TaxAudit Blog

Category: Tax Question and Answers

Estimated Tax Payments

If you happen to miss one of your quarterly estimated tax payments, all is not lost. As soon as you remember, go ahead and make the quarterly payment late.

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Woman sitting with some dogs at a dog kennel facility

Kenneling a dog for work travel is considered a personal expense. However, I wonder if the answer is different if I make income from my dog?

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Solar Panels on House Roof

How do I write off solar panels for rental properties when I claim as a real state professional to run a rental business?

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Two children dressed as office workers reading finance documents and working on the computer

A child who qualifies as a dependent on their parent’s tax return will need to file a tax return in certain situations. Let's explore when they need to file.

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Inherited IRA written on a yellow sticky note

My mom passed away about a year ago, and I inherited two IRAs. Can I roll over one of the IRAs into the other inherited IRA if it is done by direct transfer?

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Man looking at house, money, and paperwork on a desk

Can you claim a depreciation deduction for Section 1250 residential property in the year the property is sold? When it comes to taxes, details matter.

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Money background with one 100 dollar rolled up as a heart

My minor daughter was a beneficiary for her uncle's savings account. Does she need to report it as income?  Are there tax implications if she gifts the money?

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Graphic of arrows going one way and then reversing

A tax refund offset can indeed be reversed – but it is not a simple matter. It would be much better for taxpayers to prevent the offset from happening.

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House with money stacks next to it

I'm inheriting $44,000 from my father's house being sold in New York. I just want to know how much tax, if any, would I have to pay in South Carolina. Thank You

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House with a Sold For Sale Sign in Front of it

My brother's wife died and he was left with the house. He gifted (no exchange of money) me the house and I sold it. How do I report capital gains?

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pay check stub

The biggest chunk that will be deducted from your paycheck is most likely taxes, both federal and state. Federal taxes include income tax and FICA.

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Settlement written on a piece of paper placed of $100 bills

While some legal settlements can be excluded, either in full or partially, the vast majority of legal settlements will be considered to be taxable income.

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Two Men Installing Solar Panels

Writing off the purchase of solar panels for your sole proprietorship can be complicated, but we will try to highlight some of the options for you to consider.

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College add daughter moving out of parent's house

To claim a dependent on your tax return (and all the credits that come with that dependent), your child must meet a set of requirements.

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Man thinking holding a notepad

You cannot claim yourself as a dependent. It can be helpful for you find out who actually can claim you as a dependent and whether or not they intend to do so.

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House sitting on money

Your son does not need to report or pay tax on the $70,000 you gifted him from the inheritance your wife received from her mother’s probate! Let's explore more.

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Woman looking at paperwork

If the IRS applies your payment to the wrong tax year, they will generally fix the issue once they know the problem. Let's learn more.

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Man handing a woman a letter

With TurboTax Audit Defense if you receive a letter from the IRS or state tax agency, simply contact TaxAudit that you’ve received IRS correspondence for help.

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Umbrella blocking a wreaking ball

If you have audit protection, you don’t have to panic when you get a letter from the IRS. Instead, you can call TaxAudit right away, so we can step in to help!

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Crypto Currency written in lights with a city in the background

First, the essential concept to understand is that cryptocurrency is not treated as money for U.S. federal income tax purposes but is treated as property.

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Two TaxAudit Tax Professionals working on a case

What is Audit Defense? And is it worth it? Let's provide some clarity about exactly what you are getting when you purchase Audit Defense from TurboTax!

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United States Treasury Check

You’d like to know if you can file an amended tax return to claim the Recovery Rebate Credit if you did not receive the economic stimulus payment.

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1099 Form next to Calculator

I received 3 1099 forms - 1 for interest and two from houses which were sold in the months after his passing. Is the estate required to file a return?

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refund written with blocks

If the IRS is taking your refund, sometimes you need a qualified tax professional who understands IRS collection procedures to intercede on your behalf.

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Unemployment and US Treasury Check

When you owe money to the IRS, they can take a variety of actions against you to collect the balance due. You can repay the IRS debt using unemployment checks.

