Tuesday, September 01, 2015
Frequently Asked Questions
Business Income and Expenses
How do I know if I should fill out the Business Income and Expenses (Schedule C) form?
If you (or your spouse) own your own business and it is NOT a corporation, or if you (or your spouse) worked for someone else and they issues you a 1099-MISC form for the work you did, then you should fill out the Business Income and Expenses (Schedule C) form.
How do I figure out my business expenses if I work from my home?
Generally, in order to claim a business deduction for your home, you must use part of your home exclusively and regularly:
- as your principal place of business, OR
- as a place to meet or deal with patients, clients or customers in the normal course of your business, OR
- in any connection with your trade or business where the business portion of your home is a separate structure not attached to your home.
The amount you can deduct depends on the percentage of your home used for business. Figure out the full square footage of your home and then the amount of space that is used for your business in order to see how much rent expense you can deduct for your home office.
The same sort of calculation must be done to figure out what percentage of the home utilities can be deducted for the business.
Who is considered a student?
You are a student if during some part of each of five calendar months you were any of the following:
- A full-time student at a school that has a regular teaching staff, a regular course of study, and a regularly enrolled student body in attendance.
- A student taking a full-time, agricultural-related training course on a farm, given either by a school like that just described or by a state, county, or local government.
- A full-time student is someone who is enrolled for the number of hours or courses the particular school considers to be full-time attendance.
The term "school" includes elementary schools; junior and senior high schools; colleges; universities; and technical, trade, and vocational schools. It does not include on-the-job training courses, correspondence schools, or night schools.
What is the Earned Income Credit (EIC)?
The Earned Income Credit (EIC) is a credit to reduce taxes for people who earn low-to-moderate incomes.
Who qualifies for the Earned Income Credit (EIC) and what are the requirements?
TaxesByExperts.com will automatically prepare the EIC form for you if you qualify.
A taxpayer with or without a qualifying child may claim the EIC. The maximum credit you can get depends on whether you have no qualifying children, 1 qualifying child or more than 1 qualifying child.
With qualifying children, you must meet the following requirements to claim the EIC:
- You must have a valid social security number.
- You must have earned income from employment or from self-employment.
- Your filing status can't be Married Filing Separately.
- You must be a U.S. citizen or resident alien all year, or a nonresident alien married to a U.S. citizen or resident alien and filing a joint return.
- You cannot be a qualifying child of another person.
A qualifying child must have lived with you for more than half the tax year and be younger than 19 at the end of the taxable year, or younger than 24 at the end of the taxable year AND a full-time student during any part of any 5 months during the taxable year, OR any age if permanently and totally disabled.
To claim the EIC without qualifying children, you must meet the requirements listed above plus the following requirements:
- You must be at least 25 but younger than 65 at the end of the year.
- You lived in the U.S. for more than half the year.
- You don't qualify as a dependent of another person.
What is the Child Tax Credit and am I eligible to receive it?
The Child Tax Credit is an important tax credit that may be worth as much as $1,000 per qualifying child depending upon your income.
To claim the child tax credit, you must meet the following:
The dependent must be a U.S. citizen or resident, and a blood or adoptive son, daughter, stepchild, or grandchild. Foster children qualify if they lived with you as members of your household for all of 2011. AND, You must report each qualifying child's tax identification number (TIN) (usually the child's Social Security number) on your return for the year that you take the credit.
Taxes By Experts will automatically check if you qualify and prepare the credit for you if you do.
What is the Child and Dependent Care Tax Cedit and am I eligible to receive it?
If you paid someone to care for your child, spouse, or dependent last year, you may be able to claim the Child and Dependent Care Credit on your federal income tax return. The credit can be up to 35 percent of your qualifying expenses, depending upon your adjusted gross income. To qualify, you must meet the following:
The care must have been provided for one or more qualifying persons. A qualifying person is your dependent child age 12 or younger when the care was provided. Additionally, your spouse and certain other individuals who are physically or mentally incapable of self-care may also be qualifying persons. You must identify each qualifying person on your tax return.
The care must have been provided so you – and your spouse if you are married filing jointly – could work or look for work.
You – and your spouse if you file jointly – must have earned income from wages, salaries, tips, other taxable employee compensation or net earnings from self-employment. One spouse may be considered as having earned income if they were a full-time student or were physically or mentally unable to care for themselves.
The payments for care cannot be paid to your spouse, to the parent of your qualifying person, to someone you can claim as your dependent on your return, or to your child who will not be age 19 or older by the end of the year even if he or she is not your dependent. You must identify the care provider(s) on your tax return.
Your filing status must be single, married filing jointly, head of household or qualifying widow(er) with a dependent child.
The qualifying person must have lived with you for more than half of the tax year. There are exceptions for the birth or death of a qualifying person, or a child of divorced or separated parents.
Taxes By Experts will configure the credit limitation for you once you enter your information in the Child and Dependent Care Credit section.
If a taxpayer purchases a mobile home (manufactured home) with land and qualifies for the credit, is the amount of the credit based on the combined cost of the home and land?
Yes. The first-time homebuyer credit is ten percent of the purchase price of a principal residence. The total purchase price (mobile home and land) is used to determine the amount of the first-time homebuyer credit.
