My parents want to claim me on their taxes as a dependent this year, but I want to find out what my best option is for this.

I made 600$ this year on my W2 from a job I worked for 2 weeks. They withheld around 70$. Do I need to file taxes myself since I actually had a real job this year or can my parents just claim me as a dependent? Also if my parents do claim me, will that effect my financial aid for college in any way? My parents don't support me at all, they just want the money for claiming me as a dependent.

Please let me know what my best options are here. Thanks.

then any income you earned must have taxes paid on it at their tax rate, which will be higher obviously than your own rate, which would be zero given how little you earned.

They should make up the difference to you.

As for financial aid, you need to consult with the financial aid office at the college(s) you are interested in.  

(still not an accountant)

Yes, this is an "anonymous" site, but you have just admitted to the entire world that you are not claiming your rather healthy $500 hr income.

While prostitution is a rather minor offense, tax avoidance/evasion is very serious. I would strongly recommend that you NOT allow your parents to claim you as a dependent, this could have the effect of exacerbating your tax problems and further compounding the civil and criminal penalties you might face sometime down the road.

It's a very, very bad idea to publicly admit that your are committing a crime this serious. While I doubt that the IRS is going to track you down over a post that you make on a "fuck board" LE has been known to frequent these and other boards, so you can never be TOO careful.

I don't know what state you live in but for the IRS you probably won't have to file a return. You can if you want to and get some of that $70 back but it might not be worth your time. Now just in case you were to file a return, somewhere on the tax form usually on the top there is a question that will ask if someone else can claim you as a dependent on another return. You can check the yes box if yes or no box if no.

Generally speaking it is common for parents to claim their kids as dependents until they are out of college or you start making a few thousand dollars a year.

It will not effect your eligibility for financial aid but it might help.

I don't know what your relationship is with your parents but since they don't support you, you will have to decide if you want to allow them to claim you as a dependent.

If you made a substantial amount of money as a provider you should seriously consider filing taxes and reporting that income. It might catch up to you at some point. The financial aid office will wonder why nobody is claiming you as a dependent and how you are supporting yourself on only $600 / year. To receive financial aid, you must demonstrate need which means disclosing your sources of income. If someone can't claim you as their dependent you will probably need to file your own taxes as that will serve as proof of income.

You might also want to play nice with your parents if you want financial aid. If you don't want to file your own taxes and claim to be someone's dependent you will need their financial information from their tax returns, financial accounts, assets etc when you apply for aid.

I might be wrong but me sense is that you don't have a good relationship with your parents. Before you say yes or no, my suggestion would be to meet them somewhere for lunch and discuss expectations. Let them know that you plan on going to college and applying for financial aid. If they desire to claim you as a dependent, you will expect their cooperation as you apply for financial aid and that might mean disclosing their income, assets and taxes as needed.

If they say no, let them know they can't claim you as a dependent. You will probably need to file your own taxes and report all your income. In such a case with you on your own, only your financial information will be required when applying for financial aid and not your parents.

Below are two good sources for financial aid information:

https://studentloans.gov/myDirectLoan/index.action

http://www.fafsa.ed.gov/

if the child is a full time student attending school elsewhere.

(still not an accountant)

you do not have to file, but if you want the $70 refund then do so, you will not be taxed on this sum and your parents rate has nothing to do with your earning even if you were earning more.    

"To claim an exemption for a dependent child, the taxpayer must provide at least 50% of the child's support and the child must live with the adult at least half of the year. Parents, step-parents, foster parents, siblings and grandparents may claim children as dependents."

Read more: http://www.investopedia.com/articles/taxes/08/kids-first-income-tax-return.asp#ixzz1l8dKT5W5

As far as financial aid, it is expected that students are deducted on their parents tax forms, also this is confidential unless you have to provide pqrent's tax forms but it should not matter unless you have applied for aid as an independent. As long as parent contributes more than 50 percent of income they can deduct provided you are under 24, and a student, (disabled nay be deducted without qualification); it is up to them to decide, not you.