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Sold Sign

Father died 30 years ago. Stepmother just sold house and children split father's portion of sale (after filing of an affidavit of heirship). Do we owe taxes?

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Two Preschoolers Reading

The 2021 expense limit for this credit is $8,000 for one qualifying child, and $16,000 for two or more qualifying children. The credit is a % of those expenses.

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Graduation Hat

You asked if you could deduct tuition expenses for enrollment in a graduate degree program as a job-related education expense on federal and NY state taxes.

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House with money background

You asked whether the mortgage payments that your ex paid on the house you received in the divorce are taxable. This answer depends on your specific situation.

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House with person doing paperwork in the background

To know if your home inheritance is taxable income you will need to start by figuring out what your step up in basis is - the property value when someone dies.

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1040-SR Tax Return

My fiancé has recently been incarcerated. Prior to arrest he filled on pandemic unemployment, but I did not. How should I file taxes this year?

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Child Tax Credit

To claim a child for this credit, the child has to meet several tests. Biology isn’t a disqualifier in claiming dependents, but other factors must be met.

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TaxAudit Audit Defense Member and her Family

Yes! Audit Defense is worth it. Not only do audit defense members get help with IRS and state correspondences – there are a variety of other benefits.

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Estimated Taxes

Estimated tax payments are additional payments that taxpayers may make on a quarterly basis to cover any additional taxes that may be due.

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Military Service Member Uniform

As a military member do you have the same tax filing deadline as U.S. citizens? Are there tax filing extensions available for deployed members of the services?

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Woman Thinking

You might be questioning if TurboTax Audit Defense is any good as you file your tax return through TurboTax. Yes, you want audit defense and it is worth it!

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Calendar pages flipping back to the past

One of the frequently asked questions we get from our customers is, “Can I buy audit defense for tax returns filed in previous years?” The short answer is: Yes!

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Estate Tax

New Jersey, NJ imposes a tax on the beneficiaries of estates. The tax return requires the tax be paid by the estate on behalf of all the estate’s beneficiaries.

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Inheritance Tax

Whether you will be taxed on the money received from a trust will depend on the type of trust and the instructions laid out, the assets titled, and more.

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Gold Bullion

You are responsible for paying the taxes on the amount realized in the sale. The buyer is generally not required to withhold income taxes on the proceeds.

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Five Star

Yes, TaxAudit is a good company that has been providing clients with A+ rated tax representation services since 1988. TaxAudit truly cares for its clients.

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AUDIT spelled out with small blocks

If you are under audit, it is acceptable to submit your current tax return. Just be mindful that you may have to amend it once the previous year's audit closes.

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Grandmother driving Grandchild

My wife drives to transport our granddaughter to our house to watch for the day. Is this to-and-from mileage deductible as a job-related expense?

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Capital Gains

I had investment capital losses of over 17,000 dollars, yet my Schedule D is only allowing a $3,000 loss. Can I take the additional losses in future tax years?

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Last Will and Testament

I inherited a property located in foreign country from non-US relative, do I need to file 1099-S? I did not receive 1099-S since the property is not in USA.

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Multiple Tax Returns

Your audit defense membership with TaxAudit provides expert representation for each tax return year for which you have a membership.

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Golden IRA egg sitting on money

For IRA contribution purposes, certain third-party sick pay does qualify as compensation. But, there are instances where it is not considered compensation.

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Man reading a notice

Why doesn't my IRS account show I owe money if I received a Notice of Deficiency? A Notice of Deficiency represents an estimated amount due and isn't finalized.

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1099-S Form

When you inherit real property, like a home, then for tax purposes the beneficiaries receive what is called a “stepped-up” basis.

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Cancellation of Debt (COD) Income

When you are relieved of debt through the cancellation of debt, that amount is considered to be income to you, even though you did not receive cash.

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Stimulus Check with $100 bills

The IRS has not issued guidance on whether an EIP distribution will be placed on hold if a taxpayer’s 2020 return is audited to question dependents.

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Stimulus Payment

Generally, as long as the incarcerated person is a US citizen (or resident alien), has a valid SSN, and is not claimed as a dependent, they may qualify.