Is a taxpayer who purchases a mobile home and places the home on leased land eligible for the first-time homebuyer credit?
Yes. A mobile home may qualify as a principal residence and it is not necessary that the taxpayer own the land to qualify for the first-time homebuyer credit.
Who is considered to be a first-time homebuyer?
Taxpayers who have not owned another principal residence at any time during the three years prior to the date of purchase are considered first-time homebuyers. For example, if you bought a home on July 1, 2008, you cannot take the credit for that home if you owned, or had an ownership interest in, another principal residence at any time from July 2, 2005, through July 1, 2008.
In addition, under a special rule, long-time homeowners who buy a replacement home after Nov. 6, 2009, or in early 2010 can also qualify. To qualify as a long-time resident, you must have owned and used the same home as your principal residence for at least five consecutive years of the eight-year period ending on the date you by your new principal residence. For an eligible taxpayer who, for example, bought a home on Nov. 30, 2009, the eight-year period would run from Dec. 1, 2001, through Nov. 30, 2009.
When do I have to buy a new home to get the first-time homebuyer credit?
The credit is available for eligible home purchases after April 8, 2008. You must enter into a binding contract to buy the home before May 1, 2010, and close before Sept. 30, 2010, in order to obtain the credit. For a home you construct, the purchase date is considered to be the date you first occupy the home.
Can Taxes By Experts prepare a First Time Homebuyer Credit?
Yes. Taxes By Experts can prepare the credit for you onec you enter the required credit information. To claim this credit the IRS requires taxpayers to paper file their return. A tax return with this credit cannot be filed electronically (e-filed).
Can I take a tax deduction for home repairs or home improvements? ?
Generally, you cannot deduct home repairs or home improvements on your tax return in the current tax year.
Home improvements add to the value of your home, prolong its useful life, or adapt it to new uses. You add the cost of home improvements to the tax basis of your property.
Examples of home improvements include putting a recreation room in your unfinished basement, adding another bathroom, or bedroom, putting up a fence, putting in new plumbing or wiring, putting on a new roof, or paving your driveway.
Home repairs maintain your home in good condition. They do not add to its value or prolong its life, and you do not add their cost to the tax basis of your property. Nor can you deduct home repairs on your tax return.
Some examples of home repairs include repainting your house inside or outside, fixing your gutters or floors, repairing leaks or plastering and replacing broken window panes.
I refinanced my home last year and paid points. Are they all deductible this year?
No. Points paid solely to refinance your home mortgage cannot be deducted in the year paid. Instead, they must be deducted over the life of the loan.
What are employee business expenses?
If you use your car for business purposes, you may be able to deduct some of your operating expenses or take the standard mileage rate. The cost of commuting between home and your work is not deductible.
If you travel on business, either in-town or out-of-town, and your employer does not reimburse your expenses, you may deduct many of them on your income tax return.
If you entertain a business associate at a restaurant, you can deduct 50% of the business-related meal. Be sure to keep the receipts and a record of the business purpose.
Your professional library can also be a source of tax deductions. Books, magazines and journals related to your field can be deducted.
The uniform your company requires you to wear may also be a deduction. If the uniform is not suitable for everyday wear, the cost of the uniform and the upkeep may be deductible.
Education expenses related to your work may also be deductible. Courses designed to help maintain your skills in your present job are generally deductible. Plus, the mileage from work to school, usually one way only, is deductible.
If you are looking for a job in your same field, expenses such as employment agency fees and resume preparation are deductible. So are the miles driving to and from the interview. The expenses for an out-of-town interview are deductible if you are paying for them.
Out-of-town conventions can also be deducted if not paid for by your company, so save receipts for your lodging and meals. If the convention was in town, your mileage to and from the convention location may be deductible.
Do I need to make Estimated Tax Payments?
That depends on your situation. The rule is that you must pay your taxes as you go. If at filing time, you have not paid enough income taxes through withholding or quarterly estimated payments, you may have to pay a penalty for underpayment.
To determine whether you need to make quarterly estimates, answer these questions:
- Do you expect to owe less than $1,000 in taxes for the tax year after subtracting your federal income tax withholding from the total amount of tax you expect to owe this year? If so, you're safe—you don't need to make estimated tax payments.
- Do you expect your federal income tax withholding (plus any estimated taxes paid on time) to amount to at least 90 percent of the tax that you will owe for this tax year? If so, then you're in the clear, and you don't need to make estimated tax payments.
- Do you expect that your income tax withholding will be at least 100 percent of the tax on your previous year's return?
- If your adjusted gross income (Form 1040, line 37) on your tax return was over $150,000 ($75,000 if you're married and file separately), do you expect that your income tax withholding will be at least 110 percent of the tax you owed in tax for the previous year? If so, then you're not required to make estimated tax payments.
If you answered "no" to all of these questions, you must make estimated tax payments using Form 1040-ES. To avoid a penalty, your total tax payments (estimated taxes plus withholding) during the year must satisfy one of the requirements covered.
How can I figure out what I owe?
You need to come up with a good estimate of the income and deductions you will report on your federal tax return.
Include your expected gross income, taxable income, taxes, deductions and credits for the year. Use the worksheet in Form 1040ES, Estimated Tax for Individuals for this. You want to be as accurate as possible to avoid penalties.
