Making
YOUR MONEY COUNT

In January, the realities of tax season set in. It's time to start gathering all of your financial records and begin figuring just how much money you earned in 1995 and just how much of that goes to federal and state governments.

The national tax preparation firm of H&R Block offers some tax tips to help you get a head start and make completing your tax returns as easy as possible:

Must I file a tax return?

Whether you must file a tax return generally depends on whether your income reaches the gross income filing requirement amount for your status and age.

You may also be required, or want, to file a return if:

• You qualify for the earned income credit.
• You are due a refund. You have to file if you want to obtain your refund.
• You owe additional taxes.

Keep in mind that even if a federal return is not required, you may be required to file a state or local return.

When can I claim someone as a dependent on my tax return?

To claim someone as your dependent for tax purposes, all five of the following dependency tests must be met:
• Your dependent must be related to you or be a member of your household and live with you for the entire year.
• Your dependent must be a citizen or resident of the United States or a resident of Canada or Mexico during some part of the year.
• The person being claimed as your dependent cannot file a joint U.S. tax return with his or her spouse.
• Your dependent cannot have gross income for U.S. tax purposes in excess of one exemption amount ($2,500 for 1995).
• Your dependent must receive over 50 percent of his or her total support from you.

The gross income test of $2,500 (for 1995) does not apply to your children who are under age 19 or are full-time students under age 24 at the end of the year. Special rules also may apply for children of divorced or separated parents.

If your dependent is age one year or older on December 31, 1995, you must list his or her social security number on your tax return.

Should I itemize my deductions?

Because itemizing your deductions can lower your tax bill, you should itemize if you can. You can benefit from itemizing if the total of your itemized deductions is more than your standard deduction. Itemized deductions include expenses for:

• medical and dental care
• state and local real estate, income, and personal property taxes
• interest on your home loans
• investment interest
• charitable contributions
• casualty and theft losses
• miscellaneous job, investment, and tax preparation costs

JANUARY 1996 ILLINOIS COUNTRY LIVING 11