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File Folders with one labeled Taxes

If I haven't worked in a couple of years and didn't file taxes or get the first stimulus check, then where do I start or how do I file?

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Custody

My grandson is in my custody and his mom allowed another person to carry him on taxes..my taxes were rejected. What should I do next?

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W-2 tax form next to a pen, money, and calculator

It is not uncommon for state wages to be higher than their federal wages. This alone generally should not trigger a return to be rejected for e-filing.

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Schedule K-1

If the income items on the Schedule K-1 are sufficiently large, they will generate additional taxes due on your return. You will need to amend your tax return.

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Father and daughter holding hands

Having custody does not determine who can claim a child as a dependent. The IRS will look to who can prove the child lived with them most of the year.

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Paying Taxes Online

There are a bevy of options available to taxpayers who want to make a payment to the IRS online. The IRS even has an app for that!

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New Roof Being Installed

Replacing an entire roof will increase the cost basis of the home. However, any costs paid or reimbursed by an insurance are not added to the home's basis.

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Tax Return

When a taxpayer does not file their income tax return or ignores an audit notice, the IRS makes tax assessments based on info received from third parties.

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Master Limited Partnership

Generally, a “regular” limited partnership does not throw off any income that would make it currently taxable while it is inside an IRA.

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Probate puzzle piece on wooden house

Consider the potential risks and benefits before adding an adult child or caregiver as an owner of your home, bank account, credit card, or any other asset.

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State Taxes Sign

Yes, TaxAudit, the exclusive provider of TurboTax Audit Defense, represents members through the completion of any state or federal income tax audit.

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Customer Service Representative

TaxAudit is the exclusive provider of TurboTax® Audit Defense. The phone number for TaxAudit’s customer service department is 877.829.9695.

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Hand with pen writing Tax Deduction

The answer for most states is no. However, 6 states allow some form of this tax break (AL, IA, LA, MO, MT, OR), but only AL, IA, and LA allow a full deduction.

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email symbol on smart phone

Before your audit defense certificate can be sent via email, TurboTax must first notify TaxAudit of the audit defense purchase. This usually takes 1 to 6 days.

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Form 1099-Misc

For 2018 taxes I did not add my 1099. The IRS is saying I owe. How can I remedy this? I have the 1099 ready to add.

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Notary

I am a mobile notary Signing Agent. When doing quarterly payments, would I claim pay on the month I do appt. or when I get paid?

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Inheritance on top of money

Generally, when you inherit money it is tax-free to you as a beneficiary. However, like so much in tax law, the answer to this question is “it depends.”

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tax document showing filing status options

Generally, Married Filing Jointly is more beneficial as some deductions are not allowed if you file Married Filing Separate. You can use tax software to compare

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Closing Cost Analysis Statement

Many people try to guess the amount of their closing costs and use that for their taxes. If they are ever audited, this would not likely work out well for them.

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Dollar symbol written on chalk board

Tax Topic 151 means the Department of Treasury will be taking your refund or part of your refund to pay for something that has been reported that you owe.

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1040 tax return with green pen laying on it

From a tax standpoint, a relationship that is established by marriage, such as your relationship with your mother-in-law, does not end with divorce.

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Tax Deduction written on a sticky-note

Tax deductions and credits serve the same purpose − to reduce the amount of a taxpayer's tax owed. The way that each serves this purpose is different.

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boy selling lemonade

Yes, kids may have to pay taxes. No matter a person's age, if they have income that exceed certain IRS thresholds, the income should be reported.

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401k nest egg

401k loans aren't reported on your federal tax return unless you default on them. Then it becomes a distribution and subject to the rules of early withdrawal.

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1040 tax return with handcuffs laying on top

Inmates are responsible for filing taxes. While you can certainly help your boyfriend file his taxes, you can’t sign and submit the return on his behalf.

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Top half of a clock drawn on a chalkboard with the word 'TAX' written above it.

The IRS’s  “Where’s My Refund” app should be your first your first destination to find out the status of your refund.

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Gift box wrapped in a five dollar bill with a red ribbon and bow on top

A bonus is considered a supplemental wage payment and is therefore subject to slightly different withholding guidelines under federal rules.  

