Deductions & credits


@SuburbanGal wrote:

 

I’m sorry but $4,200 won’t pay rent anywhere in this country.




The $4,200  has nothing to do with paying rent.  It is based on the old "personal exemption" amount so once your income exceeds the personal exemption, you can no be claimed any more.

 

Also, the MOST that you can receive for this type of dependent (if you could claim him) is a $500 credit against your tax.

 

In addition, if he does not know, being an independent contractor earning more then $400 means that he is *required* to file a tax return and pay the SE (Social Security & Medicare) tax on the amount over $400.  Unless he has expenses that reduce the income, the  SE tax on $5,600 (6000-400) would be about $840 (15.3% of $5,600).

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**