Frequently Asked Questions
Where’s my refund?
The IRS has a really great way of checking refund status. It is at https://www.irs.gov/refunds You will need to know your Social Security Number (recommend using the first one on the return if a joint return), Filing Status and the expected refund amount. If you have your tax return in front of you when checking, you should have all this information.
Where’s my stimulus payment? Or do I get a stimulus payment?
The IRS website https://www.irs.gov/coronavirus/get-my-payment can be helpful with the question where’s my stimulus. Click on Get My Payment and complete the questions there. As to whether you qualify review the following qualifications: The payment is $1,200 for individuals or head of household filers, or $2,400 if you filed married filing jointly. Eligible individuals with adjusted gross income up to $150,000 for married filing joint returns, $112,500 for head of household filers and $75,000 for all other eligible individuals. If your income is above that you may be eligible for partial stimulus as there are phase out income limitations ($99,000 Single, $136,500 Head of Household, $198,000 for married filing joint). In addition if you have a qualifying child there is an additional $500 payment for each qualifying child (child under age 17).
Are Unemployment Benefits taxable?
Typically, unemployment income is taxable and included in your income for the year. You should get a Form 1099-G which will show the amount of unemployment income you received and will show if you had any federal taxes withheld.
Do I need to file a tax return?
For the most part, you need to file a tax return if you have over $12,400 in income for single filers or $24,800 for married filing jointly. At these dollar amounts, we would not have you include social security in your income.
Are medical expenses deductible?
This one can be hard to explain but first and foremost you have to itemize deductions to take the expenses which means you have to have more in itemized deductions than the standard deduction ($12,400 Singe and $24,800 married filing jointly). Deductible medical expenses are not dollar for dollar. In order to claim a medical expense deduction, they must exceed 10% of your adjusted gross income. The most common other itemized deductions are mortgage interest, real estate taxes (up to $10,000) and charitable contributions.
What is the difference between a tax credit and a tax deduction?
Both tax credits and tax deductions can reduce the amount of tax you pay however deductions reduce the amount of income you pay taxes on and credits are a dollar for dollar reduction in the amount of tax you owe.
What form do I file?
This is a common question when someone has set up a new entity. There are various types of entity (business) returns. General partnerships, LLC’s, LLP’s and similar entities use Form 1065 Partnership return, with one caveat – to file a Form 1065 you need 2 or more partners or members. If you have a single member LLC, you file a Schedule C, E or F on your personal tax return. C Corporations file a Form 1120 and S Corporations file Form 1120S. If you don’t have a separate entity established or are a Single Member LLC, you would file a Schedule F if you are an agriculture business, Schedule C for any other type of business, or Schedule E if you do real estate rental.
How to figure capital gains on a sale of real property?
On real property held for over a year there are long term capital gains tax on the gain. The gain is what it was sold for less what your adjusted cost basis is in the asset (what you paid for it or the basis in how you inherited the asset). So for example, if you sold an piece of real property for $400,000 that you originally purchased for $100,000 you would have a $300,000 gain. Your capital gains tax rate is completely dependent on your other income. Capital gains tax rate is either 0%, 15% or 20%. For example, married filing jointly is 0% up to $80,000 of income; 15% from $80,001 to $496,600 and 20% over that amount. To get to the income, you would include all your income. Generally speaking when talking about a gain (married filing jointly) of $300,000, it will mostly all be at 15%. To properly estimate however, we’d need to know the entire picture of income to advise. Capital gains rates will normally all fall into a lower tax rate than ordinary income. Short term capital gains are taxed the same as ordinary income.
What do I claim as income?
There is a great misconception that if you didn’t get a 1099, you don’t need to claim funds received as income. If you received funds for services you performed or sale of business or investment assets, it is most likely income. If you receive money for a personal item (such as you sold your personal vehicle) you don’t need to report this as income, unless the selling price exceeds the purchase price that you paid for the item. If you receive a gift (funds from someone with whom it is not a tax deduction for that person) that is not income to you. In the same light, we are often asked if inheritance received is income. The principle funds received as long as they aren’t part of a retirement or annuity account typically are not income however any income produced by that asset is taxable income.
Who is a dependent?
This can a simple answer for people with children or more complex when either the children are over 24 or you have other people you support. Typically, a dependent is a qualifying child younger than 19, or under 24 if they are attending school full time. Your child should have lived with you (if in college it can still count as living with you) for more than half the year and you provide more that half of their support. For other dependents there are income limitations and support tests to review to determine whether you can claim as a dependent.