Taxes ?: $26000 earned, $1200 return, claimed as dependent on parents taxes. Does this sound right?

Question

Girlfriend got her return back for $1200.
She is claimed as a dependent for 2006 on her parents tax filing.
She earned over $26000 from June 2006-December 2006.
She paid at least $7500 in taxes.

Can merely $1200 for her return be correct?

Is the tax benefit to her parents taking away from the range of $4000 to $5000 that I believe she should have gotten back from the IRS?

Is there a website or link that you can check to see if the government still owes you taxes?

Please help!! :)

She was a full time student for the spring semester of 2006. From June 2006 to Dec 2006 she was full time employed and there is no way that her parents supported her even 30% for the year of 2006.

I think she allowed her parents to claim her for the tax benefits to them out of the kindness of her heart. However, I think it was a bad decision on her part.

From what I understand she paid taxes in 2006 with her company as an independent. IE she only claimed 1 normal exemption then later her parents claimed her on their taxes after the fact.

She did the tax return herself and got back what she determined using the Quicken Tax software to be correct about $1200. However, she has no tax filing experience and is busy as all hell and probably spit out a figure and said "good enough". I do not believe she took due diligence and I think she is screwing herself out of thousands by her indifference. It makes no sense to me....

Answer 1

If she earned $26,000 and is a dependent, then her taxable income would be about $20,500. Tax on this is about $2,700. If she had $7,500 withheld for federal income tax, you are correct about her refund.

So something is wrong. Did she file a return showing only a $1,200 refund? Maybe the return is inaccurate and she should have it checked by a preparer.

If the IRS check was for $1,200 and this is not the amount that was shown on her tax return, she should receive a letter explaining the difference. If she does not receive the letter in a few weeks, she should contact the Iocal office of the IRS to ask for assistance. Or she can call the national number at 1-800-829-1040.

Answer 2

The most she could lose in taxes because her parents claimed her is the value of the exemption times her tax bracket, or 15% of $3300, or $495.

What you are missing in your advice to her is that if she worked as in independent contractor, she’d have had to pay 15.3% of her net income for self-employment tax (social security and medicare) in addition to any income tax owed. Unless she had substantial business deductions for expenses incurred to make the $26K, that would amount to almost $4000. That, plus around $2700 in income tax, would just about track with paying in $7500 and getting $1200 back.

Whether or not her parents were entitled to claim her might be in question, but in any case the cost to her was more like $500, not the thousands of dollars you are telling her it cost her.

Not sure what you mean when you say "independent". If she worked as an independent contractor (got a 1099) then the above is correct. If what you're saying is that she worked as an employee and got a W-2 for her income, then yes, something is definitely wrong, she should have gotten more back, but it's not mostly because her parents claimed her but because she did something wrong on her return, possibly by confusing the meaning of "independent" as filing status (dependent of her parents or not) or as employment status(1099 or W-2). If her income was on a W-2, then the social security and medicare would already have been deducted from her paychecks, then you are correct and she should have gotten several thousand dollars back if she'd paid in $7500.

Answer 3

When your parents claim you as a dependent, you don't get any of the benefit of the dependent deduction or the personal exemption. Since her parents have claimed these benefits on their return, she cannot - no doubling up.

However, if your girlfriend is not being supported more than 50% by her parents, she should file her return on her own. Her parents can claim her as a dependent if she is 22 or under and at least a part-time student.

The only way she can get her taxes back, if the first paragraph is her situation, she has no way to get it back. If the second paragraph is true, she and her parents can file amended returns (Form1040X) if her parents agree.

Hope this helps!

Answer 4

in the journey that your mom and dad declare you as a based, you would be ineligible for the rebate, yet you may desire to nonetheless income below the plan. mutually as the rebate relies upon on your 2007 status and income, it particularly is rather a rebate in direction of your 2008 taxes. in accordance to the economic Stimulus Act of 2008, taxes could be cut back in 2008 from 10 % to 0 % on the 1st $6,000 money of taxable income for guy or woman taxpayers. So in case you have taxable income in 2008, you will see a tax cut back once you record in 2009.

Answer 5

hahahaha if they claimed dependent she's LUCKY to be getting 1200 back!

Dont even fight it, most people i know that made that or more while claiming dependent got around 500-700 back, if that much!

Answer 6

www.irs.gov