The year is divided into four payment periods, or due dates, for estimated tax purposes. Those dates generally are April 15, June 15, Sept. 15 and Jan. 15.
Form 1040ES, Estimated Tax for Individuals, provides all you’ll need to pay estimated taxes. This includes instructions, worksheets, schedules and payment vouchers. But the easiest way to pay estimated taxes, however, is electronically, and you can do that through Taxes By Experts while completing your tax return.
Filing Status Personal and Dependent Info
What are capital gains and losses?
When you sell a capital asset, the difference between the amount you sell it for and your basis – which is usually what you paid for it – is a capital gain or a capital loss.
What are my Filing Status options?
The following are definitions of each filing status and some general rules:
You fall in the single category if you are not married at year-end and don’t qualify to use the lower surviving-spouse or head-of-household rates.
Married Filing a Joint Return
If you are married on the last day of the year, you can file a joint return. This applies even if you are separated from your spouse and pursuing a divorce. Unless the divorce is final by the end of the year, the IRS considers you married, and you can’t file a return as a single taxpayer. If you were married for any part of the year but were widowed at year-end you file a joint return for yourself and your deceased spouse.
For up to two years after the year in which your spouse dies you may be able to continue using the joint-return rates rather than moving immediately into higher brackets. Not every widow and widower qualifies, though. Most, in fact, do not.
To be a qualifying surviving spouse, sometimes called a qualified widow or widower, you must meet four tests:
- You must have been eligible to file a joint return for the year your spouse died.
- You must not have remarried. (But if you did, you can use the joint-return rates by filing with your new spouse.)
- You must have a child, stepchild or foster child who qualifies as your dependent.
- You must have paid more than half the cost of maintaining your home, which is the principal residence of the child for the entire year (except for temporary absences).
Head of Household
To earn the head-of-household title and the right to use the lower-than-single tax rates, you basically have to be providing a home for a child or other relative. To qualify:
- You must be unmarried at the end of the year. (Even if you’re legally married at year-end you can pass this test under a special "abandoned spouse" rule if your spouse didn’t live with you during the last six months of the year.)
- You must pay more than half the cost of keeping up the principal home for yourself and a child or other relative you can claim as a dependent.
- In most cases, you and the child or other relative must share the same house for more than six months of the year. There is an exception, however, if you are paying more than half the cost of maintaining a home for your dependent mother or father for the entire year. In that case, he or she does not have to live with you for you to qualify for head-of-household tax status. If you are paying more than half the cost of a nursing home for your dependent parent, for example, you can qualify.
When figuring whether you pay more than half the cost of maintaining a home, count such expenses as rent or mortgage interest, taxes, insurance on the home, repairs, utilities, domestic help and food eaten at home. Don’t count the cost of clothing, education, medical treatment, vacations, life insurance or transportation.
Married Filing Separately
The rare circumstances in which this status can pay off usually involve a husband and wife with similar incomes who by splitting the income on separate returns can claim deductions that would elude them on a joint return.
One often-cited reason for filing separate returns, for example, is if one spouse has significant medical bills. Such expenses are deductible only to the extent that they exceed 7.5% of adjusted gross income (AGI). Splitting income on separate returns might squeeze out a bigger medical deduction for one spouse, but only in very special circumstances would the tax savings offset the cost of skipping the advantages that come by filing a joint return. There are many factors to consider, some costly, before filing separately:
- One spouse can’t claim the standard deduction if the other itemizes. If one itemizes, both must.
- On separate returns, you can’t claim the child-care credit.
- The $25,000 passive-loss allowance for active rental real estate investors, is not allowed on
Which filing status do I select?
Select Single if:
You are not married and have no dependents. If you are Single but have Dependents, then select Head of Household.
Select Married Filing Jointly if:
You were married during the tax year, or if your spouse died during the tax year.
Select Married Filing Separately if:
You are married and your spouse files a separate return. Earned Income Credit (EIC) is not available under this status. If one spouse does an intemized return, the other cannot take a standard deduction; both must itemize.
Seleft Head of Household if:
You are not married and have a child or relative dependent.
Select Qualifed Widower if: Your spouse died before the tax year, and you have a dependent child. If your spouse died during the tax year, you must file Married Jointly for this year.
What is Injured Spouse Relief?
A spouse is considered to be injured, if one spouse owes taxes that the other is not responsible for because the owing spouse incurred these taxes prior to marriage or prior to filing a Married Filing Joint Tax Return.
Who is a Dependent? ?
A dependent may fall into one of the following categories:
The IRS defines a Qualifying Child as someone who fits ALL of the following criteria:
The person is your child (including foster and adopted), brother, sister, stepbrother, stepsister, or a descendant of one of these (e.g., a grandchild, niece, or nephew); AND
Lives in your home for more than half the year*, including temporary absences such as college, boarding school, military service, or juvenile detention (different guidelines apply for children of divorced or separated parents – see Exceptions below); AND
Is age 18 or under (or a full-time student 23 or under) at the end of the tax year OR is disabled, regardless of age; AND
Does not provide more than half of his or her own support; AND
Is a United States citizen, resident, or national OR is a resident or national of Canada or Mexico (an adopted child who is not a U.S. citizen must live with you for the entire year); AND
Does not file a joint tax return with their spouse, unless that return is filed to get a refund of taxes withheld AND both dependent and spouse would not have owed taxes had they filed separately.
