FAQ - KG Tax & Consulting

Frequently Asked Tax Questions

The following FAQ's are some of the most asked questions from our clients. For more detailed answers and solutions to your unique tax situation please contact us via Email or Schedule an Appointment

How do I notify the IRS my address has changed?

Tax Return: File your income tax return using your new address
Or go to:
IRS.GOV
Complete IRS Form 8822 – Change of address
Complete IRS Form 8822B – Change of Business address

When should an extension be filed?

Corporations extensions must be filed by March 15th. You have 6 months for the IRS to receive your return (September 15th).
Personal extensions must be filed by April 15th. This extends your paperwork, not the tax that is owed. You have 6 months for the IRS to receive your return (October 15th).

Is there an age limit on claiming my child as a dependent?

To claim your child as your dependent, your child must meet the qualifying child test or the qualifying relative test.

To meet the qualifying child test, your child must be younger than you and as of the end of the calendar year, either be younger than 19 years old or be a student and younger than 24 years old, or any age if permanently and totally disabled.
There is no age limit on claiming your child as a dependent if the child meets the qualifying relative test.

In addition to meeting the qualifying child or qualifying relative test, you may claim a dependency exemption for your child as long as all of the following tests are met:

Dependent taxpayer test
Citizen or resident test, and
Joint return test

What should I do if I made a mistake on my federal return that I've already filed?

It depends on the type of mistake you made:

Many mathematical errors are caught during the processing of the tax return and corrected by the IRS, so you may not need to correct these mistakes.
If you didn't claim the correct filing status or you need to change your income, deductions, or credits, you should file an amended or corrected return using IRS Form 1040X

How do I know if I have to file quarterly individual estimated tax payments?

You must make estimated tax payments for the current tax year if both of the following apply:

You expect to owe at least $1,000 in tax for the current tax year after subtracting your withholding and refundable credits.
You expect your withholding and refundable credits to be less than the smaller of:
- 90% of the tax to be shown on your current year’s tax return, or
- 100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)

There are special rules for:

Farmers and fishermen
Certain household employers
Certain higher income taxpayers
Nonresident aliens

I retired last year, and started receiving social security payments. Do I have to pay taxes on my social security benefits?

You must pay federal income taxes on a portion of your Social Security benefits if your total combined income exceeds certain thresholds. If Social Security is your only source of income, your benefits are generally not taxable. The rules depend on your filing status, total income, and state of residence.

Federal taxation of Social Security
The Internal Revenue Service (IRS) determines how much of your Social Security is taxable based on your "combined income," which is your adjusted gross income, plus non-taxable interest, plus half of your Social Security benefits.

For the 2025 tax year, the income thresholds are:
Filing status Combined income Percentage of benefits that may be taxed
Individual $25,000–$34,000 Up to 50%
More than $34,000 Up to 85%
Married filing jointly $32,000–$44,000 Up to 50%
More than $44,000 Up to 85%
Married filing separately Any amount Likely up to 85%
(if you lived with your spouse)

Important considerations

Benefits not taxed below threshold: If your combined income is below $25,000 as an individual or $32,000 as a couple filing jointly, none of your Social Security benefits will be taxed by the federal government.
Never 100% taxed: The maximum amount of your Social Security that can be taxed is 85%, regardless of your income.
Benefits included in taxation: The taxation rules apply to monthly retirement, survivor, and disability benefits. Supplemental Security Income (SSI) payments are not taxable.
Voluntary tax withholding: You can have federal taxes automatically withheld from your Social Security payments by completing Form W-4V and submitting it to the Social Security Administration.

State taxation of Social Security
In addition to federal taxes, some states also tax Social Security benefits. As of late 2025, the following eight states are known to tax benefits:

Colorado
Connecticut
Minnesota
Montana
New Mexico
Rhode Island
Utah
Vermont

Each of these states has its own rules regarding income thresholds and exemptions. You should check with your state's tax agency for details.

Recent changes for 2025–2028
Recent legislation includes a temporary deduction for seniors aged 65 and older for the 2025–2028 tax years. This deduction may help lower the taxable income of eligible seniors, especially those with lower incomes. The deduction is available for single filers with an adjusted gross income under $75,000 and for married couples filing jointly with an income under $150,000

What is Earned Income Tax Credit (EITC)?

EIC is a tax credit available to low income earners. EITC, Earned Income Tax Credit, is a benefit for working people who have low to moderate income. A tax credit means more money in your pocket. It reduces the amount of tax you owe and may also give you a refund.

What is the Capital Tax Gain?

The capital gains tax rate depends on whether the gain is short-term or long-term, your income, and your filing status.

Short-term capital gains

Short-term gains are profits from assets held for one year or less.
They are taxed at the same rate as your ordinary income, which can range from 10% to 37%.

Long-term capital gains (2025 tax year)
Long-term gains are profits from assets held for more than a year and are generally taxed at more favorable rates: 0%, 15%, or 20%.

Long-term capital gains tax rates for the 2025 tax year:
0% rate (taxable income) 15% rate (taxable income) 20% rate (taxable income)
Single Up to $48,350 $48,351 to $533,400 Over $533,400
Married filing jointly Up to $96,700 $96,701 to $600,050 Over $600,050
Married filing separately Up to $48,350 $48,351 to $300,000 Over $300,000
Head of household Up to $64,750 $64,751 to $566,700 Over $566,700

Special cases

Net Investment Income Tax (NIIT): A 3.8% tax on net investment income may apply to high-earning individuals.
Collectibles: Long-term gains from selling collectibles, such as art, coins, and antiques, are taxed at a maximum rate of 28%.
Real Estate Depreciation Recapture: If you sell real estate for which you previously claimed depreciation, a maximum 25% tax rate may apply to the portion of the gain related to that depreciation

Does your home sale qualify for the maximum exclusion?

Your sale qualifies for exclusion of $250,000 gain ($500,000 if married filing jointly) if the following is true:

You owned the home and used it as your main home during at least 2 of the last 5 years before the date of sale.
You did not acquire the home through a like-kind exchange (also known as a 1031 exchange), during the past 5 years.
You did not claim any exclusion for the sale of a home that occurred during a 2-year period ending on the date of the sale of the home, the gain from which you now want to exclude.