Tax Tips

Tip for Parents of Working Dependents

Parents of working age children need to protect the dependency deduction they take for their dependent children. Every year, students eager for a refund file their own return and mistakenly claim themselves. In the past, the IRS would require the parents to file a paper return, allow the deduction and just have the student amend their return later. Now the IRS is denying the parent’s claim and requiring the student to amend their return before accepting the parents claim. This could cause serious delays in getting the parent’s return filed. Parents, please be sure to talk to your students if you intend to claim them – we might add that it’s almost always more beneficial for the Parents to claim the student.

Paying Your Federal Taxes

Here is a link to the IRS Web site that provides info on how to pay your federal taxes by credit or debit card: www.irs.gov/efile/article/0,,id=101316,00.html. It looks like the first option is the least expensive.

If you want to make payment arrangements with the IRS, you may download Form 9465 Installment Agreement Request at www.irs.gov/pub/irs-pdf/f9465.pdf and mail it to the IRS. You may also make payment arrangements online at www.irs.gov/individuals/article/0,,id=149373,00.html. You simply tell the IRS how much you can pay and when, and then make sure to pay them when you said you would. You will still have to pay interest and penalties, but the rates work out to be comparable to about 10-15%, which is not too bad compared to some credit card rates.

You may download “How to Pay Your Taxes”, a list we have put together to help you pay your taxes.

Paying Your Maryland Taxes

Go to https://interactive.marylandtaxes.com/Individuals/payagr/ to set up an online payment agreement for your Maryland personal income tax liability or set up automatic payments for an existing payment agreement.