Article Highlights:Divorce or Separation Agreements Can Specify Who Claims a Child.If You Pay Child Support, You Claim the Child as a Dependent.Avoiding Payroll Taxes by Treating an Employee’s Compensation as a Gift.Only Medical Expenses for Taxpayer, Spouse, and Dependents Are Deductible.Donation of the Use of a Time-Share Week Is a Charitable Deduction.Pay Household Help in Cash and Avoid Paying Payroll Taxes.Health Savings Account Funds Are Only for Medical Expenses.Only Must Report and Pay Tax on Income Over $600.You Don’t Have to Report Interest Income if You Haven’t Received a Form 1099-INT.You Can Help Friends and Family with Interest Free Loans. Older People Should Change the Title on Their Home to Their Child.Cost of Attending a Medical Conference Is Deductible.Claim a Medical Deduction for Repainting Home If Lead-Based Paint Is Discovered.You Can Sell Your Used Electric Vehicle to an Individual and Get a Tax Credit.Investments In Foreign Countries Are Not Subject to U.S. Taxes.·Only Homeowners Can Claim the Solar Credit.A U.S. Citizen Married to A Non-Resident Alien Cannot File a Joint Return.The U.S. Tax Code is used for more than just collecting taxes. It is used by the Government as a means of providing lower-income individuals with social benefits such as the earned income tax credit, child tax credit and health care subsidies. It also is used to promote government-sponsored programs such as combatting climate change through tax credits for electric vehicles, home solar installations, and home energy-saving improvements. As a result, the tax code has become quite complex and changes frequently. That is why getting tax advice from friends and relatives or off the internet can be risky and lead to misinformation and trouble with the IRS, or missing out on tax benefits. Here are examples of bad tax advice. If your divorce or separation agreement says so, you can claim your child as your dependent.Not true! The IRS will not accept a state court’s allocation of dependents because IRC Sections 151 and 152, not state law or a judge’s ruling, determine who may claim a child as a dependent for federal income tax purposes.If you pay child support you are entitled to claim the child as a dependent.Untrue! A child is the dependent of the custodial parent unless the custodial parent releases the dependency to the non-custodial parent.The IRS defines “custodial parent” to be the parent with whom the child resides for the greater number of nights during the year.An employer can avoid payroll taxes by treating an employee’s compensation as a gift.Not true! Although gifts are generally excluded from the recipient's gross income, transfer by or for an employer to or for the benefit of an employee can't be excluded as a gift (Code Sec. 102(c)(1)).However, de minimis fringe benefits are not treated as a gift and are excluded from the recipient's gross income (Code Sec. 132(a)(4)). A de minimis fringe is any property or service whose value is so small that accounting for it is unreasonable or administratively impracticable. You can only deduct medical expenses for the taxpayer, spouse, and dependents.That is generally true, but for purposes of deducting medical expenses for a dependent relative, the individual does not need to meet the gross income test (IRC Sec 152(d)(1)(B)) to be a medical dependent. In addition, for qualifying children of divorced or separated parents, each parent can deduct the expenses they pay, as long the child is a dependent of one of them.You get a charitable contribution if you donate the use of your time-share week to a charity auction.Not true! Unfortunately although that might seem to be good advice, the “use” of an item does not constitute a gift of property. It is merely the granting of a privilege for which no charge is made and therefore does not constitute a deductible charitable contribution. Rev Ruling 70-477, I.R.B. 1970-37.If you pay your household help in cash you can avoid paying FICA.Not true! The IRS consider household help to be employees and employees are subject to Social Security and Medicare taxes (FICA) once a specified threshold is exceeded. Household employees do not include repairmen, plumbers, contractors, and other business people who provide their services as independent contractors. IRS Publication 926. Health savings account (HSA) funds can only be used for medical expenses.Not true! Generally HSAs can only be established by eligible individuals who are only covered by high-deductible health plans. Eligible individuals may, subject to inflation adjusted limits, make contributions to HSAs. Even though the intent of HSAs is to provide a means for taxpayers with high deductible insurance to pay medical expenses, there is no requirement that HSA distributions must be used to pay medical expenses. However, such distributions are subject to income tax and a 20% penalty tax., except that an individual aged 65 or older can withdraw the funds penalty free but still must pay tax on the nonqualified distribution.