FAMILY TAX STRATEGIES (T/G 103) covers the anatomical parts of a parental return for achieving tax savings; the ages of children for the dependent care, adoption, and child credits; educational tax credits and their AGI "phase outs"; employer assistance exclusions; and gifts and inheritances (gratuitous transfers and life insurance proceeds) as they apply to the primary filer in a family situation of multiple filers. Also covered:

• Benefit trade-offs between divorced parents
• The "Kiddie Tax": Form 8615 or 8814?
• Treatment of "gift loans" & injury awards
• Job education expenses & lifetime learning
• Meaning of "qualified" state tuition programs
• The "nanny tax" vs. independent contractors

Family Tax Strategies
Book: 103
Table of Content

1.  FILING STATUS CHOICES                       1-1

    The Checkboxes: Five                        1-2
    Tax Rate Dependency                         1-4
    Multiple Uses of “Single”                   1-6
    Variations of “Married” Status              1-8
    Married Filing Separately                   1-10
    Head-of-Household Status                    1-12
    Head-of-Household Versatility               1-13
    Another Status: Form 1040EZ                 1-15
    When Form 1040 Required                     1-17
    
2.  DEPENDENTS & EXEMPTIONS                     2-1
    
    How “Dependent” is Defined                  2-2
    Other Definitional Aspects                  2-3
    Age “Levels” of Children                    2-4
    What Constitutes “Support”?                 2-6
    Multiple Support Agreements                 2-8
    Children of Divorced Parents                2-9
    Dependency Exemption: How Much ?            2-12
    How Exemptions Are Claimed                  2-13
    When a Dependent Files                      2-15
    
3.  DEPENDENT CARE CREDIT                       3-1

    Basic Law: Section 21                       3-2
    If Married, Must file Jointly               3-3
    Identifications Required                    3-5
    What Expenses Qualify?                      3-6
    Dependent Care Assistance                   3-8
    Part III, Form 2441                         3-10
    Exclusion or Credit: Which is Better?       3-12
    When “Married Filing Separately”            3-13
    What If Legally Unmarried?                  3-15
    Children of Divorced Parents                3-16    

4.  CHILD ADOPTION CREDIT                       4-1

    Adoption Credit Overview                    4-2
    Who is an “Eligible Child”?                 4-4
    Credit is “Per Child” Amount                4-6
    Employer-Provided Assistance                4-7
    Credit “And/Or” Exclusion                   4-8
    Make Claim on Form 8839                     4-10
    Separate Computation: Each Child            4-12
    When Benefits “Phase Out”                   4-15
    Unused Credit Carryforwards                 4-17

5.  THE CHILD TAX CREDIT                        5-1

    Overview of Section 24                      5-2
    Who is a Qualifying Child?                  5-4
    Use Worksheet for Phaseouts                 5-5
    Other Intervening Credits                   5-7
    When 3 or More Children                     5-9
    Abridgment of Form 8812                     5-10
    Synopsis of Page 2 (Form 1040)              5-11

6.  WEIGHING THE “NANNY TAX”                    6-1
    
    Household Employees Defined                 6-2
    Who are Nonemployees?                       6-4
    Rationale of Section 3510                   6-5
    Highlights of Section 3510                  6-7
    Schedule H (Form 1040)                      6-8
    There’s More than Schedule H                6-11
    California Goes Bonkers                     6-13
    Other States More Realistic                 6-14
    Rethink Your Household Needs                6-15
    The Disabled & Elderly                      6-17
    Independent Contractors: Yes; No            6-18

7.  GRATUITOUS TRANSFERS                        7-1
    
    First Things First                          7-2
    Gifts & Inheritances                        7-3
    Distributions from Trusts                   7-6
    Who Pays the Gift Tax?                      7-7
    Exclusions from Gift Tax                    7-9
    Life Insurance Proceeds                     7-11
    Personal Injury Awards                      7-12
    Treatment of “Gift Loans”                   7-14
    The GST Exemption                           7-16

8.  THE “KIDDIE TAX” EXPLAINED                  8-1

    Introduction to Section 1 (g)               8-2
    Basic Premise challenged                    8-3
    Net Investment Income                       8-5
    Now, on to Form 8615                        8-7
    Child’s “Higher of” Tax                     8-10
    Role of Capital Gains                       8-11
    One Alternative: Form 8814                  8-12
    Another Alternative: Tax Exempts            8-15

9.  EDUCATION TAX INCENTIVES                    9-1

    The Scholarship Exclusion                   9-2
    Employer Education Assistance               9-4
    Higher Education bonds                      9-5
    Student Loan Interest                       9-7
    Job Education Expenses                      9-9
    Hope Postsecondary Credit                   9-10
    Lifetime Learning credit                    9-12
    Form 8863, Part I and II                    9-13
    Part III of Form 8863                       9-15
    Education IRAs                              9-16
    Qualified State Tuition Program             9-17
    Summary Commentary                          9-20 

10. SAVINGS BEHIND THE LINES                    10-1

    The 15 Income Lines                         10-2
    First Look: Form (s) W-2                    10-4
    Other Box 1 Reductions                      10-6
    Tax Exempt Interest                         10-7
    Small Business Elections                    10-9
    Self-Employed “Adjustments”                 10-10
    Transactional Gains & Losses                10-13
    Supplemental Income/Loss                    10-14
    Other Income/Other Offsets                  10-18

11. DEDUCTION PHASEOUTS & AMT                   11-1
    
    The Schedule A Phaseout                     11-2
    Phaseout of Personal Exemptions             11-4
    Recap of Other Phaseouts                    11-5
    Introduction to AMT                         11-6
    Introduction to Form 6251                   11-8
    AMT Exemptions & Phaseouts                  11-11
    Part III of Form 6251                       11-12
    Credit for Prior AMT                        11-14
    Any Relief from AMT?                        11-16

12. YOUR DEPENDENTS’ RETURNS                    12-1

    Notice from the IRS                         12-2
    Behind the Notice (s)                       12-4
    Guidelines for Oversight                    12-5
    Form 1040EZ & TeleFiling                    12-7
    Form 1040A More Versatile                   12-10
    When Form 1040 Required                     12-11
    Assigning Assets to Minors                  12-13   
    Employing Your Children                     12-15
    Dependent-in-Fact I                         12-16
    Dependent-in-Fact II                        12-17