Tax - Advice
IRS has no information on missing stimulus checks
Kelly Phillips Erb
Feb 9th 2010 at 3:00PM
Filed under: Tax, Tax - Advice, Tax - Credit
After the popular "stimulus checks" issued as part of efforts to jump start the economy in 2001 and 2008, many taxpayers were again looking forward to a check in 2009. This year, however, checks weren't in the cards for most Americans. Most of the taxpayer relief for American Recovery and Reinvestment Act of 2009 (ARRA) focused on the Making Work Pay credit. The Making Work Pay credit allows up to $400 per individual worker and $800 per working married couple and is figured on your tax return. Those who did not work during the year are not eligible for the credit.
The pitfalls of Refund Anticipation Loans
Kelly Phillips Erb
Feb 9th 2010 at 2:45PM
Filed under: Tax, Tax - Advice
Anyone fortunate enough to be getting a tax refund will probably want that money sooner rather than later. But don't let your haste cloud your good judgment. There are a number of less-than-scrupulous outfits out there that are waiting to prey on your desire (or need) for quick cash. One of my clients is a good example.
When she learned she was getting a refund on her taxes this year -- money she desperately needed to pay the oil bill -- it was all she could do to fight back the tears of joy. Last year, it had been a whole different story.
WalletPop experts take on your questions, from capital gains to back taxes
Lan N. Nguyen
Feb 9th 2010 at 9:00AM
Filed under: Tax - Advice
The Internal Revenue Service collected $56.4 billion from "enforcement efforts" in 2008. Peter Pappas of The Tax Lawyer's Blog expects the figure for 2009 to be even higher. Don't be another auditing statistic. WalletPop experts are on hand to answer some of your burning questions, from capital gains on property sales to back taxes on a business.Question:
If my wife and I sold our two family houses of 25 years and had a rental 10 of those years, how much capital gains are we allowed to claim?
A two-family home can be treated as one or two separate properties for purposes of a sale, depending on the facts. This is important, because only a home used as your principal residence for at least three of five years before the date of sale can qualify you to claim an exclusion of up to $500,000 of gain on the sale (a $250,000 limit applies to singles). If rental use was longer than three years within this five-year period, then any gain related to this portion of the home will be taxable and won't qualify for the home sale exclusion. Any depreciation claimed on the rental portion of the home after May 6, 1997, is subject to "recapture," which means this amount is taxed at a 25% rate; the balance of your gain is taxed at a 15% rate. And even if rental use during the five years doesn't exceed three years, any gain related to rental use after 2008 won't qualify for the home sale exclusion.
10 ways to maximize your tax deductions -- without itemizing
Kelly Phillips Erb
Feb 9th 2010 at 6:30AM
Filed under: Tax, Tax - Advice, Tax - Deduction
Too often, taxpayers are led to believe that if they don't itemize, then there are no real deductions available to them beyond the standard deduction. In reality, there are a number of deductions that a taxpayer can claim without itemizing. Here are 10 ways to maximize your tax deductions -- without going through the trouble of itemizing:
From health deductions to mortgages, WalletPop experts answer your questions
Lan N. Nguyen
Feb 5th 2010 at 1:00PM
Filed under: Retirement Advice, Tax - Advice
Calculating taxes has become so complicated that it's not surprising many of us turn to professionals for help. According to the IRS' national tax advocate, more than 80% of individual taxpayers pay others to prepare their taxes. But that still means we have to get our paperwork together. With W-2s and 1099s on hand or in the mail, there's no excuse to procrastinate. To help you, WalletPop experts have answered some of your urgent questions about health insurance, dependent credits and IRA conversions.
Question:
I run a small business as a Sub S. Is it better to run my personal health insurance through the company or pay for it out of personal funds?
