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
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).
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.
- 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.)
- 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?
Social security benefits include monthly retirement, survivor and disability benefits. They do not include supplemental security income (SSI) payments, which are not taxable. The amount of social security benefits that must be included on your income tax return and used to calculate your income tax liability depends on the total amount of your income and benefits for the taxable year.
To find out whether any of your benefits may be taxable, compare the base amount for your filing status with the total of:
If you are married and file a joint return, you and your spouse must combine your incomes and social security benefits when figuring the taxable portion of your benefits.
To find out whether any of your benefits may be taxable, compare the base amount for your filing status with the total of:
- One-half of your benefits.
- All of your other income, including tax-exempt interest.
- $25,000 if you are single, head of household, or qualifying widow(er),
- $25,000 if you are married filing separately and lived apart from your spouse for the entire year,
- $32,000 if you are married filing jointly,
- $0 if you are married filing separately and lived with your spouse at any time during the tax year.
If you are married and file a joint return, you and your spouse must combine your incomes and social security benefits when figuring the taxable portion of your benefits.
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?
Almost everything you own and use for personal or investment purposes is a capital asset. Examples include a home, personal-use items like household furnishings, and stocks or bonds held as investments. When you sell a capital asset, the difference between the adjusted basis in the asset and the amount you realized from the sale is a capital gain or a capital loss. Generally, an asset's basis is its cost to the owner, but if you received the asset as a gift or inheritance, refer to www.irs.gov/taxtopics/tc703 for information about your basis. For information on calculating adjusted basis, refer to Publication 551 www.irs.gov/publications/p551
You have a capital gain if you sell the asset for more than your adjusted basis. You have a capital loss if you sell the asset for less than your adjusted basis. Losses from the sale of personal-use property, such as your home or car, are not tax deductible. If you hold the asset for more than one year before you dispose of it, your capital gain or loss is long-term. If you hold it one year or less, your capital gain or loss is short-term.
The tax rate on most net capital gain is no higher than 15% for most taxpayers. Some or all net capital gain may be taxed at 0% if you are in the 10% or 15% ordinary income tax brackets. However, a 20% tax rate on net capital gain applies to the extent that a taxpayer’s taxable income exceeds the thresholds set for the 37% ordinary tax rate.
You have a capital gain if you sell the asset for more than your adjusted basis. You have a capital loss if you sell the asset for less than your adjusted basis. Losses from the sale of personal-use property, such as your home or car, are not tax deductible. If you hold the asset for more than one year before you dispose of it, your capital gain or loss is long-term. If you hold it one year or less, your capital gain or loss is short-term.
The tax rate on most net capital gain is no higher than 15% for most taxpayers. Some or all net capital gain may be taxed at 0% if you are in the 10% or 15% ordinary income tax brackets. However, a 20% tax rate on net capital gain applies to the extent that a taxpayer’s taxable income exceeds the thresholds set for the 37% ordinary tax rate.
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.