If one or more of these criteria do not apply, the child most likely cannot be claimed as a Qualifying Child. However, there are exceptions for unusual cases; see Exceptions, below.
* A dependent who was born or passed away during the tax year and lives/lived in your home is considered as having lived with you the entire year. Stillborn children cannot be claimed.
The IRS defines a Qualifying Relative as someone who fits ALL of the following criteria:
Lives in your home for the entire year (is a "member of your household") OR is related to you; AND
Has less in gross income than the standard deduction, not including Social Security or welfare; AND
You provide more than half of his or her support (special rules apply for children of divorced or separated parents or children receiving support from two or more people – see Exceptions below); AND
Does not file a joint tax return with their spouse, unless that return is filed to get a refund of taxes withheld AND both dependent and spouse would not have owed taxes had they filed separately.
If one or more of these criteria do not apply, the person cannot be claimed as a Qualifying Relative.
What is considered support?
To figure out if you provided more than half of her support, you must first determine the total support provided. Total support includes amounts spent to provide food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities.
What are deductible investment expenses?
In general, expenses related to the production of taxable investment income are deductible as miscellaneous itemized deductions subject to the 2% of AGI limitation.
These would include investment advice fees, publications, brokerage fees (if for purchase or sale of securities, these are instead considered part of the tax basis of the security), software for investment tracking, pro-rated costs of a computer used for investments purposes, online service charges incurred for investment advice access, postage and telephone charges regarding investments, etc.
You may not deduct travel as an investment expense.
What can I itemize?
There are several expenses you can itemize including:
- Tax preparation fees
- Income taxes paid from previous years
- Real estate taxes
- Automobile taxes
- Gifts to charity (monetary & donations)
- Mortgage interest paid
- Medical expenses (insurance premiums & money paid to providers)
- Dental expenses (insurance premiums & money paid to providers)
- Casualty and theft losses
- Unreimbursed employee expenses (mileage & travel)
If you work from home full time or any time throughout the year, you can itemize the following expenses:
- Utility bills
- Phone bills
- Mortgage payments
- Rental payments
If you must use your computer at home, you can deduct the following expenses:
- Printer expenses
- Computer costs
- Computer paper
- Computer ink
- Cost of Internet Service (if applicable for work)
Are there any limits to the itemized amounts I can deduct? ?
You can deduct only certain amounts of some types of itemized deductions. The amount you can deduct is based on different limits, depending on the type of itemized deduction.
TaxesByExperts.com figures these limits for you and reduces your deductions where appropriate.
Most of the limits are figured using a percentage of your adjusted gross income (AGI).
Your actual deduction will be calculated by taking your total expense, for that type of deduction, and then subtracting the appropriate percentage of your AGI.
For example, your miscellaneous itemized deductions must be greater than 2% of your adjusted gross income before you get a tax benefit for any of those expenses.
This type of percentage limit is called a floor, because you have to come up to the floor before you can start deducting any of the expenses.
Here are some of the expenses you can deduct and their limitations:
Medical and dental expenses
As a general rule, you can deduct any expense you pay for the prevention, diagnosis, or medical treatment of physical or mental illness, and any amounts you pay to treat or modify any structure or function of the body for health purposes (but not for cosmetic reasons). You can also deduct transportation costs for getting to where you can receive this kind of medical care, your health insurance premiums, and your costs for prescription drugs and insulin.
Your medical expenses must equal at least 7.5% of your adjusted gross income before they give you a tax benefit. This means that the medical expenses needed to meet the 7.5% floor don't give you a tax benefit.
Interest on both your primary residence and one other residence is deductible.
The limits on deductible home mortgage interest expense are:
You can deduct interest on up to $1,000,000 in acquisition debt (which usually is your original mortgage).
You can deduct interest on up to $100,000 in home-equity debt.
Personal interest (such as credit card debt) is not deductible. However, the Taxpayer Relief Act of 1997 gave us new law that might allow you to deduct interest paid on student loans beginning in 1998. The best part about the new law is that you can take the deduction even if you don’t itemize deductions.
Deduct your charitable contributions in the year you make them. For most contributions, the maximum you can deduct in one year is 50% of your adjusted gross income. However, there are certain types of contributions that have a limit of 20% or 30% of your adjusted gross income.
If your contributions go over the limit, you can carry the unused deduction forward to the next tax year. However, be sure to enter all of your contributions on this year’s return, or the IRS won’t know why you are claiming a carryover deduction next year.
Casualty and theft losses
For most personal casualties and thefts, deduct the loss in the year it happened. If you have a loss in a federally declared disaster area, you might be able to deduct the loss in another year.
The limit on casualty and theft loss deductions, for non-business property, is:
The total of your casualty and theft losses must be more than 10% of your adjusted gross income (AGI), plus $100, before you will receive a tax benefit.
New recordkeeping requirements for cash contributions.
