 Income tax 2021-2022 income tax software example who qualifies as your dependent. Get ready to get refunds to the max, diving in to income tax. Here we are in our LASERT tax software. If you don't have access to this software or any tax software, that's okay. You might want to get access to a PDF file of the Form 1040, which you can find on the IRS website at irs.gov, irs.gov. The tax software helping us to enter the data a little bit more quickly, jumping on over to the 1040, running different scenarios. We're gonna start off with our baseline scenario, that being our single filer, Adam Smith, living in Beverly Hills 90210. We got the 100,000 on the W-2 wages, we're gonna assume, and the 12,550 for the standard deduction being taken, that getting the taxable income to the 87,450. We can mirror that in our Excel worksheet here, for example, 100,000 on the income. We're gonna say the standard deduction is gonna be for a single filer, 12,550, and we're gonna give the tax down here that will be calculated by the system. So we're at the 87,450, taxable income, 87,450, jumping to page two, tax calculated at the 15,15. So we're gonna go back on over here, put that in our Excel worksheet for the baseline, 15,015, and so there's our starting point and we don't have anything that we put down here in the payments at this point. So we got the tax liability going all the way down, tax due at that point based on that calculation. So now let's go on back to the first page. Let's add a dependent now, let's add a dependent and say, we're gonna say the son is gonna be added a straightforward kind of dependent situation, Sam Smith, 2019. So it's gonna be a qualifying child son lived for the 12 month timeframe. So meeting that test, let's go on back to the forms then and back to the first page and we're gonna say, okay, single filer, we've got our dependent now here, Sam Smith, 444, social security number son, checked off here for the child tax credit because they're gonna qualify there. Therefore credit for other dependents not checked because you're typically gonna have either or of these two items and it's a qualifying child here, Sam is. So if we then scroll back down, we got the same starting point but the major benefit generally being on the second page where we're talking about the credit that could be involved for the qualifying child. So in this case, we have it here at the 2003 50 and you can get more detail on that credit on form or schedule 8812, 8812 is going to be here. So there is the schedule for the qualifying child. Now we're gonna go into the schedule in a lot more detail in future presentations because we're just looking at the qualifications for the dependent but the major benefit that you would get would of course be if it was a qualifying child, the credit for the qualifying child. Now let's do the same for the married filing joint which is gonna change kind of the income threshold because now you're gonna have in essence two people will keep it up to 100,000 on income. So let's say Adam gets married to Eve, Adam says, Madam, I'm Adam and they meet when they meet and then they get married. So married filing joint here, Adam and Eve, we're gonna go back then to the forms. So now we've got married filing joint. We still got the one dependent Sam, we're gonna keep it at the 100,000 of income. 25 100 is now going to be the standard deduction not being affected by the child in this case. And we're gonna be picking it up over here, 25 100 on our item here. This is gonna be equal to the married deduction. We can verify then the 75 nine, I'm gonna remove the tax and let the system calculate the tax. So if I go back on over 74 900 matching out 74 900, going to page two to calculate the tax at 8,593, we can mirror that here, 85 93. And so then I'm gonna go back down and we've got our refundable tax credit. Notice it's different now. And basically that's because of the income threshold now with two individuals. So there's gonna be some income phase out basically that will take place. There also could be a refundable portion and so on that we're gonna have to take into consideration. We'll talk more about that later, but just right here, we're looking at the dependence and one of the major kind of components that would be involved would be whether or not you're gonna have the child tax credit then we'll get into the advanced payments, refundable portion, phase outs and whatnot when we talk more about the child tax credit itself. Now of course you could have more than one dependent. So if we have two dependents for example, now we've got the married, filing joint, Adam and Eve living in Beverly Hills 90210. We've got the two dependents down here. And so this one I put son, daughter, daughter, but in any case, we're gonna say they're qualifying children here. So qualifying children. And then you probably wanna make sure that you get the right thing or that could upset the client here, but in the case shouldn't have an impact on our calculation, we're gonna go to them to the second page and we're gonna say now you have an impact of course on the credit, which is gonna be one of the major kind of impacts that you would have. So now let's run a scenario where basically it's still a son here. So we're now still married, filing joint, Adam and Eve. We're now just have one dependent that being a related a child, but the child is over the age limit of 19. So now we're gonna say if they're over 19 and they're not then a qualifying student, then they're still gonna get a credit, but not the child tax credit. You're gonna get possibly the credit for other dependents, which would be on page two here. So we can see then on page two, the benefit a lot lower dollar amount generally, the non-refundable child tax credit or the other dependents. And you can see schedule 8812 for more detail. We'll get into that a little bit more in the future. But again, that's the major component or difference or change that you would see with the dependents. Now, what if that child was around 20 or 21, but they're also a full-time student. So in other words, we're gonna say we're gonna say that they didn't live with the taxpayer at this point in time. And we're gonna say that there's still the son here, child living with a taxpayer, child not living with the taxpayer. If we go back on over to Sam, the son here, you gotta make sure that you take into consideration the age limitation or the age tests. So if you say that the son is gonna be over that 19 limit, then you could say, well, they gotta be under 19 in general, or under age 24, if they're going to be basically a student at the same point. So for example, if we say that Sam was born in 2000, then we're gonna keep the son, we're gonna keep it here at lived, months lived at home at 12 months, child living with a taxpayer will keep it at that, and then the earned income credit when applicable. Now in order to qualify as a qualifying child here, I'm gonna put that they were the student age 19 to 23 in order to qualify under the qualifying child. If they didn't qualify under the qualifying child and they still lived at the home for the 12 months, then they may still qualify for the other dependent in that case as well. So then if we go back on over, we're gonna go back on over to the forms and say, okay, now we got Sam at the son and they're a qualifying child, but they're gonna be over the threshold. So you got the different age threshold. So remember it was 19 to be a qualifying child or 24 if a student, but there's another age test, which I believe was 18, to see if they're gonna be qualifying for the basically the child tax credit. So now they're gonna be qualifying as a dependent qualifying child, but you're still only gonna get the credit for the other dependents on page two. So if I go to page two, then we've got the credit for the other dependents coming from schedule 8812. We might talk more about that in the future, but we're basically just kind of focusing in on the dependents at this point in time. We'll get into more of the nuances with the credits at a future point. So now let's say for example, we have Sam here who was 1985 date of birth. And we're gonna say the relationship is just other in terms of the relationship test, but they lived with a taxpayer, us, the Smiths here for 12 months, and they probably would have a different last name if it was someone other than a related person, what we're gonna say other for the dependent other than a child, we're gonna say, and then it went applicable. So we're gonna go back on over here and say now we're talking about a dependent here, which we're assuming we're not related to them, what they're living within our household, and we possibly then would have the credit for the other dependents, but they would have to qualify in that instance for the non-relation test, which would include having a very low income level and having half of the support test being met as well. The income threshold being below, I believe, the 4,300 of the earned income in that instance. And so again, you'd have the other credit, you wouldn't get the child tax credit, that would be then calculated on page two here. So the general idea as you think about this and go through the questionnaire, is someone gonna be a qualifying child, and if they're a qualifying child, are you gonna get the child tax credit? If not, do they still qualify for the, as qualifying child possibly without the child tax credit to get the other credit? And if they're not a qualifying child, could you still qualify as a qualifying relative or a child or your dependent? In other words, the qualifying relative could include who is very broad and could include any person other than your spouse who lived with you all year as a member of your household. If your relationship didn't violate local law, if the person didn't live with you for the required time, you can see the exceptions to that rule as well.