-- Robert Clark, 48, Atlanta
Your tax questions answered
Kelly Phillips Erb
Feb 5th 2010 at 6:00AM
Filed under: Tax, Tax - Advice
It's an annual rite of passage that almost every taxpayer goes through: Interpreting the latest and greatest IRS rules. Of course, that leads to lots of tax questions. Luckily, we have the answers. Below tax blogger and attorney Kelly Phillips Erb tackles some of your top tax questions.
10 tax tips for seniors
Kelly Phillips Erb
Feb 4th 2010 at 3:30PM
Filed under: Tax, Retirement Advice, Tax - Advice
Every year about this time, I receive a lot of mail from seniors who are confused about whether they should file a tax return. The confusion stems from the fact that many seniors receive income from sources that might not be taxable, such as Social Security and tax-exempt bonds. Whether you're a retiree or someone helping a senior family member or friend with taxes, here are 10 tax tips to help ease you through the tax season and maximize your deductions:
Overlooked deductions: job search expenses
Kelly Phillips Erb
Feb 1st 2010 at 2:45PM
Filed under: Tax, Tax - Advice, Tax - Deduction
The national unemployment rate stands at a whopping 10% -- higher than it has been for years. Despite all the talk in Washington about creating new jobs, the outlook is pretty scary: When the economy was recovering from the 2001 recession, it took two years to reduce the unemployment rate by nearly a full percentage point. For that to happen in 2010, a net total of about 3 million jobs would have to be created. Realistically, that means tens of millions of Americans were searching for new jobs in 2009. Job interviews, resumes, and fees related to a job search can add up. Fortunately, those expenses are deductible on your federal income tax return. Here's what you need to know:
Help! I don't have all my tax documents!
Kelly Phillips Erb
Feb 1st 2010 at 12:00PM
Filed under: Tax, Tax - Advice
Even though the online filing season for the IRS officially began Jan. 15, many taxpayers don't yet have their necessary tax forms. That's because the law allows employers and others charged with preparing tax forms to taxpayers to distribute those forms up until Jan. 31 -- unless Jan. 31 falls on a holiday or weekend, in which case the deadline is the next business day. That's the case this year, so that means that the deadline is Monday, Feb. 1.What do you do if Monday comes and goes and you don't have your forms W-2, 1099, and other documents you need to file your tax return? Here are a few answers:
From dependent credit to filing jointly, WalletPop experts take on your questions
Lan N. Nguyen
Jan 29th 2010 at 12:00PM
Filed under: Bankruptcy, Tax - Advice, Tax - Deduction
The tax code is over 18,000 pages long. And it's so complex that even Wall Street wizs like Treasury Secretary Tim Geithner make mistakes on their tax returns. WalletPop's experts are on hand to help answer your questions and correct mistakes before it's time to file.Question:
I have been filing single with one dependent. I make less than $17,000 a year. My daughter is single, 19 years old and graduated high school May of 2009. She has worked and probably made less than $10,000 last year. I really need to claim her on my taxes if I can. She lived with me for over six months last year. I am getting conflicting advice. Some say that I can claim her all year and she can claim zero on her taxes. Some say that I can only claim her for six months, but I am not sure how that works -- how does she claim herself on her taxes?
--Elizabeth Weber, 43, Marana, AZ
Answer from Ralph Hymans, CPA based in Charleston, SC
With the facts presented, you should file your return as the head of household with one dependent. Your daughter must file her own return as a single because of her income in 2009, and she cannot take an individual deduction for herself.
You are allowed to do this because she is a dependent; your daughter is under the age of 19. Filing as head of household gives you your greatest tax benefit. The fact that your daughter lived with you for less than 12 months in 2009 is not relevant to the issue. The key issues are your daughter's status as single and her age of 19.
Top 10 ways to avoid a tax audit
Kelly Phillips Erb
Jan 28th 2010 at 8:00AM
Filed under: Tax, Tax - Audit, Tax - Advice
"Worried about an IRS audit? Avoid what's called a red flag. That's something the IRS always looks for. For example, say you have some money left in your bank account after paying taxes. That's a red flag."
