Unearned Income

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.Q: My 15-year-old had $614 in unearned income last year from interest, dividends and capital gain distributions from mutual funds. My understanding is that a federal return has to be filed if a child with some unearned income has income of $600 or more. I worked it out and he has a $2 tax liability. Do I really have to file a return for $2? Also, can I file the short form or does it have to be the full fledged 1040 and Schedules B and D?

You likely haven't filed your 2007 tax return, but it's not too early to take note of changes for 2008. Capital gains tax will disappear for some, while the youngest investors might be in for a tax shock. Workers will be able to salt away more for retirement. And if your home is being reassessed this year, don't forget to file for Maryland's homestead credit. Stay tuned, too. The emergency stimulus package to prop up the economy could bring on more tax breaks soon. Here are some changes we know about so far: Zero capital gains taxes.

NEW YORK -- Congress keeps nipping at the tax code, to pick up a few billion dollars here and there. It won't fix the deficit, but who's counting? This year at least, you have two extra days to hold your money; tax returns aren't due until April 17.Some new and old troubles of the season:* Retirement angst.If your retirement income is well above average, you may pay taxes on 85 percent of your Social Security benefits.You figure this out on the work sheet that came with Form SSA-1099, which tells you how much Social Security income you received last year.

Parents and grandparents have long given securities to youngsters so that the income from those investments is taxed at the children's lower rate. Last year, Congress tried to rein in this practice by raising the age of children subject to the so-called "kiddie tax." Basically, once a child's investment income reaches a certain point, the child pays taxes based on the parent's higher tax rate. But apparently the loophole wasn't closed tightly enough. Tucked into the bill that includes funding for the Iraq war and an increase in the minimum wage was a provision to again raise the age limit for the kiddie tax. Beginning next year, even college students in their early 20s might find themselves subject to a kid's tax. "It's one of those sneaky little things the government likes to do so they can say they didn't raise taxes, but they did raise revenue," says John Bacci, a Linthicum financial planner.

HOURS BEFORE Saddam Hussein's tanks launched aggression that threatens, in the President's words, America's ''way of life,'' Sen. Pat Moynihan's pen launched a skirmish which, if not erased, will erase Congress' ''way of life.'' So Mr. Moynihan's handiwork will be quietly dropped from the bill to which it is attached.On Aug. 1, the Senate, rushing toward recess, was yet again practicing moral perfectionism -- legislating ethics, as that subject was understood that week. Suddenly Senator Moynihan, the patrician from Hell's Kitchen, brought the class struggle to the Senate floor with two words: unearned income.

You likely haven't filed your 2007 tax return, but it's not too early to take note of changes for 2008. Capital gains tax will disappear for some, while the youngest investors might be in for a tax shock. Workers will be able to salt away more for retirement. And if your home is being reassessed this year, don't forget to file for Maryland's homestead credit. Stay tuned, too. The emergency stimulus package to prop up the economy could bring on more tax breaks soon. Here are some changes we know about so far: Zero capital gains taxes.

Parents and grandparents have long given securities to youngsters so that the income from those investments is taxed at the children's lower rate. Last year, Congress tried to rein in this practice by raising the age of children subject to the so-called "kiddie tax." Basically, once a child's investment income reaches a certain point, the child pays taxes based on the parent's higher tax rate. But apparently the loophole wasn't closed tightly enough. Tucked into the bill that includes funding for the Iraq war and an increase in the minimum wage was a provision to again raise the age limit for the kiddie tax. Beginning next year, even college students in their early 20s might find themselves subject to a kid's tax. "It's one of those sneaky little things the government likes to do so they can say they didn't raise taxes, but they did raise revenue," says John Bacci, a Linthicum financial planner.

Hi! My name is Charles, and I'm going to be your CPA today!This is the time of year when people begin thinking about seeing their accountant (from a Sioux Indian word meaning ''Dances with Calculators'') to find out what they should have done about their taxes before it was too late, which it is.Let's face it -- taxes are just too complicated for the average citizen to fathom. Which pretty well explains why you hardly ever hear of large groups of people getting together for an evening of tax fathoming any more.

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: I have a rental property in Hawaii on which I show a loss. I am not a resident of Maryland but file a Maryland nonresident income tax return. I know I can deduct all my losses for my property in Hawaii on my federal tax return but can I also deduct it on my Maryland return?A: A Hawaii loss is not deductible against Maryland income.

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15. See below for how to submit a question.How much income can I have before I have to file a tax return? I am a single.A single person under the age of 65 and who is not a dependent of another taxpayer does not need to file an income tax return until income exceeds $6,950. If the taxpayer is over 65, he or she does not need to file an income tax return until income exceeds $8,000.

Tax system puts a bigger burden on lower incomes The column "Ending the shakedown" (Opinion * Commentary, Nov. 21) by Grover Q. Norquist asserts that the U.S. tax code is unduly complex - taxing us multiple times for the same income. But while the income tax system certainly needs reform, his analysis is deeply flawed. His assertion that a flat income tax and a sales tax are economically the same thing and that some taxpayers prefer a sales tax belies a clear bias against the working classes of America.

SIXTEEN-year-old Lillian Gibbons earns $7 an hour as a cashier at Valley View Farms garden center in Cockeysville, but the high school junior says she gets a lot more out of the job. Her paycheck, she says, teaches her a lot about money management, from taxes to the temptations of an ATM card. "It's a source of constant, dependable income that I didn't have before when doing just babysitting," the Sparks teenager says. "With the paycheck, I'm learning this is how much I make and this is how much money I spend."

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15. See below for how to submit a question.How much income can I have before I have to file a tax return? I am a single.A single person under the age of 65 and who is not a dependent of another taxpayer does not need to file an income tax return until income exceeds $6,950. If the taxpayer is over 65, he or she does not need to file an income tax return until income exceeds $8,000.

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.Q: Is a single dependent taxpayer required to file if there is no federal tax withheld and wages totaled $2,025? What about with the state? Also, will she be required to file Form 8606 when she opens an IRA?A: For federal income tax purposes, a single dependent taxpayer who is not 65 year or older, or blind must file if:a) her unearned income (interest, dividends) was $1 or more and the total of that income plus earned income was over $650; orb)

NEW YORK -- Congress keeps nipping at the tax code, to pick up a few billion dollars here and there. It won't fix the deficit, but who's counting? This year at least, you have two extra days to hold your money; tax returns aren't due until April 17.Some new and old troubles of the season:* Retirement angst.If your retirement income is well above average, you may pay taxes on 85 percent of your Social Security benefits.You figure this out on the work sheet that came with Form SSA-1099, which tells you how much Social Security income you received last year.

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: I have a rental property in Hawaii on which I show a loss. I am not a resident of Maryland but file a Maryland nonresident income tax return. I know I can deduct all my losses for my property in Hawaii on my federal tax return but can I also deduct it on my Maryland return?A: A Hawaii loss is not deductible against Maryland income.