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Tips for Tax Forgiveness

Taxpayers may only claim dependents who are minor or adult children claimed as dependents on their federal income tax returns. For PA purposes, qualifying children include parents' natural children, adopted children and step-children. Qualified children also include grandchildren of grandparents and foster children of foster parents. An aunt, uncle or unrelated person may not claim a child as a dependent for PA purposes, even if claiming the child as a dependent on a federal return. Adult children can be claimed as dependents for PA purposes if they meet qualifications for and are claimed as dependents on 2008 federal income tax returns.

Generally, if a taxpayer is claimed as a dependent on someone’s federal income tax return, the taxpayer does not qualify for Tax Forgiveness unless the person who claims the taxpayer also qualifies for Tax Forgiveness. For example, say the parents of a student with a part-time job claim the student on their federal return. If the parents qualify for Tax Forgiveness, the student may also claim Tax Forgiveness on his/her state tax return.

Eligibility income for Tax Forgiveness is different from taxable income. Eligibility income is greater because it includes many nontaxable forms of income, such as interest on savings bonds, alimony, the nontaxable gain on the sale of a home, insurance proceeds, inheritances, winnings from the PA Lottery, foster care payments and the value of gifts from people living outside the household.

Taxpayers do not have to include qualified retirement payments, Social Security benefits, unemployment, child support, military combat pay, hazardous duty pay or public assistance in eligibility income.