Moore Colson Newsletter

Moore Colson Newsletter - July / August 2007

Named One of
America’s Top 25 Accounting Firms
by Inside Public Accounting

Child or Dependent Tax Breaks:
Not For All Ages

Tax break

Age requirements

Child and dependent care credit

Under age 13 at year end or disabled

Child credit

Under age 17 at year end

Dependency exemption

Under age 19 at year end; under age 24 if the person is a full-time student

Earned income credit

Under age 19 at year end; under age 24 if the person is a full-time student

Tax tips
Nothing is certain … not even taxes

This section presents brief notes on uncertain tax positions, installment plans, the alternative minimum tax and donor-advised funds.

Read more

Joint purchases
How a simple estate planning tool can save a lot of taxes

Estate planning seems to get more complicated all the time. But there are still a few techniques available that are straightforward and easy to implement — and produce significant tax savings. This article reviews one such strategy: the joint purchase, also known as a split purchase, detailing the advantages and disadvantages.

Extra credit
Expanded tax benefits for qualified research

The research and development (R&D) credit has been around for more than 20 years. And despite continual efforts by supporters to make the credit permanent, the tax break remains a temporary one. Nevertheless, each time the credit has expired, Congress has renewed it. Most recently, the R&D credit expired at the end of 2005. But the Tax Relief and Health Care Act of 2006 (TRHCA) extended the credit for another two years, through the end of 2007, and expanded it. This article looks at the changes to the credit and the new alternative, simplified credit that may make these benefits available to businesses that had trouble qualifying in the past.

Do you qualify for child or dependent tax breaks?

The Internal Revenue Code contains a variety of exemptions, deductions and credits designed to ease the federal tax burden on people with children or other dependents. For many years, these provisions had different definitions of “qualifying child.” This inconsistency caused a great deal of confusion among taxpayers and led to a lot of tax return errors. The Working Families Tax Relief Act of 2004 (WFTRA) sought to simplify this aspect of the tax code by creating a uniform definition of qualifying child. For the most part, it appears that the act has succeeded. This article explains how to determine whether someone is a qualifying child for purposes of several of the most common tax breaks.

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