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Boy standing in front of chalkboard with a finger on his chin

The first thing to do is to check every name and Social Security number listed on the return with what is listed on their Social Security cards.

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Money being handed over

While increasing allowances leaves you with more available funds throughout the year, it will have a rippling effect and your tax refund will decrease.

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Internal Revenue Service sign next to traffic light

Returns are being processed, and refunds are being issued. Things seem back to normal.

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Woman at desk with head down on tax forms, holding a pencil and calculator.

Below is a list of misconceptions and examples of misinformation taxpayers may encounter during the upcoming tax season.

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Graduation Hats

For the American Opportunity Credit, a student is required to be in pursuit of a degree or recognized education credential and be enrolled at least half-time

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Woman on the phone holding nephew

When more than one person wants to claim a child on their tax return, sorting it out becomes complicated. Not only are there five tests to meet for a child...

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Colorful balls with numbers

Lottery earnings are generally reported on Form W-2G, taxed as ordinary income, and expected to be reported as “other income” on the federal tax return.

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Woman working from home with child next to her

When determining the deduction for a home office, there are two different methods to choose from: Actual expenses and the simplified method.

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tax records

The IRS general rules for keeping tax records and returns is you must keep them for the period of time in which the IRS can audit you and assess additional tax.

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Person receiving fast food

The IRS is currently offering this cash payment alternative at participating 7-Eleven stores in 34 states.

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Child and Dependent Care Credit

The Child and Dependent Care Credit is available to help offset some expenses of childcare or daycare costs.

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Woman in white hat in a swimming pool

If my ex-wife lives with me and I provided more than half of her financial support will I be considered single status or head of household? 

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Mom blowing bubbles with daughter on a couch

I’m legally married and live with my spouse. We file our taxes separately. Can I file as head of household while he files as married filing separately?

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Woman in white sweater

I have a question about a head of household. My ex-husband passed away, which left his mother needing someone to care for her. I took her into my home…

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Pencil on Monthly Expense Guidelines paper

There are only two months left in the year. What can I do now to avoid paying a big tax liablity on my Schedule C business next year?

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Healthcare Blocks

The Cadillac tax has zero to do with automobiles and everything to do with health care.

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hot cup of coffee

Starbucks? Coffee beans? Lattes? What do they have to do with taxes? Don’t worry, we will get to that! But first, let’s discuss your Golden Years again...

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businessman in wheelchair

Are disability payments taxable? This is a good question, but there is no correct general "yes" or "no" answer. 

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1040 Pie Chart

Should I include notary feeds on my tax return? 

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Old orange truck

What is the best option are for getting rid of an old vehicle? Should I donate it for the auto valuation guide value of $3,000 or sell it now for $1,500? 

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young toddler girl in a swing

What do I do with a stepdaughter who doesn't live with us? She is in college and lives with her mom. How do I list that? My husband pays child support.

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woman on the phone holding baby

I am a policy and procedure writer for a company. Due to my long commute, my boss lets me work from home one day a week. Can I write off my home office?

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Calculator that says Tax Help? on top of 1040 tax forms

How long does it take to get my refund if I e-filed my taxes? It seems like I should have received it by now.

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keyboard that says Crowd Funding

Crowdfunding is a popular way to raise funds for businesses, charities and individuals. It occurs when someone asks others to contribute to their idea or cause.

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speedometer

How many miles can I claim on my tax return when driving for work? 

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W-2 Wage Statement

 filed my tax return, and then a W-2 came in the mail for a job I worked earlier this year that I had forgotten about. How do I file this? 

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three bars of gold

I am considering buying Gold Bullion. I am 68 and do not plan on using an IRA of any kind for this. What are the tax implications of buying gold?

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Earned Income Credit

The Earned Income Tax Credit is available to workers who earn $52,427 or less from wages or self–employment.

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Woman looking at receipts with calculator and 1040 tax forms on desk

Is there a threshold as to when a married couple filing jointly would fall under the AMT? There is not a threshold, per se. AMT, or Alternative Minimum Tax...

