Frequently Asked Questions About Dependency Claims, Filing Taxes And Proprietorship

Many people often miss out on tax claims or are unable to take their business to the next step as they lack adequate information. If you’re one such individual who has accounting and tax-related questions but finds answers difficult to come by, Terry L. Barker, CPA, PC, understands the stress that you may feel. To ensure you have all your doubts cleared and are armed with the most accurate information, I have answered five of the most frequently asked questions about dependency claims, filing taxes, and proprietorship.

1. Is there an age limit on claiming my child as a dependent?
To claim your child as your dependent, you must meet the qualifying child test, dependent test, and the citizen or resident test. If you have questions in determining dependency status of a child, please contact me to discuss qualifications.

2. To qualify as head of household filing status, do I have to claim my child as a dependent?
The answer is no. To claim head of household, you must be the custodial parent, but you can release the claim to exemption for the child to a non-custodial parent and still claim head of household.

3. What should I do if I made a mistake while filing my tax return?
You will likely need to file an IRS Form 1040X reporting the changes necessary to correct any mistakes in filing your return with documentation and an explanation as to why the changes are made. Amending your tax return can be a daunting task. Please contact me for help in determining if an amended return is needed.

4. Can a married couple operate a business as a sole proprietorship, or do they need to be a partnership?
A married couple can file as sole proprietors by electing to file as a qualified joint venture. They operate the business as co-owners filing a Schedule C for each of their respective interest in the business operation.

In a community property state, you can qualify to file a joint Schedule C with equal ownership.

5. Does a small company that operates as a sole proprietorship need an Employer Identification Number (EIN)?
If you do not have employees, file any excise or pension plan tax returns, you do not have to have a separate EIN. It would likely be advisable to have an EIN not to be using your SSN for an identification number. For further discussion, please contact me.

If you have any more accounting or tax-related questions, reach out to Terry L. Barker, CPA, PC. As a Certified Public Accountant serving Katy, Fulshear, and Bellaire, TX, I ensure that I exceed expectations and always put you first. With over twenty-nine years of experience, I have been providing professional accounting, tax preparation, and business consulting services to clients across Sugar Land, Katy, Brookshire, Rosenberg, Bellaire, and the surrounding areas.

To learn more about my services, please click here or contact me by clicking here.