You cannot deduct a cash contribution, regardless of the amount, unless you keep as a record of the contribution a bank record (such as a canceled check, a bank copy of a canceled check, or a bank statement containing the name of the charity, the date, and the amount) or a written communication from the charity. The written communication must include the name of the charity, date of the contribution, and amount of the contribution. For more information, see Publication 526, Charitable Contributions.
Contributions to donor advised funds you cannot deduct a contribution to a donor advised fund after Febru
I took an accounting course in order to keep my salary on my current job. My employer did not reimburse me for the expenses. Can I take a deduction on my tax return for the cost of the course?
You may be able to deduct work-related educational expenses as an itemized deduction if the education meets this criteria:
Maintains or improves skills required in your present job, or
Serves a business purpose and is required by your employer, or by law or regulations, to keep your salary, status, or job.
Your expenses are not deductible if the education is required to meet the minimum educational requirements of your job or is part of a program that will lead to qualifying you in a new trade or business.
How do I deduct and substantiate my gambling losses?
You can deduct gambling losses only if you itemize deductions. Claim your gambling losses as a miscellaneous deduction. The amount of losses you deduct cannot total more than the amount of gambling income you have reported on your return.
My spouse and I are filing separate returns. How can we split our itemized deductions?
If you and your spouse file separate returns and one of you itemizes deductions, the other spouse will not qualify for the standard deduction and should also itemize deductions.
You may be able to claim itemized deductions on a separate return for certain expenses that you paid separately or jointly with your spouse. Deductible expenses that are paid out of separate funds, such as medical expenses, are deductible by the spouse who pays them. If these expenses are paid from community funds, the deduction may depend on whether or not you live in a community property state. In a community property state, the deduction is divided equally between you and your spouse.
What does itemizing deductions mean, and is it beneficial to me?
Instead of taking a standard deduction, itemizing deductions allows you to list all the expenses you paid during the year for certain items such as medical and dental care, state and local income taxes, real estate taxes, home mortgage interest, and gifts to charity.
Itemizing may result in a greater refund than taking the standard deduction. Fill out the Itemized Deductions form in your Taxes By Experts account and compare the Calculated tax refund results to see if this option is best for you.
When itemizing deductions, what taxes are deductible?
You can deduct as an itemized deduction, certain taxes that were imposed on you that you paid during the year. You cannot deduct taxes paid for another party, if you are not also liable for payment of the tax.
Deductible taxes include:
-State and local income tax.
-Payments to certain state benefit funds (including California state -disability insurance) that are imposed as taxes.
-Foreign income taxes (unless you elect to claim the credit on Form 1116).
-Real estate taxes on property you own (but not just amounts impounded by the mortgage company, until the taxes are actually remitted to the taxing authority).
-Your share of real estate taxes on a co-op apartment.
-Personal property taxes.
You CANNOT deduct:
-Federal income taxes.
-FICA tax withheld.
-Charges imposed by taxing districts for improvements or services, such as garbage collection or sewers.
-Federal and state excise taxes.
-Fees for drivers licenses, dog licenses, hunting or fishing licenses.
When itemizing, what interest is deductible?
You can deduct interest that qualifies as home mortgage interest. This includes two categories:
-Interest on loans used to buy or improve your primary or second residence, and secured by either of those properties. The total debt cannot exceed one million dollars.
-Interest on a loan secured by your primary or second residence that does NOT qualify under the previous heading. This would be considered home equity debt, and such loans cannot exceed an additional $100,000.
A "second home" can include a house, cabin, boat, travel trailer or motor-home, as long as it contains sleeping, toilet and kitchen facilities. Interest on loans that are for boats, trailers or motor-homes are not deductible for purposes of calculating the Alternative Minimum Tax.
You can also deduct points paid on loans used for the purchase, refinancing or improvement of your primary or second home, but pro- rata over the life of the loan. [For example, if you refinanced your 30 loan in August, you can deduct 5/360ths of the points paid in that year.] The points paid must be expressed (as a loan origination fee or loan discount) on the closing settlement statement, and must not be excessive for such loans.
There is an exception for points paid on the original purchase of a primary residence. You can deduct the points paid, by you OR the seller, in full, in the year of purchase.
If you pay off or refinance a loan on which you have been writing off points over a period of months, you can deduct any unamortized points in full when that loan is paid off.
You can also deduct interest incurred on loans to carry investment property, including margin loan interest and loans to invest in a partnership or corporation business. The deduction is limited to investment income received during the year.
What is a K-1 and do I need to complete that form?
A K-1 Schedule is a form for tax purposes issued to business partners or corporate shareholders. If you are a partner or sharholder you should receive a K-1 Schedule and then file the appropriate form:
- For shareholder's share of income, credit, deductions and other items:
Schedule K-1 (Form 1120S).
- For partner's share of income, credit, deductions and other items:
Schedule K-1 (Form 1065).
Why Is My Tax Refund Less Than What I Expected?
There are a number of reasons why a taxpayer's refund can be reduced (or claimed) by the IRS including:
- Additional tax liability found in current year tax return
- Past due child support payments were collected
- Debt owed to another federal agency was collected
- Past due state income tax was collected
If the tax refund amount you received is significantly different than what you were expecting, you will receive a letter from the IRS that explains why your refund amount was changed. It may take one to two months after you filed your income tax return to receive formal notification from the IRS regarding your tax refund.