.http://www.irs.gov/publications/p929/ar02.html

I have eight years experience working at H&R Block.

If you under 24 and a full time student (more than half time) then you parents can claim you as a dependent if you did not provide more than 50% of your own support. So they can not claim you as a dependent.

If they claim you and the IRS finds about your other income. They will lose the deduction, about $900, assuming they are in the 25% tax bracket.

If the IRS finds about your other income, here is how it would work out.

Say you earned $20,000 in 2011.
Your standard deduction is $9,500 so you taxable income $10,500.
You income tax plus self-employment tax adds up to about $2600.

There would likely be a 20% accuracy penalty which would be another $520.

If you did not file at all there would another penalty
either failure to file .Up to $650 more
or fraudulent failure to file. Up to $2000.

It's hard to determine where the student actually resides...  While I think the IRS'd expect to see the parent's address as the permanent address, it's pretty much unenforceable as long as the parents accept mail sent there.  The real test is if the person claiming provided more than 50% of support.  If the student does not reside under that roof OR have college bills (cancelled checks)...  the parents are risking a lot.    

Not an accountant either, but dealt with it first hand not long ago.

How the girls should handle taxes overall. I would guess most ignore this and could get into trouble as indicated for tax problems. On the other hand, if they declare income from cash they might draw attention either from the taxman (questioning accuracy) or create suspicion about where the money comes from.

unless blatant fraud and big earnings that are easily documented. A simple error does not always incur penalties.

There is a problem. Say your parents e-file claiming you as dependent (which they cannot legally since you provided more than half your support.
Then you decide to file with your self employment income, the IRS computer will reject your return if you claim yourself.

There is no record of your income so realistically you don't have much to worry about. But you should do your share and pay taxes like the rest of us.

> I made 600$ this year on my W2 from a job I worked for 2 weeks.
> They withheld around 70$.
> Do I need to file taxes myself since I actually had a real job this year

Assuming that is all the income you are going to report, then you do not have to file. With $600 of income (regardless of whether you can be claimed on your parent's return or not), you will not ow taxes (and thus be required to file).

> or can my parents just claim me as a dependent?

They can claim you as a depended regardless of whether you file. Whether you qualify as their dependent is their problem, not yours.

If you are claimed as a dependent on their return, and you file your own return, just make sure you state you are claimed as a dependent on someone else's return. It affects your deductions and such, but you are well below the limits for taxable income.

Whether you have a State income tax issue is another question.

> Also if my parents do claim me, will that effect my financial aid for college in any way?

Depends upon whether you qualify to be independent for Financial Aid purposes.
http://www.fafsaonline.com/fafsa-form/dependent-status-for-fafsa-5.php
If you were born before 1/1/1989, then you are considered independent. Otherwise, see if you qualify for any of the others.

> My parents don't support me at all, they just want the money for claiming me as a dependent.

Then they will be committing tax fraud. But, that is their problem, not yours.

> Please let me know what my best options are here.

Let your parents do what they want to do. If/when you report your income, mark the appropriate box on your tax form. If you want the $70 bucks, then you have to file.

Assuming the IRS somehow finds out about your non-reported income (and you had a lot of it), then:
1) If you don't file, then they can get you for failure to file.
2) If you do file, then they can get you on tax evasion.

Remember, Al Capone was busted for tax evasion, not for all the stuff he did as head of the mob.

I myself do each and every year without fail and have my business registered with uncle sam as a business,I make money I keep records I pay taxes. As do all of my friends.

The IRS could care less where the money comes from as long as they get their fair share.

The penalties are much worse for avoidance than the actual taxes ,and they also can come with felony convictions relating to it.

If ladies are not paying taxes not they need to contact a provider friendly CPA and get the ball rolling,
The IRS will work with you to catch up your taxes even if you havent filed in a couple years,and your CPA can help you with that also.
Huggz
Leigh

I would be happy to answer any tax questions from providers.

Mary "Lee" Miller
Companion Tax & Accounting Services
[email protected]