I did my taxes for the first time this year and TurboTax told me that I qualified for the $4,000 tax break because of claiming a dependent. I wanted to know does that mean I won t have to pay the $714 I owe, or will I?
?
"qualified" is an overstatement. The dependent deduction was $4,000 per dependent for everyone, for every dependent. Read your 1040 ( -- , A , or EZ ) and you will see that.You are also getting the $1,000 extra tax credit for the child, and maybe some EIC. {Except something else is going on [your W-4 is wrong?] because you should not owe any tax unless you made really big bucks. <- best guess(es) with limited info.} Have someone review your tax form.
Max Hoopla
That means your tax bill was reduced by your top marginal rate times $4,000. For most wage earners that will reduce the bill by between $400 and $600. I can't tell from your narrative exactly what Turbo Tax says you owe but I'm guessing that you owe $714 instead of somewhere between $1,114 and $1,314.
tro
you misunderstood what TT was telling you
there is no $4K 'tax break'
you claim for personal exemptions $4K for each person you name on the tax return, this could be you, your wife and any dependent you are eligible to claim, this is not a 'break', it is standard
now if you have a child claimed as a dependent under 17 in your household you do have a child tax credit, which could be considered a 'break' of $1K for each child
in addition to that if your income is low you might be eligible for the earned income credit this amount will depend on your earned income, how old you are and how many children you claim as dependents
?
The $714 "tax owed" number is the final result after including dependents. $4000 of your income was not taxed because you have a dependent. Your tax would have been around $1200 without that exemption.
Judy
No. It mean $4000 of your income isn't taxed. It might lessen what you owe, but if tha $714 is turbotax's final amount any savings is already deducted.