If you feel that the IRS was wrong to reduce your tax refund, you can call the IRS at 1-800-829-1040. Taxes By Experts does not have information about why your refund amount might be different, or about any tax refund disputes you may have with the IRS. You must contact the IRS directly for a resolution.
How long will it take for me to receive my refund?
If you filed electronically (e-fied), then you can expect your federal refund in as little as 8-10 days.
For more detailed information on when to expect your refund, you can check directly with the IRS at "Where's My Refund?" or by phone at 1-800-829-1040.
State refunds may take a bit longer, depending on how quickly your state processes returns. You can always contact your state for more specific information through our Contact page.
Why is my tax refund less than what I expected?
The IRS can reduce or claim your tax refunnd for a number of reasons:
• Additional tax liability found in current year tax return
• Past due child support payments were collected
• Debt owed to another federal agency was collected
• Past due state income tax was collected
If the tax refund amount you received is different than what you were expecting, you will receive a letter from the IRS that explains why your refund amount was changed. It may take one to two months after you filed your income tax return to receive formal notification from the IRS regarding your tax refund.
If you feel that the IRS was wrong to reduce your tax refund, you can call the IRS at 1-800-829-1040.
Why Does the IRS Sometimes Delay Refunds? ?
Every year, the IRS reviews certain individual income tax returns before issuing refunds, as part of its revenue protection efforts. Returns with questionable refunds and Earned Income Credit (EIC) are often selected for review. If your refund is delayed beyond two weeks, the IRS will mail a notice advising the taxpayer that the refund is being delayed for further review.
You can always contact the IRS directly for more detaile information on your refund at 1-800-829-1040.
Rental Income and Expenses
If I own a property that I rent to others, do I need to include this information on my tax return?
Yes, if you own property and receive income from renting it out, you must report this on your tax return. Please note that this is not the same as renting FROM someone.
Can I deduct the expenses associated with renting out my property to others?
Yes, generally, the expenses of renting your property, such as maintenance, insurance, taxes, and interest, can be deducted from your rental income.
Sale of Home
How does the sale of my home affect my income tax return?
If you have a gain from the sale of your main home, you may qualify to exclude all or part of that gain from your income.
In general, you are eligible for the exclusion if you have owned and used your home as your main home for at least two years out of the five years prior to its sale.
You are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.
If you or your spouse are on qualified official extended duty in the Uniformed Services, the Foreign Service, or the intelligence community, you may elect to suspend the five-year test period for up to 10 years. You are on qualified official extended duty if, for more than 90 days or for an indefinite period, you are:
At a duty station that is at least 50 miles from your main home, or
Residing under government orders in government housing.
If you sold your home under a contract that provides for all or part of the selling price to be paid in a later year, you made an "installment sale". If you have an installment sale, report the sale under the installment method unless you elect out.
Why would I want to file a tax return even if I'm not required to?
Even if you are not required to file a tax return, it may be beneficial for you to do so.
There are several reasons why you may want to file or efile a tax return even if you do not meet the minimum income requirements:
- If you had taxes withheld from your pay, you must file a tax return to receive a tax refund.
- If you qualify, you must file a return to receive the refundable Earned Income Tax Credit.
- If you are claiming education credits, you must file to be refunded the American Opportunity Credit.
- If you have a qualifying child but owe no tax, you can file to be refunded the Additional Child Tax Credit.
- If you qualify, you must file a return to claim the First-Time Homebuyer Credit.
- If you qualify, you must file to claim the refundable Health Coverage Tax Credit.
- If you adopted a qualifying child, you must file to claim the refundable Adoption Tax Credit.
- If you qualify, you must file to claim the Credit for Prior Year Minimum Tax.
- If you overpaid estimated tax or applied a prior year overpayment to this year, you must file to receive the refund.
- If you qualify for the federal fuel tax credit, you must file to receive it.
What do I do if my tax return is Accepted?
This means that the IRS has accepted the receipt of your tax return and will process the return promptly. If you are due a refund, the IRS will either mail you your Refund Check or issue your refund Direct Deposit according to the IRS Refund Cycle Schedule.
What do I do if my tax return requires corrections?
If your TaxesByExperts.com account is showing that your tax return requires corrections, please see the details in your My Taxes section. Carefully read through the detailed explanation of what corrections are required and make the necessary changes. If you need help making the changes, please contact us and we will be glad happy to assist you.
How long will it take for my return to be Accepted?
Your federal tax return can take anywhere from 24 to 48 hours after you transmit your return to be acknowledged and accepted by the IRS. If there is a mismatch of information on your tax return, the IRS will let us know that corrections are necessary (this is commonly referred to as an IRS rejection), and we will let you know what exact steps to take to fix the errors and get your return accepted.
State tax returns usually take about five days after you transmit your state tax return before they are accepted or rejected. Some states are taking longer to acknowledge e-filed tax returns. If your tax return is not acknowledged after five days, you can check directly with your state using the state contact information on our Contact page.
What if I find a mistake in my tax return after I e-filed it?
If you discover that you made a mistake in your income tax return(s) after it was accepted, you can still fix the error in your tax return and then simply re-file it with the IRS, or your state tax authority.