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Gift wrapped in five dollar bill

I’ve never been married and I have no children. I’ve been successful in my career and have some money saved. I want to give my six nieces and nephews $20,000

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Block with Tax words on it

My husband passed in February of this 2104. We have always filed a joint return. What do I need to do this year?

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Student desk with books and apple on it

I have a daughter who is eligible for the American Opportunity Tax Credit of $2,500.00. Can she also use the Lifetime Educational Tax Credit of $4,000.00?

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Ocean

We have an off-shore account, set up in 1998 when they weren't reportable. But now under the Foreign Account Tax Compliance Act, the accounts are reportable.

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Little boy blowing bubbles

I took care of my three nieces and a nephew (all under 17 years of age) up until the end of last month, August 28, 2014, to be exact. I claimed these kids...

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Blender

Uncle Sam expects to see that Fair Market Value (FMV) listed on your tax return for that tax year as income.

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House on top of stack of money

If I'm going to do home repairs, such as a roof and heating, which will cost about $15,000, would it be better to take out a home equity loan to pay for it or..

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Dictionary with the focus on the word Taxpayer

If you made an mistake on your taxes or omitted required information, such as a late-received W-2 or K-1, you can file an amended return on Form 1040X.

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3 Armed Forces Members

If you are a member of the U.S. Armed Forces, there are tax breaks written just for you. Merchant Mariners and American Red Cross employees do not qualify...

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Ocean

We have been asked to build some basic boxes to be used as a stage for a company. They plan to pay us but are not placing us on their payroll as employees.

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Man with ball and chain attached to leg

Tired of feeling like the government is taking your last penny? Having trouble making ends meet? There is a solution – provided you are willing to move.

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Dictionary with the focus on the word Taxpayer

For several years, National Taxpayer Advocate Nina Olson has been arguing for the simplification and codification of taxpayer rights and responsibilities.

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Divided wedding cake with groom on one side and the bride on the other

Taxpayers who must pay alimony to a former spouse may deduct it from his/her tax return as an adjustment to income.

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Rolled up receipt

If you have a dedicated credit card for your business, can you use the statement as the receipt for your business entertainment, meals, travel, etc.?

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Basketball resting on a Basketball Court

While we call it the “Jock Tax,” it really is a tax that does affect a variety of people, but we are focusing on the NBA because of the extensive travel habits.

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The word TAX spelled out with tiles on paper money and next to a stack of coins

I hate allowing the government an interest free loan. This year I had a penalty for owing too much at the end of the year. So my question is: how…

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Handcuffs laying on a 1040 form

My son was arrested in December of 2012 and spent the entire year of 2013 in jail awaiting trial. During that year I paid his attorney fees, car payments...

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Clock pointing the time hands towards the word TAX

You got your return filed on time and you’ve got a nice big refund coming. But the funds don’t show up in your bank account when you expected them to. Now what?

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Woman blowing bubbles on couch with child

My two children live with my ex. He is the custodial parent but we have joint custody. I pay child support and they come over to my house almost every weekend.

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Woman blowing bubbles on couch with child

Household employers: Did you hire someone to care for your children in your home? Do you have a gardener, a handyman, or a chauffeur?

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Family in swimming pool on a raft

I lived with my younger cousins, ages 11 and 4, in 2013 except for about 2 months when I stayed with my father while he was sick. I provided more than...

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Hand holding stack of 100 dollar bills giving it to another hand

In order to qualify for an Earned Income Tax Credit (EITC) of up to $6,044, you must first meet these two qualifications: You must have earned income...

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Gold Record

I’m sure you remember when Susan Boyle became an overnight web sensation. Since then, thousands of hopeful musicians, writers, artists, and dancers...

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1040EZ

Taxes! Usually, this word creates a strong emotive reaction. We older people tend to not remember the days back when we first filed our very first 1040 EZ.

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This blog does not provide legal, financial, accounting, or tax advice. The content on this blog is “as is” and carries no warranties. TaxAudit does not warrant or guarantee the accuracy, reliability, and completeness of the content of this blog. Content may become out of date as tax laws change. TaxAudit may, but has no obligation to monitor or respond to comments.