Q
& A:
Frank
Aquilino
Professor,
Accounting, Law and Taxation
In the Feb. 15 issue of INSIGHT Online, Frank Aquilino
of Accounting, Law and Taxation explained some important tax changes for
2003, and gave the campus community an opportunity to ask the questions
in this week's Q&A.
Q. I did
a purchase of temporary service credit in 2003 from the New Jersey Division
of Pensions and Benefits. I sent PERS (Public Employees Retirement System)
a lump sum payment. Is it tax deductible?
A.
No. The tax law does not provide for this as a deduction.
Q.
I have a 21-year-old daughter living at home. She didn't go
to school last year (2003). She worked part time and made a little over
$8,000 for the year. I was told because she didn't go to school I could
not claim her as a dependent. I claimed her other years because she was
in school and she has now gone back to school this year. Is this true?
A.
It is true that you cannot claim her for 2003. You could claim
her only if she were a full-time student under 24 years old (defined by
the college she attends). Her gross income for 2003 could not exceed $3,050.
Q.
If I am a single parent, how do I qualify for filing as head
of the household rather than as a single person, and what are the benefits
to filing as head of the household?
A. Your child
must be living with you the entire year and you provide the upkeep of
the household. The child does not have to be your dependent. Boarding
away at school is considered a temporary absence. You do not need to claim
the child as your dependent. The benefit is that you pay less overall
tax than as a single filer.
Q. If two
single people (never married) have a child and have always lived together
providing equal support for that child, can they both claim head of household
status?
A.
No. Only one taxpayer can qualify. Only one taxpayer can claim
that he or she maintained the household for the entire year to use this
filing status. The child does not have to be your dependent, just live
with you the entire year.
Q.
If I won't be able to finish my return by April 15, can I get
an extension?
A. Yes. You
can file for an automatic extension by April 15, 2004, which is good until
Aug. 15, 2004.
Q.
What do I do if I file electronically but my tax return gets
rejected?
A.
You can keep trying until it gets accepted, depending on the reason
for the rejection. The IRS is having quite a few problems this year with
electronic filing.