You'll need do what is known as amending your tax return. You can file an amended tax return with Taxes By Experts for an additional fee.
If your tax return was rejected, you can fix the error and then re-submit your tax return without incuring any additional fees.
Where do I find my Declaration Control Number (DCN)?
If you've successfully e-filed your tax return and your return was ACCEPTED, you should see your tax return Declaration Control Number (DCN) in the My Taxes section of your account.
Can I e-file a income tax return for a previous tax year?
No, but Taxes By Experts can help you PAPER FILE returns from previous years.
Can I electronically file (e-file) both my Federal and State Tax Returns? ?
Yes, you can e-file both your federal and state tax returns if your state accepts e-filed returns. You will need to submit your federal and state tax returns at the same time. If you need to file more than one state tax return, you will be able to e-file one state and need to submit the additional state tax returns by paper. We can prepare any additional state tax return you request.
Where can I find my Adjusted Gross Income (AGI) from the previous tax year?
If you filed with TaxesByExperts.com, you can check the My Taxes section of your account to find your Adjusted Gross Income (AGI) from the previous year.
You can also look directly at the tax return you filed. You AGI can be found on the following lines:
Form 1040 – Line 37
Form 1040A – Line 21
Form 1040EZ – Line 4
Form 1040NR – Line 35
If you amended your tax return, do not use the amended AGI. Use the original.
If you did not file in the pervious tax year, enter 0 as your AGI.
For joint filers, eter your AGI as it appears on your originally filed return. Do not split, allocate, or combine AGI amounts.
Where can I find my Self-Selected IRS PIN from the previous tax year?
If you do not remember your Self-Selected IRS PIN, you can get a new PIN issued by using the Electronic Filing PIN tool located at:
Or, calling the the IRS PIN hotline at 1-866-704-738.
What do I do if I don't have a copy of my W-2 forms?
If your employer(s) issued you a W-2 form but you cannot locate it, please contact your employer(s) and request a copy.
Can I file a past year tax return with TaxesByExperts.com?
Yes, you can file any unfiled tax returns through TaxesByExperts.com. Past year returns cannot be electronically filed (e-filed) and must be submitted as a paper return.
Just start a new tax return in your TaxesByExperts.com account for the year which you would like to file. We will prepare the return for you and provide you with a printable and mailiable copy of teh prepared retrn for you to sign and mail out.
Can I file an amended tax return with TaxesByExperts.com?
If you filed your original tax return through TaxesByExperts.com, we can prepare an amended tax return for a very low fee.
In your TaxesByExperts.com account, find the year you wish to amend and select the Amend option to start the amended return. We will prepare the return for you and provide you with a printable and mailiable copy for you to sign and mail out.
How do I check the status of my electronically filed (e-filed) tax return?
Your TaxesByExperts.com account will always be updated to reflect your current filing status. You can also check directly with the IRS or your state using the contact information listed on our Contact page.
We will also notify you regularly via e-mail or text (acording to your preferences) about the current status of your tax return.
What if I filed my income tax return(s) but the IRS or my state tax agency says they never received it?
You may not have completed the all of the steps required to complete the filing process. You must finalize and submit the return by pressing the Submit button. If paying by credit card, you must make sure your payment was processed. Whenever you successfully file a tax return or your credit card is charged, you will receive an e-mail confirmation from TaxesByExperts.com.
If ou selected to file a paper tax return, you must remember to print, date, sign, and mail out the tax return to the correct agency. TaxesByExperts.com includes detailed instructions with every mailable tax return.
If you have any doubts on whether your tax return was filed, please contact us immediatley and we will
If my tax return is rejected and I can't make the necessary corrections will you refund the e-filing fees?
First and foremost, we will try to help you make the necessary corrections so that your return can be e-filed and you can receive your refund. If your return is rejected and you cannot or (choose not) to re-submit your tax return electronically, we do not refund the Taxes By Experts e-filing fees.
Circumstances beyond our control, such as incorrect information, IRS or state requirements not met, or a malfunction of the taxing authority's system, can cause an e-filed tax return to be rejected. These rejections are not related to our e-filing service and we still incur the cost of the e-filing transmission.
If you are unable to file the return electronically but still want to process yoru tax return, we will gladly help you file a paper tax return.
When will I receive my tax refund?
When your tax return is accepted, you can refer to the IRS Refund Cycle Chart (IRS Publication 2043) to check the estimated date that you will receive your federal refund.
If you don't receive your refund within 28 days from the date your return was accepted by the IRS, you can check the IRS Web site's Where's my Refund? feature.
For individual state tax refunds, contact your state for information about when to expect your tax refund.
Which option should I choose?
That depends on your situation.
The safest option to avoid an underpayment penalties is to aim for "100 percent of your previous year's taxes." If your previous year's adjusted gross income was more than $150,000 (or $75,000 for those who are married and filing separate returns last year), you will have to pay in 110 percent of your previous year's taxes to satisfy the "safe-harbor" requirement. If you satisfy either test, you won't have to pay an estimated tax penalty, no matter how much tax you owe with your tax return. if you meet either one of these conditions, you do not need to pay estimmated tax.