-- Jay Leno
While Leno might not have it exactly right, he is on to something: The IRS does look for red flags when selecting a return for audit. Their methodology, however, is a little more sophisticated than what the comedian suggests. While there's no foolproof way to escape an audit, here are some tips for keeping your return from being flagged:
-- Jay Leno
While Leno might not have it exactly right, he is on to something: The IRS does look for red flags when selecting a return for audit. Their methodology, however, is a little more sophisticated than what the comedian suggests. While there's no foolproof way to escape an audit, here are some tips for keeping your return from being flagged:
WalletPop experts answer questions about 401(k)s to back taxes
Lan N. Nguyen
Jan 26th 2010 at 4:15PM
Filed under: Retirement - 401(k), Tax - Advice
About 10 million Americans file their taxes late, incurring penalties, not to mention a whole lot of stress. Don't be one of them this year. Take this month to get started. Our experts are on hand to help. Here's what they had to say about your questions, from cashing in on a 401(k) too early to not filing tax returns for three years.Question:
My husband and I both have retired. I used my 401(k) to pay my house loan off. My 401(k) was disappearing before my eyes; I got scared. I now owe the IRS more than I can pay back. Have others done this, and if so, how do you pay back when you don't have the money?
--Lee Coit, 55, Denver
--Lee Coit, 55, Denver
Early tax filing tips: 8 ways to make tax season less painful
Ken and Daria Dolan
Jan 24th 2010 at 6:00AM
Filed under: Tax, The Dolans, Tax - Advice, 101 taxes
Unfortunately, we all have to go through the painstaking process of doing our taxes. For those who want to get it over with now, Ken and Daria Dolan have some simple steps you can take that will take some of the stress out of tax season. In a Dolans.com survey, 34% of respondents said that they start working on their taxes in January. We applaud all of you early birds and we want to encourage the rest of you to follow suit.
Trust us, tackling tax season in bite-sized chunks will make the whole process much less daunting and save you a lot of time and headache down the road. Here are a few simple, painless tricks that can give you a big head start on your 2009 taxes now.
How to prepare for a tax audit
Kelly Phillips Erb
Jan 23rd 2010 at 3:00PM
Filed under: Tax, Tax - Basics, Tax - Advice
It's no secret that the IRS is ramping up the number of audits in an attempt to close the "tax gap." That's the term the IRS is using to account for the difference between the taxes it believes it should have collected and what it actually managed to collect. For 2001 (the last year for which data is available), the tax gap was $345 billion.
Audits can be divided into two general categories: paper audits and people audits.
Audits can be divided into two general categories: paper audits and people audits.
Common tax credits explained
Kelly Phillips Erb
Jan 22nd 2010 at 6:15PM
Filed under: Tax, Tax - Basics, Tax - Advice
Tax credits are popular ways to reduce your overall tax burden. Credits are dollar for dollar reductions in the amount of tax due, so it's a pretty big bang for your buck. Here are five of the most common tax credits:
Credit for child and dependent care expenses. The credit for child and dependent care expenses can be fairly significant, depending on the amount that you paid and your income level. The credit is equal to a percentage of the expenses you actually paid for child care less any reimbursements from any program or social services agency. The credit starts at 35% of expenses if your adjusted gross income is less than $15,000 and phases out to 20% of expenses if your adjusted gross income is more than $43,000. The maximum credit available is $3,000 for one qualifying child and $6,000 for two or more qualifying children.
Credit for child and dependent care expenses. The credit for child and dependent care expenses can be fairly significant, depending on the amount that you paid and your income level. The credit is equal to a percentage of the expenses you actually paid for child care less any reimbursements from any program or social services agency. The credit starts at 35% of expenses if your adjusted gross income is less than $15,000 and phases out to 20% of expenses if your adjusted gross income is more than $43,000. The maximum credit available is $3,000 for one qualifying child and $6,000 for two or more qualifying children.
