These are some of the more popularly asked questions involving taxes and different scenarios. If your question doesn't appear here, then feel free to reach out to our experienced staff who will be more than willing to assist you.
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Below is a list of documents that should be uploaded with your online tax organizer when it gets sent to you. A copy of this list, along with what to expect during our tax review appointment, can be downloaded from the Support section of our website.
PERSONAL INFORMATION FOR EACH FAMILY MEMBER:
INCOME AND TAX INFORMATION:
DEDUCTIONS/ADJUSTMENTS:
TAX CREDITS:
Your mortgage company should send you Form 1098 which reports the mortgage interest you paid.
The forms to prove employment may vary depending on individual situations. For most, an employer will provide a W-2 form. The self-employed (i.e. independent contractors, product sales representatives such as Mary Kay, etc.) should receive a 1099-MISC from the company.
If you received unemployment benefits from your state over the past year, you must claim that as income and, therefore, pay taxes on those benefits. The unemployment agency should provide you with a 1099-G form, which explains the amount of benefits you drew during the past year. The Internal Revenue Service (IRS) receives a copy as well and will tax you at the appropriate rate in your tax bracket. Not everyone owes. If you worked a portion of the past year, chances are you paid payroll taxes and may earn a refund if those deductions were overpaid.
You will need to file a Schedule C using IRS Form 1040. Depending on your type of business and where you conduct business, there may be other forms you will need. You may also need to make quarterly estimated payments by filing Form 1040-ES, Estimated Tax for Individuals.
Taking necessary steps before tax time will make things easier once you file your taxes for the first time after a divorce. Change your W-4 through your employer so taxes will be withheld at the correct rates. Also, if you (or a family member) changed your name, file Form SS-5 with the Social Security Administration to ensure there aren’t any complications with the IRS.
Since it is not a small change (missing form or math miscalculation), missed income probably requires that you file an amendment. You’ll need to file Form 1040X, Amended U.S. Individual Income Tax Return. Additionally, if any changes you are making need forms or schedules attached, make sure you do so.
Don’t panic, you have three years since the date of filing or two years from paying (whichever is later) to correct the issue. But note, if your amended return claims more refund money, go ahead and cash your original refund check – no need to wait the average 12 weeks it takes to process your amended return. However, if your amended return shows you owe, you’ll want to lower fees and interest by paying those taxes as fast as you can.
You can then track the status of your amended tax return(s) with the IRS’s ‘Where’s My Amended Return’ tool. Check the IRS’s site about three weeks after you’ve mailed your amended return or call 866-464-2050.
If you are uncertain about needing to amend a tax return, don’t hesitate to contact us.
No. The federal tax laws do not consider gifted money to be earned income therefore it is not taxable to you. No state has a tax law on gifted money either.
Generally, property received as an inheritance is not included in your income. However, if property you receive this way later produces income such as interest, dividends, or rents, the income is taxable to you.
Yes, any money which you received as a result of work is taxable income and must be reported on your tax return. Upload your W-2 showing your earnings and your taxes withheld.
Yes, you can as long as you keep good records in case you are ever audited by the IRS. Be sure to record the name of the organization, the date and location, as well as a detailed description of what you donated. Keep notes on the amount you claimed as a deduction and how you figured the fair market value on the items you donated. In the case of monetary donations over $250, canceled checks, receipts from the organization or even a payroll deduction must be saved to show proof of the donation.
Typically, general home repairs cannot be deducted from your taxes. Home repairs are meant to keep your home in good condition, but do not increase the value of your home. However, if you live in a “federally declared disaster area” and your home is affected, then you can claim the cost to repair the damages. If you use part of your home as a principal place of business, some repairs can be deducted, but you must itemize your deductions on Schedule A.
The first step is to check the IRS Tax Relief Site to see if your area has been determined as a “disaster area” by the President because the IRS provides specific relief to these victims. (If you do not have access to the internet, call FEMA for disaster assistance at 1-800-621-3362). If you are in a disaster area and you were impacted by the disaster, meet with a tax preparer to determine which year you should claim casualty loss. Doing so will help you figure out the best possible tax break.
Depending on which Chapter you filed for, taxes may not be exempt. With Chapter 7 bankruptcy, federal taxes are exempt from discharge. When filing Chapter 13 bankruptcy, it is very important to file and pay your taxes during the bankruptcy proceedings because the court can dismiss your claim if you fail to meet this requirement. Dismissing the claim leaves you responsible for all of your debts. For further tax information on bankruptcy, read the IRS Publication 908 (10/2012), Bankruptcy Tax Guide.
If your divorce is not final, you may choose to file married filing jointly. Just note, that you and your spouse are responsible for the tax bill and any future audits.
The standing deadline for personal taxes is April 15. However, sometimes that date falls on a weekend or after Emancipation Day (a holiday in DC) and pushes the deadline to as late as April 18.
When you get your W-2, you can have your taxes prepared right away, but the IRS will not accept them before a pre-defined date.
Yes, you can opt to pay your tax liability through an installment plan. In addition to paying taxes through an installment payment plan, there may be other options such as the Offer in Compromise (OIC). Under an OIC agreement, the IRS may agree to settle the taxpayer’s liability for less than the full amount of taxes owed. The IRS is not likely to approve an OIC if there’s evidence that the taxpayer could pay the full amount through an installment payment plan or another method. A taxpayer can request consideration for an OIC by filling out Form 656, Offer in Compromise, or Form 656L, Offer in Compromise (Doubt as to Liability), and mail the application package to the IRS.
