How do I qualify for Earned Income Credit, Child Tax Credit & Child & Dependent Care Credit?

Question

I have never filed taxes before. I am head of household, with one child. Unsure of income right now, haven't done the math yet, still locating paperwork, but around $12,000-14,000 last year. Self employed (at home).
also, WHAT ALL CAN I WRITE OFF AS BUSINESS EXPENSES? whole phone bill or part?
PLEASE HELP!!! I AM LOST but really want to learn how to do it myself!

***And what forms do I need to use to file????****

Ok, acmeraven said that my refund will be: $2747- $1695 taxes= $1052 REFUND TOTAL

IF MY BUSINESS EXPENSES ARE OVER $5,000, THEN WHERE DOES THIS COME IN AT? WILL I NOT OWE ANY TAXES AT ALL? (AND ME & IRS JUST BE EVEN) OR DO THEY PAY ME ANYTHING OVER THE $1695...FOR EXAMPLE...I OWE TAXES OF $1695, BUT MY EXPENSES ARE $5000, DO THEY OWE ME A REFUND OF $3305 FOR WHAT IS LEFT OVER (5000-1695=3305) OR DOES IT JUST COVER THE TAXES I OWE TO WHERE I OWE NOTHING AND MY REFUND IS $2747?

=) SILLY, BUT I HAVE NO IDEA!

AND, FOR EXAMPLE, I BOUGHT A CAR 2 YEARS AGO FOR $5500 AND ONLY USED IT FOR 2006 (1 YEAR) FOR BUSINESS, HALF THE TIME, WOULD THIS BE CORRECT:
$1375 AS BUSINESS EXPENSE?
THANKS FOR ANY ADDITIONAL DETAILS!

Answer 1

First I will give the simple answer. Why don't you go to IRS.GOV and find the nearest VITA (Volunteer Income Tax Assistance) site where a volunteer will walk you through the preparation of your return?

Now for the not simple portion. Go to your post office and get a booklet for the form 1040 and Sch C, Sch SE, Form EIC and a 2441. As a self employed person you fill out the Sch C first. If you have a home office for business purposes you will also need a form 8829 to write off a portion of your rent, utilites, etc.; said amount to be deducted on your Sch C. With an income of 12-14K you don't qualify for the CTC and I doubt you will need the dependent care credit as you are in a tax free area already. Head of household gets you a standard exemption of 7,550 and yourself and one dependent at 3,300 give you 6,600 for a total of 14,150 that is not taxable. You have 2,747 for EIC for your child and you will owe on 12k 1,695 in SE (FICA) tax so you will be getting refund of around 1,052. If you decide to tackle this yourself don't be afraid to ask me for specific guidance with any questions; I have been doing taxes as a VITA volunteer for 36 years now and if I haven't seen it then it hasn't happened. I admire your spunk in wanting to try it yourself; it really isn't hard. If I can do it then anybody can.

Answer 2

http://www.irs.gov/efile/index.html

You may search this site for any of your information, forms and instructions that you need ONLINE.
You may download forms etc.

You certainly are qualified for plenty of tax credits (actually receiving cash plus your return of any federal taxes withheld).

For a at-home business - you file a Schedule C - with your 1040,
and list your income and your expenses.
Note: only list part of your personal property for expenses.
pens, paper, computer - to record your expenses and prepare reports for yourself, telephone, travel - hey you have to drop those letters and pay your bills sometimes - plus you have to travel to buy stamps etc, so part of your car expenses are deductible on your schedule C.
Remember - for your personal items - never take more than the maximum about of 90% of that items to deduct it from your schedule C. So if you use your car - 50% of the time for your business - to run it properly, then 50% of your car expenses are deductible (gas, inspections, repairs, tires, window cleaners, car washes, oil, etc) are deductible on your schedule C.
Keep a record of what you pay for those items, and then take half to list as an expense on your schedule C.
If you car is paid off, and worth say $5,000 - then you take depreciation for your car - say over 3 years, at the 50% level.
So $5,000 = $2,500 at the 50% level divided by 3 years, so your depreciation expense for your car is $833.33 per year for 3 years.
And that is what's listed for 2006 for your depreciation expense for your car on your schedule C - if you had a car.
If you use all of your computer paper, and pens and ink cartridges for your business, then deduct those as SUPPLIES on your Schedule C at 100% of their cost.
If you have a telephone, and you use it sometimes for personal use - you may estimate the % for personal - say 20% of the time.
If you telephone bill for the year is $1,000 - then 80% of it is deductible or $800 goes to your Schedule C as telephone expense.

If you estimate any of your expenses (which at times you may have to do), write down your reasons for your estimate on a piece of paper that you will keep with your tax return information.

So prepare you taxes in the privacy of your home using the forms that you download from the irs.gov internet site,
and use whatever instructions you need to set up your Schdule C for small business.
Then after you're finished, and check your calculations again,
you may file electronically for free.
They ask you questions and you provide the answers on these sites - and my best word is FREE.
Now for free filing, yes FREE ELECTRONIC IRS filing - especially for those with low income, those of us with $52,000 or LESS CAN FILE FREE.

http://www.irs.gov/efile/article/0,,id=118986,00.html

If you have additional questions, please post them as additional advice needed on your question,
and I'll watch your site and answer them for you.
and my advice is free.

GOD bless us one and all, always.
CPA-retired
MBA-Boston University

Answer 3

SORRY THE ONLY WAY I DO IT IS THRU H&R BLOCK AND THEY FIGURED HOW TO PUT MY CHILD IN THERE. BUT I DO KNOW THAT THEY HAVE TO HAVE IS SOCIAL SECURITY NUMBER IN ORDER TO PUT HIM IN. GOOD LUCK. WISH I COULD HELP YOU MORE.