FAQFrequently Asked Questions
Common questions our clients ask us…
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 e-file 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 Home-buyer 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 over payment 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.
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.
EITC, is a benefit for working people who have low to moderate income. It reduces the amount of money you owe and may give you a hefty refund if you have a qualifying child. The credit puts in consideration a lot of a lot of factors when qualifying and calculating the credit. It is not a flat credit, so each individual will qualify for different amounts in credit.
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 the entire year.
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.
To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.
It is important to separate business expenses from the following expenses:
- The expenses used to figure the cost of goods sold,
- Capital Expenses, and
- Personal 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.
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.
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.