If you expect your income this year to be less than last year and you don't want to pay more taxes than you think you will owe at year end, you can choose to pay 90 percent of your estimated current year tax bill. If the total of your estimated payments and withholding add up to less than 90 percent of what you owe, you may face an underpayment penalty. So you may want to avoid cutting your payments too close to the 90 percent mark to give yourself a little safety net.
If you expect your income this year to be more than your income last year and you don't want to end up owing any taxes when you file your return, try to make enough estimated tax payments to pay 100 percent of your current year income tax liability.
Taxes You Paid Interest Paid
I just bought a home. What can I deduct from the settlement statement? ?
If you bought your home, you probably paid settlement or closing costs in addition to the contract price. These costs are divided between you and the seller according to the sales contract, local custom, or understanding of the parties. If you built your home, you probably paid these costs when you bought the land or settled on your mortgage.
What filing methods does TaxesByExperts.com offer?
TaxesByExperts.com can electronically file (e-file) your tax reurn, or you can chose to have a mailable paper tax return prepared for you.
There are several advantages to e-filing: It's quick, easy, and convinient. There is no need to sign and mail any forms. You can receive your refund in as ittle as 8-10 days.
If you select to paper file, we will provide you with a printable and mailable copy of the prepared tax return for you to sign and mail out.
How do I sign my electronicaly filed (e-filed) tax return?
You do not need to physically sign your tax return. When e-filing, the IRS ask that you verify your identity by providing either your Adjusted Gross Income (AGI) from the pervious tax year or your Self-Selected IRS PIN from the previosu tax year.
If I register with TaxesByExperts.com and calculate my estimated tax return, will I be charged any fees?
No, there are absolutely no fees attached to registration or to calculating your return. You are only liable for our fees if you complete the Finalizing Your Return section by agreeing to all the Terms and Conditions and pressing the Submit button.
What are the TaxesByExperts.com fees?
We provide numerous fee options for quick and easy filing. To see a breakdown of all our fees, please see our Pricing page.
How can I contact TaxesByExperts.com if I have questions or need help?
You can contact us by telephone (1-866-883-3973) during our hours of operation, by e-mail (firstname.lastname@example.org) at any time, or through our Live Chat feature where a representative will be glad to assist you.
When and how do I pay for TaxesByExperts.com services?
We try to accommodate all of our customers by offering two payment options:
Credit Card - You can pay for the preparation of your tax return by credit card. The payment will be processed right away when you submit your tax return. This option offers the lowest possible fees.
Fee From Refund (Refund Transfer) - If you are due a refund, you can select this option to file your tax return without any up-front payment. Your refund will be sent through Santa Barbara Tax Products Group (SBTPG), a third party processor for The Citizens Banking Company. SBTPG will take the TaxesByExperts.com fees out of your refund and then direct deposit the remainder of your refund directly into your bank account.
Fee From Refund is not available if you select to paper file your return, if you are amending an existing return, or if you are adding a state tax return to an already existing tax return.
According to the IRS website most refunds are disbursed in less than 21 days. Refund Transfers are a bank product offered using The Citizens Banking Company of Sandusky, Ohio, Member FDIC. Refund Transfers are not a loan. Tax refund and e-filing are required in order to receive a Refund Transfer. Processing and bank fees apply. Product terms and conditions are subject to change without notice. Other IRS e-file options are available.
When I’m entering my tax information online, can I stop and come back to finish?
Yes, you may save and come back to continue your tax return at any time.
Is this service secure? ?
Yes, your data is protected. You do not have to worry about viruses, worms, and hackers attacking your personal tax return information. We use industry-recognized security safeguards and procedures such as password-protected login, the highest commercially available encryption technology (128-bit SSL), and firewall-protected servers
How do I change or update my contact and/or address information?
In your TaxesByExperts.com account you can make changes to all of your personal information and account preferences in the Account Info tab. If you are having trouble making changes, please contact us and a represenative will be happy to help you.
How do I change my password and/or security question?
In your TaxesByExperts.com account you can make changes to your password and/or security question in the Account Info tab. If you are having trouble making changes, please contact us and a represenative will be happy to help you.
Can I deduct car and truck expenses?
Yes, The cost of operating a car, truck or other vehicle is tax-deductible when driving for business purposes, medical purposes, moving and relocating, or charitable service.
The amount of your deduction is based on the number of miles you've spent driving for the tax-deductible purpose. You can calculate your actual car expenses, or you can opt for a standard mileage rate.
What counts as a deductable car or truck expense? ?
The following can be deducted:
- Parking fees and tolls
- Interest on a loan (for self-employed people only)
- Vehicle registration fees
- Personal property tax
- Lease and rental expense
- Fuel and gasoline
- Repairs, including oil changes, tires, and other routine maintenance
The following can NOT be deducted:
- fines and tickets, including parking tickets
- expenses related to personal use or commuting
- for charity and medical expense deductions, you cannot claim depreciation, insurance, or repairs.
Should I calculate my car and truck expense using the actual cost or use the Standard Mileage Rate?
You should use whichever method will result in a larger deduction.
Generally speaking, claiming the standard mileage rate works results in less paperwork and is best suited for situations in which you drive your car sometimes for work, charity or medical appointments, and you don't want to have to dig up all your car-related expenses.
If you did not find the answer you need, you may want to try the
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