FAQs - Frequently Asked Questions About Taxes
1. Can I get the earned income credit?
2. Can I claim the child and dependent care credit?
3. Can I get the credit for the elderly or the disabled?
4. What are advance earned income credit payments?
5. I heard there is a credit for hiring certain groups of workers, such as veterans or ex-felons. Is that the same thing as the Work Opportunity Tax Credit?
6. Is the exclusion from income of up to $5,250 of employer-provided educational assistance under a qualified program still available?
7. What can I do to avoid any errors on my tax return in order to receive my refund as quickly as possible?
8. How long do I need to keep certain records?
9. I have already filed my return and now I have received another Form W-2. What can I do?
10. I forgot to mail my Form W-2, schedules or forms with my tax return. What should I do?
11. What is a 1040PC tax return?
12. We will be filing a joint tax return. Can we file our return electronically?
13. Can I use computer-generated tax forms instead of the IRS forms?
14. Will the IRS recommend a reputable preparer?
15. My daughter is my dependent and receives dividend income. Does she need to file a federal income tax return?
16. In addition to my regular job, I had a part-time business fixing cars. Do I have to report the money I made fixing cars?
17. What are the tax options for lump-sum distributions from retirement plans?
18. What is alternative minimum tax?
19. How do I deduct the administration expenses of my father's estate?
Can I get the earned income credit? back to the top
You may be able to take this credit if a child didn't live with you and you earned less than $10,200. You may also be able to take this credit if a child lived with you and you earned less than $26,928 (with one child), or less than $30,580 (more than one child). Other rules applyÉ
Can I claim the child and dependent care credit? back to the top
If you paid someone to care for your dependent under age 13 or your disabled dependent or spouse so that you could work or look for work, you may be able claim the credit for child and dependent care expenses. For specific information on how to qualify for these credits. Call Joseph & Associates.
Can I get the credit for the elderly or the disabled? back to the top
Generally, if you were age 65 or older or disabled and your income and nontaxable social security or other nontaxable pensions are below specified amounts, you may be able to take this credit.
What are advance earned income credit payments? back to the top
If you expect to qualify for the earned income credit in 2000, you may be able to start getting part of the credit with your pay in 2000, instead of waiting until you file your 2000 tax return in 2001. This is called the advance earned income credit or AEIC.
To get part of the credit with your pay, you must have at least one qualifying child, and meet certain other conditions. You cannot get the AEIC if you do not expect to have a qualifying child, even if you will be eligible to claim the earned income credit on your 2000 return.
I heard there is a credit for hiring certain groups of workers, such as veterans or ex-felons. Is that the same thing as the Work Opportunity Tax Credit?
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The work opportunity credit provides an incentive to hire individuals from targeted groups that have a particularly high unemployment rate or other special employment needs. The credit can be as much as 40% of the qualified wages you pay to individuals who begin work for you between October 1, 1996, and June 30, 1999.
An individual is a member of a targeted group if he or she is a:
- Qualified recipient of Aid to Families with Dependent Children (AFDC) or successor program.
- Qualified veteran.
- Qualified ex-felon.
- High-risk youth.
- Vocational rehabilitation referral.
- Qualified summer youth employee.
- Qualified food stamp recipient.
- Qualified SSI recipient.
An individual is not considered a member of a targeted group unless your state employment security agency certifies him or her as a member. This certification requirement can be satisfied in either of two ways:
1.On or before the day on which the individual begins work for you, you have received a certification from your state employment security agency that the individual is a member of a targeted group, or
2.On or before the day you offer employment to an individual, you complete Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity and Welfare-to-Work Credits and send it to your state employment security agency no later than the 21st day after the individual begins work.
You must receive the certification before claiming the credit.
Is the exclusion from income of up to $5,250 of employer-provided educational assistance under a qualified program still available? back to the top
Yes. However, it applies only to benefits you receive for courses that begin before June 1, 2000. The exclusion does not apply to graduate-level courses that began after June 30, 1996. Call Joseph & Associates.
What can I do to avoid any errors on my tax return in order to receive my refund as quickly as possible? back to the top
Call Joseph & Associates, when Preparing Your Tax Return, to assist you in double checking your arithmetic and your entire return to help eliminate any delays in receiving your refund.
How long do I need to keep certain records? back to the top
Records such as receipts, canceled checks, and other documents that prove an item of income or a deduction appearing on your return should be kept until the statute of limitations expires for that return. Usually this is three years from the date the return was due or filed, or two years from the date the tax was paid, whichever is later. There is no period of limitations when a return is false or fraudulent or when no return is filed. You should keep some records indefinitely, such as property records, since you may need them to prove the amount of gain or loss if the property is sold. If you are an employer, you must keep all your employment tax records for at least four years after the tax is due or paid, whichever is later. Starting a Business and Keeping Records. People in business often have expenses for travel, entertainment, and gifts. The documentation you should keep for each of these expenses can be found in.
I have already filed my return and now I have received another Form W-2. What can I do? back to the top
If you find that you did not report some income, you claimed deductions or credits you should not have claimed, you failed to claim some deductions or credits you are entitled to, or you should have used a different filing status, you should file an amended return. The form you use to correct the Form 1040, Form 1040A, or Form 1040EZ you already have filed is Form 1040X, Amended U.S. Individual Income Tax Return.
I forgot to mail my Form W-2, schedules or forms with my tax return. What should I do? back to the top
Wait until the Internal Revenue Service requests the Form W-2, schedules or forms. The request will be made in writing within six weeks from the date you mailed the return.
What is a 1040PC tax return? back to the top
The 1040PC is an alternative to filing a conventional paper tax return. It is a computer generated tax return that prints out only the lines on which you made an entry. For example, this format can reduce an eleven page conventional tax return to two pages. Because you're using IRS approved software, there are fewer errors, and that means faster processing of your return by the IRS. Look for IRS accepted software advertised in computer magazines or at your local software store.
We will be filing a joint tax return. Can we file our return electronically?
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Yes. Filing your return electronically is faster, safer, and more accurate than mailing your tax return because it is transmitted over telephone lines directly to an IRS computer.
Can I use computer-generated tax forms instead of the IRS forms?
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IRS provides for the approval and acceptance of computer-prepared and computer-generated tax forms that are filed by individual taxpayers and tax practitioners, in place of many of the official IRS printed forms.
Will the IRS recommend a reputable preparer? back to the top
The IRS will not recommend a specific tax preparer. You may want to check with friends, co-workers, or your employer and tell them about Joseph & Associates, for help in selecting a reputable preparer. That right, call us.
My daughter is my dependent and receives dividend income. Does she need to file a federal income tax return? back to the top
A federal income tax return usually must be filed for a child whose income included investment income, such as interest and dividends, and totals more than $700. Who Must File. There are special rules that affect the tax on certain investment income of a child under age 14.
In addition to my regular job, I had a part-time business fixing cars. Do I have to report the money I made fixing cars? back to the top
Yes. This is self-employment income. You must report it on Form 1040, Schedule C or Form 1040, Schedule C-EZ. You may also have to file Form 1040, Schedule SE and pay self-employment tax.
What are the tax options for lump-sum distributions from retirement plans?
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Special tax computations are allowed for qualifying recipients of certain lump-sum distributions from retirement plans. Call Joseph & Associates.
What is alternative minimum tax? back to the top
The tax laws give preferential treatment to certain kinds of income and allow special deductions and credits for some kinds of expenses. The alternative minimum tax attempts to ensure that all individuals who benefit from these tax advantages will pay at least a minimum amount of tax. The alternative minimum tax is a separate tax computation that, in effect, reduces the benefit of certain deductions and credits, thus creating a tax liability for an individual who would otherwise pay little or no tax. You may have to pay the alternative minimum tax if your taxable income for regular tax purposes, plus any of the adjustments and preference items that apply to you, is more than a specified exemption amount.
How do I deduct the administration expenses of my father's estate?
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Expenses of administering an estate can be deducted either from the gross estate in figuring the federal estate tax on Form 706 or from the estate's gross income in figuring the estate's income tax on Form 1041. However, these expenses cannot be claimed for both estate tax and income tax purposes. In most cases, this rule also applies to expenses incurred in the sale of property by an estate (not as a dealer). Administration expenses include: fees paid to the fiduciary for administering the estate; attorney, accountant, and return preparer fees; expenses incurred for the production or collection of taxable income; expenses incurred for the management, conservation, or maintenance of property held for the production of taxable income; expenses in connection with the determination, collection, or refund of any tax.
