Tax Related Questions

Lifetime Learning Credit The Lifetime Learning Credit is one of two tax credits, along with the American Opportunity Credit, that help offset the costs of higher education. Y...
Tuition and Fees Deduction The tuition and fees deduction allows you to deduct up to $4,000 of qualified educational expenses from your adjusted gross income. Qualifying expens...
Qualified Education Expenses The various education credits available to students and those who pay for them are based on the money spent on qualified education expenses, but the d...
What Is an Eligible Educational Institution for Tax Purposes? Any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student loan program administe...
Ordinary Dividends Dividends are what the shareholders of a company get, as their share of the company’s profits. If you own stocks, mutual funds, or bonds, you receive ...
Qualified Dividends Dividends are divided into two broad categories: ordinary dividends and qualified dividends. Ordinary dividends are taxed at the same rate as ordinary...
Self-Employment Profit or Loss Subtract your self-employment expenses from your self-employment income. If the difference is positive, meaning your self-employment income was greate...
Taxable Interest Income Generally speaking, you have to pay taxes on any interest income you receive, including interest on bank accounts, deposited insurance dividends, and ...
Tax-Exempt Interest Income Tax-exempt interest is interest that is not subject to federal income tax. Income earned from bonds issued by states, cities, counties or the District...
Tip Income All tips are taxable and must be reported to the IRS, including cash tips you get directly from customers, tips from customers using credit cards, and...
Allocated Tips The basic idea behind allocated tips is that if you work in a restaurant, cocktail lounge, or similar establishment, you deserve 8% of the business’s ...
Additional Child Tax Credit - Form 8812 If the amount of your Child Tax Credit exceeds the amount of income tax you owe, you may be able to claim the Additional Child Tax Credit and get a re...
Telephone Excise Tax Refund The Telephone Excise Tax Refund (TETR) was implemented to return excise taxes collected on long-distance phone service between February 28, 2003 and A...
Alternative Motor Vehicle Credit - Form 8910 The Alternative Motor Vehicle Credit was enacted by the Energy Policy Act of 2005. It offers a tax credit for qualified hybrid, fuel cell, alternative...
Nonbusiness Energy Property Credit - Form 5695 The Nonbusiness Energy Property Credit offers a tax credit for making energy efficient improvements to your principal home. Qualifying improvements ...
Residential Energy Efficient Property Credit - Form 5695 The Residential Energy Efficient Property Credit provides taxpayers with a nonrefundable tax credit for installing qualified residential alternative e...
Educator Expenses Deduction Eligible educators can deduct up to $250 of expenses for books, supplies, computer equipment, and other classroom materials incurred over the course o...
State and Local Sales Tax Deduction Those who itemize deductions on Schedule A have the option of claiming either state and local income taxes or state and local sales taxes. They canno...
What Are Charitable Contributions? Charitable contributions, in cash or in property donated to qualified organizations, are tax deductible only if you itemize your deductions on Schedu...
Home Mortgage Interest Deduction The Home Mortgage Interest deduction allows you to deduct the interest paid in a given year on a loan taken to secure your primary residence, where yo...
Recovery Rebate Credit - Form 1040 2008 Line 70 The Recovery Rebate Credit is a one-time tax credit from 2009 for taxpayers who did not receive the full benefits of the economic stimulus payments fr...
First-Time Homebuyer Credit The first-time homebuyer tax credit is a special tax break available to qualified taxpayers who purchased a primary residence between April 9, 2008 an...
What Are Casualty Loss Deductions? A casualty loss against your home, household items, or vehicle, resulting from property damage or destruction by a sudden, unexpected, or unusual even...
Child Tax Credit The Child Tax Credit allows you to reduce your income tax burden by up to $1,000 per qualifying child, depending on your income. A qualifying child m...
American Opportunity Tax Credit The American Opportunity Tax Credit helps students and parents pay for college expenses. In 2009 the American Recovery and Reinvestment Act, also kno...
Sales Tax Deduction for Vehicle Purchases The Sales Tax Deduction for Vehicle Purchases is a tax deduction that allows taxpayers to deduct the state and local sales or excise taxes paid on the...
Self-Employed Health Insurance Deduction Self-employed taxpayers with a net profit for the year may be able to deduct the amount they paid for medical and qualified long-term care insurance f...
Roth IRA A Roth IRA is an individual retirement account (IRA) that is generally subject to the same rules that govern traditional IRAs, with a few notable exce...
Qualified Charitable Distribution Qualified charitable distributions allow IRA owners over the age of 70.5 to directly transfer up to $100,000 tax free from their IRA (excluding SEPs a...
Adoption Credit and Adoption Assistance Programs For taxpayers who adopted an eligible child, an adoption tax credit and exclusion are available to help compensate for qualified adoption expenses. Y...
Archer Medical Savings Account (MSA) Archer MSAs are tax-exempt trusts or custodial accounts set up with a U.S. financial institution that allow taxpayers who are self-employed and employ...
Health Savings Accounts (HSAs) A health savings account (HSA) is a tax-exempt trust or custodial account created to pay or reimburse qualified medical expenses. In general, any adul...
Making Work Pay Tax Credit A component of the Stimulus, the Making Work Pay Credit was available for the 2009 and 2010 tax years. The refundable tax credit gave back to working ...
Interest and Ordinary Dividends - Schedule B Taxpayers filing a Form 1040 or 1040A can include a Schedule B to report their interest and dividends. Generally speaking, you must include a Schedul...
Profit or Loss from Business - Schedule C Schedule C is included with your return to report income or loss from a business you operated or a profession you practiced as a sole proprietor or si...
Net Profit from Business - Schedule C-EZ Schedule C-EZ is a simpler version of the normal Schedule C. You attach to your 1040 to report income and expenses, and ultimately your net profit or ...
Capital Gains and Losses - Schedule D Attach Schedule D to your 1040 to report your capital gains and losses. Starting in 2011 there is a new form that also deals with capital gains and l...
Credit for the Elderly or the Disabled - Schedule R Attach Schedule R to your 1040 or 1040A to claim the tax credit for the elderly or disabled. You may be eligible for the credit if you, or your spo...
Self-Employment Tax Schedule SE calculates the tax due on your self-employment earnings. Generally speaking, you must pay self-employment tax if you earned $400 or more i...
Net Operating Loss - Form 1045 - Schedule A Form 1045 Schedule A is used to compute a net operating loss (NOL) and determine the amount available for carryback or carryforward. Those with a neg...
Miscellaneous Income - Form 1099-MISC Form 1099-MISC reports various types of miscellaneous income other than wages, salaries, and tips, which are reported on a W-2 instead. Payments for ...
Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. - Form 1099-R Form 1099-R is used to report distributions of $10 or more from profit-sharing or retirement plans, individual retirement arrangements (IRAs), annuiti...
Foreign Tax Credit - Form 1116 Individuals, estates, and trusts can file Form 1116 to claim the Foreign Tax Credit if they paid or accrued certain taxes to a foreign country or U.S....
Employee Business Expenses - Form 2106 Form 2106 is for employees to deduct ordinary and necessary expenses for their jobs. An ordinary expense is one that is common and accepted in your ...
Unreimbursed Employee Business Expenses - Form 2106-EZ Form 2106-EZ is for employees to deduct ordinary and necessary work expenses for which they were not reimbursed by their employer. An ordinary expen...
Child and Dependent Care Expenses - Form 2441 Form 2441 determines the amount of the credit for child and dependent care expenses. You may be to claim the credit if you paid someone else to care f...
Moving Expenses - Form 3903 You can use Form 3903 to deduct your moving expenses. Your move must occur within 1 year of the start of work at the new location. