1. I need help with filing my tax returns. What documents will your firm need from me??

  • The original copies of:

    • W-2's,

    • 1099's,

    • K-1's (Issued to those individuals who are partners in a partnership, Co-owner of a Sub-Chapter S company, or recognized by the IRS to file Form 1120S tax return)

  • Birth dates and social security numbers: yours, your spouse's, and that of all dependents

  • A copy of your last year's tax return

  • A copy of any carry forward schedule, the most common of which are:

    • Depreciation schedules

    • Amortization schedules

    • NOL (Net Operating Loss)

  • A list of any questions you might have

 

2. What is your fee?

Each taxpayer’s tax situation is different so fees are estimates and based on the service performed.

 

3. I've just discovered an error after filing my individual tax return. What should I do?

The IRS will usually correct calculation errors, or request a missing form (like W-2s) or schedule. If that is what has happens you don't have to amend your return. However, you will need to file an amended return if any of the following were reported incorrectly:

  • Your total income

  • Your filing status

  • Your deductions or credits

To do so, use Form 1040X, Amended U.S. Individual Income Tax Return, to correct a previously filed paper or electronically-filed Form 1040, 1040A, or 1040EZ return. Make sure that you enter the year of the return you are amending on top of Form 1040X.

Use a separate 1040X for each year if you are amending more than one tax return, and mail each in a separate envelope to the IRS processing center for your state. The address for the centers is listed in the 1040X instructions.

If the changes involve another schedule or form, attach it to the 1040X. For instance, if you are filing a 1040X because you have a qualifying child and now want to claim Earned Income Tax Credit, you must complete and attach a Schedule EIC to the amended return. You must file Form 1040X to claim a refund within three years from the date of filing of your original return, or within two years from the date you paid the tax, whichever is later. 

4. I can't meet my April 15 tax deadline. What should I do?

If for some reason you cannot meet the April 15 deadline to file your tax return, you can get an automatic six-month time extension from the IRS. This will give you the extra time you need to get the paperwork into the IRS, but it does not extend the time you have to pay any tax due. That means, if your tax return will show that you owe the IRS, then what is owed is required to be paid to the IRS by April 15. If not, you will owe interest on the amount not paid by the April 15 deadline, plus a late payment penalty if you have paid less than 90 percent of your total tax by that date.

To get the automatic extension, file Form 4868, Application for Extension of Time to File U.S. Individual Income Tax Return, with the IRS by the April 15 deadline, or make an extension-related electronic payment. You can file your extension request by phone or mail the paper Form 4868 to the IRS. Filing Form 4868 timely will allow you until October 15 to file your tax return timely. If your are a business, except for a corporation, your deadline to file is the same as an individual (April 15). You must file Form 7004 (Extension to File). If you are corporation, you are required to file the Form 1120 by March 15 or Form 7004 (Extension to File). 

5. I'm planning to donate to charity, so it'll automatically be a tax deduction. Right?

Not necessarily. To be tax deductible, your contributions must be made to qualified organizations such as a charity recognized by the IRS as a IRC 501 filer.

You can get this information either from the organization itself (they will tell you whether they are qualified and if donations to them are deductible), or from IRS's exempt organization search feature. IRS Publication 78, Cumulative List of Organizations, lists all charitable organizations except the ones that were most recently granted tax exempt status. 

 

6. If I am refinancing my home, am I eligible to get tax deductions on points paid?

Generally speaking, for taxpayers who itemize, the "points" paid to obtain a home mortgage may be deductible as mortgage interest. Points paid to obtain an original home mortgage can be fully deductible in the year paid, depending on circumstances. However, points paid solely to refinance a home mortgage are usually to be deducted over the life of the loan.

For a refinanced mortgage, interest deduction is calculated by dividing points paid by number of payments to be made over the life of the loan. Such information is usually available with lenders. Taxpayers may deduct points only for those payments made in the tax year. For example, a homeowner who has paid $2,000 in points and who would make 360 payments on a 30-year mortgage could deduct $5.56 per monthly payment, or a total of $66.72 if he/she made 12 payments in one year.

However, if a part of the refinanced mortgage money was used to finance improvements to the home and if the taxpayer meets certain other requirements, the points associated with the home improvements may be fully deductible in the year the points were paid. Also, if a homeowner is refinancing a mortgage for a second time, the balance of points paid for the first refinanced mortgage may be fully deductible at pay off.

Other closing costs, such as appraisal fee and non-interest fees, are generally not deductible. Also, the amount of Adjusted Gross Income can affect the amount of deductions that can be taken. 

7. I am thinking of selling my home. How will that affect my tax returns?

You may be able to exclude up to $250,000 of gain ($500,000 for jointly filing married taxpayers) from your federal tax return. This exclusion is allowed each time you sell your main home, but generally not more frequently than once every two years.

To be eligible for the exclusion, your home must have been owned by you and used as your main home for at least two out of the five years prior to its sale. You must also not have excluded gain on another home sold during the two years before the current sale.

If you and your spouse file a joint return for the year of sale, you can exclude the gain if either of you qualify for the exclusion. However, both of you would have to meet the use test to claim the maximum $500,000.

To exclude gain, a taxpayer must both own and use the home as a principal residence for two of the five years before sale. Short absences like summer vacations count as periods of use, but longer breaks like one-year sabbaticals do not.

If it so happens that you do not meet the ownership and use tests, you may be allowed to exclude a reduced maximum amount of the gain realized on the sale of your home if you sold your home due to unforeseen circumstances such as health related problems or a change in place of employment, etc. Unforeseen circumstances also include divorce or legal separation, natural or man-made disaster resulting in a casualty to your home, or an involuntary conversion of your home.

8. I'm thinking of presenting a valuable gift to a dear friend. Is it necessary to report this to the IRS?

If your gift to any one person is valued at more than $12,000, you will have to report the total gift to the Internal Revenue Service. You may even have to pay tax on it.

However, the person who receives your gift does not have to report the gift to the IRS or pay gift or income tax on its value. A gift is that which you make when you give property (including money) or the use of or income from property, without expecting to receive something of equal value in return. So if you happen to sell something at less than its value, or make an interest-free or reduced-interest loan, you could be making a gift.

There are some exceptions, however. The following do not count as gifts against the annual limit:

  • Gifts to your spouse

  • Tuition or medical expenses paid directly by you to an educational or medical institution for someone's benefit

  • Gifts to political organizations

  • Gifts to charities

Also, if you are married, both you and your spouse can give separate gifts of up to the annual limit to the same person without making it a taxable gift.

9. I changed my surname (last name) recently. What should I do now to avoid complications later?

A mismatch between a name on the tax return and the Social Security Number (SSN) could unexpectedly increase a tax bill or reduce a refund. So you should make sure that the name on your tax return matches the name registered with the Social Security Administration (SSA).

You will have to inform the SSA of a name change by filing Form SS-5 at your local SSA office. Take or mail your completed application and documents to your local Social Security office or your local Social Security Card Center. Usually it takes two weeks to have the change verified. The form is available on www.ssa.gov and at local offices. Local office addresses are available on the SSA website. 

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