Please feel free to use the convenient refund tracking tool on our website. It provides federal, state, and amended return status by linking directly to the IRS and state tax authorities for the most up-to-date information.
Many factors play a part in how the amount of your refund is calculated. You have to consider the three elements that define a refund: your taxable income, the amount withheld from your paycheck for federal and state taxes, and your tax rate. These factors are some of the common reasons why your refund may be different than you expected.
Keep detailed records of your income, expenses, and other information you report on your tax return. A good set of records can help you save money when you do your taxes and will be your trusty ally in case you are audited.
There are several types of records that you should keep. Most experts believe it's wise to keep most types of records for at least seven years, and some you should keep indefinitely.
Keep records of all your current year income and deductible expenses. These are the records that an auditor will ask for if the IRS selects you for an audit.
Here's a list of the kinds of tax records and receipts to keep that relate to your current year income and deductions:
While you're storing your current year's income and expense records, be sure to keep your bank account and loan records too, even though you don't report them on your tax return. If the IRS believes you've underreported your taxable income because your lifestyle appears to be more comfortable than your taxable income would allow, having these loan and bank records may be just the thing to save you.
Keep the records of your current year's income and expenses for as long as you may be called upon to prove the income or deduction if you're audited.
For federal tax purposes, this is generally three years from the date you file your return (or the date it's due, if that's later), or two years from the date you actually pay the tax that's due, if the date you pay the tax is later than the due date. IRS requirements for record keeping are as follows:
Yes, keep your old tax returns.
One of the benefits of keeping your tax returns from year to year is that you can look at last year's return while preparing this year's. It's a handy reference and reminds you of deductions you may have forgotten. Another reason to keep your old tax returns is that there may be information in an old return that you need later.
Audits and your old tax returns
Here's a reason to keep your old returns that may surprise you. If the IRS calls you in for an audit, the examiner will more than likely ask you to bring your tax returns for the last few years. You'd think the IRS would have them handy, but that's not the way it works. More than likely, your old returns are stored in a computer, in a storage area, or on microfilm somewhere. Usually, your IRS auditor has just a report detailing the reason the computer picked your return for the audit. So having your old returns allows you to easily comply with your auditor's request.
How long should I keep my old tax returns?
You may want to keep your old returns forever, especially if they contain information such as the tax basis of your house. Probably, though, keeping them for the previous three or four years is sufficient.
If you throw out an old return that you find you need, you can get a copy of your most recent returns (usually the last six years) from the IRS. Ask the IRS to send you Form 4506, Request for Copy or Transcript of Tax Form. When you complete the form, send it, with the required small fee, to the IRS Service Center where you filed your return.
You need to keep some other types of tax records and receipts because they tell you how much you paid for something that you may later sell.
Keep the following types of records:
How long should I keep these records? You need to keep these records as long as you own the item so you can prove the cost you use to figure your gain or loss when you sell the item.
There are other records you should keep, even though they don't appear to have any use for your tax returns.
Here are a few examples:
Unless you own or operate your own business, partnership, or S corporation, recordkeeping does not have to be fancy.
Your recordkeeping system can be as casual as storing receipts in a box until the end of the year, then transferring the records, along with a copy of the tax return you file, to an envelope or file folder for longer storage.
To make it easy on yourself, you might want to separate your records and receipts into categories, and file them in labeled envelopes or folders. It's also helpful to keep each year's records separate and clearly labeled.
If you have your own business, or if you're a partner in a partnership or an S corporation shareholder, you might find it valuable to hire a bookkeeper or accountant.
Do you contribute to charity?
If you donate to a charity, you must have receipts to prove your donation.
Starting in 2007, contributions in cash or by check aren't deductible at all unless substantiated by one of the following:
Besides deducting your cash and non-cash charitable donations, you can also deduct your mileage to and from charity work. If you deduct mileage for your charitable efforts, keep detailed records of how you figured your deduction.
Are you employed by someone else?
If you work for someone else and spend your own money on company business, keep good records of your business expense receipts. You will need these records to either get a reimbursement from your employer or to prove business-related deductions that you take on your taxes.
Do you have income from tips?
If you make tips from your job, the hand of the IRS reaches here too, and if you are ever audited, the IRS will be interested in records of how much you made in tips.
Do you own property?
If you own property, be particularly careful to keep receipts or some other proof of all your expenses, especially for repairs and improvements.
Do you hire domestic workers?
It's important to keep accurate information about who works for you, including nannies and housekeepers, when and where they worked for you, and how much you paid them for the work.
Do you have a business?
If you have a business, you must keep very careful records of all your business expenses, including vehicle mileage, entertainment expenses, and travel expenses.
If you have a business, just because you have cash in your pocket doesn't mean you're in the black on the books. Keeping up-to-date records of all transactions and costs will not only help you tax wise, it will tell you if your business is actually profitable.
Do you travel for your business?
If you travel for business, keep good receipts and logs of all your travel expenses, including those for meals and entertainment. You will need this information whether you work for yourself or for someone else.
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