Important Birthdays Related to Your Taxes
Apr 01, 2014
From a tax standpoint, some birthdays are more important than others. Here are some notable tax milestones.
BIRTH: You generally can start claiming a dependency exemption for your child in the year he or she is born. In 2014, the exemption is $3,950, subject to phaseout for higher income taxpayers. For married taxpayers filing jointly, the phaseout begins with an adjusted gross income (AGI) of $305,050, and the credit is completely phased out with an AGI of $427,550.*
13: The child care credit is available to eligible working parents until the year their child turns 13. The credit is 20% to 35% of employment-related child care expenses, depending on income. The maximum amount of expenses eligible for the credit is $3,000 for one qualifying child and $6,000 for two or more. As a general rule, qualifying expenses are limited to the earned income of the spouse who earns the lesser amount (no earned income, no child care credit).
17: A child tax credit is available until the year a child turns age 17. The maximum credit is $1,000 per qualified child, and it is phased out above certain income amounts.
19: Your child may continue to qualify as your dependent until the year he or she reaches age 19. If your child is enrolled as a full-time student for some part of five calendar months during the year, then he or she can qualify as your dependent until age 24.
59½:You won’t have to worry about the 10% penalty tax on early withdrawals from tax-deferred retirement accounts and traditional individual retirement accounts (IRAs) once you reach age 59½.
65: If you claim the standard deduction instead of itemizing your deductions, you can celebrate your 65th birthday with an additional standard deduction. For 2014, the additional standard deduction is $1,200 for a married individual (filing jointly or separately) or a surviving spouse and $1,550 for a single or head-of-household taxpayer.
70½: After you reach age 70½, annual required minimum distributions (RMDs) from traditional IRAs and employer retirement plans generally must start — and they represent taxable income. (Your plan may allow you to delay RMDs if you are still working for the company sponsoring the plan and you are not a 5% owner.)
- The 2014 AGI phaseout range for single taxpayers is $254,200 to $376,700. It’s $279,650 to $402,150 for heads of household.