Tax Answers

April 05, 1994

Here are answers from members of the Maryland Association of Certified Public Accountants to readers' tax questions. The Sun will publish answers through April 15.

Q: My mother-in-law resides with us. She gets all her support from us as far as food, clothing and other expenses. She has Social Security income of $483 a month, and she has a CD income of $1,224 a year. Is she eligible to list as a dependent?

A: Yes, your mother-in-law does qualify to be your dependent. As long as you support her and her gross income is less than $2,350 a year she can be claimed as your dependent. Gross income does not include untaxable income such as Social Security benefits.

Q: When you have money in an annuity and you are allowed to take a percentage out without penalty, and you put that money into another annuity, do you have to pay taxes on the money that you have taken out?

A: No, you don't have to pay taxes on the money that is transferred to another annuity provided that the new tax-deferred annuity continues to apply the same withdrawal restrictions that applied before the transfer.

NOTE: Several readers have called to question an answer given in this column last week, which said that Baltimore Gas and Electric Co. rebates to homeowners who install energy-efficient heating and cooling equipment are not taxable. Although those rebates were taxable for the tax year 1992, they became nontaxable on Jan. 1, 1993, under a provision of the Energy Policy Act of 1992.

The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary. Consult with a tax adviser for specific advice.

To ask a tax question by phone, call Sundial, The Sun's telephone information service, at (410) 783-1800. In Anne Arundel County call 268-7736, in Harford County 836-5028, and in Carroll County 848-0338. Using a touch-tone phone, enter 6120 after the greeting.

Written queries may be sent to TAX QUESTIONS, The Baltimore Sun, Business News Department, 501 N. Calvert St., Baltimore 21278. Fax questions to the Business News Department at (410) 783-2517.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.