forms are called information returns, they serve different functions.
Employers use Form W-2, Wage and Tax Statement to:
Employers furnish the Form W-2 to the employee and the Social Security Administration. The Social Security Administration shares the information with the Internal Revenue Service.
Payers use Form 1099-MISC, Miscellaneous Information or Form 1099-NEC, Nonemployee Compensation to:
A minister’s housing allowance (sometimes called a parsonage allowance or a rental allowance) is excludable from gross income for income tax purposes but not for self-employment tax purposes.
If you receive as part of your salary (for services as a minister) an amount officially designated (in advance of payment) as a housing allowance, and the amount isn’t more than reasonable pay for your services, you can exclude from gross income the lesser of the following amounts:
the amount officially designated (in advance of payment) as a housing allowance;
the amount actually used to provide or rent a home; or
the fair market rental value of the home (including furnishings, utilities, garage, etc.).
The payments officially designated as a housing allowance must be used in the year received.
Include any amount of the allowance that you can’t exclude as wages on line 1a of Form 1040, U.S. Individual Income Tax Return or Form 1040-SR, U.S. Tax Return for Seniors. Enter “Excess allowance” and the amount on the dotted line next to line 1a.
If your congregation furnishes housing in kind as pay for your services as a minister instead of a housing allowance, you may exclude the fair market rental value of the housing from income, but you must include the fair market rental value of the housing in net earnings from self-employment for self-employment tax purposes.
For more information on a minister’s housing allowance, refer to Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers.
For information on earnings for clergy and reporting of self-employment tax, refer to Tax Topic 417, Earnings for Clergy
If they otherwise meet all of the requirements to claim the earned income tax credit (EITC), unmarried parents with a qualifying child may choose which parent will claim the qualifying child for the EITC.
There are instances where neither parent can claim the child as a qualifying child, and some other person is entitled to claim the child as a qualifying child for purposes of the EITC. In instances where some other person or persons may claim the child as a qualifying child for purposes of the EITC:
Yes, a noncustodial parent may claim the child tax credit for his or her child if he or she is allowed to claim the child as a dependent and otherwise qualifies to claim the child tax credit.
A noncustodial parent must also attach to his or her return a Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, or a substantially similar statement, signed by the custodial parent to claim the child as a dependent.
Generally, you don’t have to be entitled to claim the child as a dependent to claim the earned income credit based on the child being your qualifying child, because the support test for qualifying child as a dependent does not apply for the earned income credit. However, if your qualifying child was married at the end of your tax year, generally, he or she can’t be your qualifying child unless you meet one of the following conditions:
No, for purposes of calculating the earned income credit, child support isn’t considered earned income.
Examples of items that aren’t earned income include interest and dividends, pensions and annuities, social security and railroad retirement benefits (including disability benefits), alimony and child support, welfare benefits, workers’ compensation benefits, unemployment compensation (insurance), nontaxable foster care payments, and veterans’ benefits, including VA rehabilitation payments. Don’t include any of these items in your earned income.
Yes, you may claim the child tax credit (CTC)/additional child tax credit (ACTC) or credit for other dependents (ODC) as well as the child and dependent care credit on your return, if you qualify for those credits.
Yes. The work opportunity tax credit (WOTC) provides an incentive to hire individuals from targeted groups that have a particularly high unemployment rate or other special employment needs.
The Taxpayer Certainty and Disaster Tax Relief Act of 2020 extended the ability to claim the WOTC for members of targeted groups that begin working for the employer after 2020 and before 2026. Generally, the WOTC is equal to 40 percent of the qualified wages paid to a targeted group employee who performs at least 400 hours of service during his or her first year of employment with the employer.
You must pre-screen and obtain certification from your state workforce agency (SWA) that an individual is a targeted group member before you claim the credit. To satisfy the requirement to pre-screen, on or before the day a job offer is made, Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit must be completed by you and the job applicant. Generally, you obtain certification by submitting Form 8850 to the SWA. You must submit the form not later than the 28th day after the individual begins work for you.
Newly hired individuals from the following targeted groups might qualify you for this tax credit:
A long-term family assistance recipient.
A qualified recipient of Temporary Assistance for Needy Families (TANF).
A qualified veteran.
A qualified ex-felon.
A designated community resident.
A vocational rehabilitation referral.
A qualified summer youth employee.
A qualified Supplemental Nutrition Assistance Program (SNAP) benefits (food stamps) recipient.
A qualified SSI recipient.
A qualified long-term unemployment recipient.
If you’re a partnership, S corporation, cooperative, estate, or trust, you calculate the credit by completing Form 5884, Work Opportunity Credit and filing with your tax return or on Form 3800, General Business Credit, as appropriate. If your only source for the credit is a partnership, S corporation, cooperative, estate, or trust, you aren’t required to complete or file Form 5884, instead report the credit directly on Form 3800. If you’re a qualified tax-exempt organization, calculate and claim the credit by completing Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans. See the Instructions for Form 5884 and the Instructions for Form 5884-C.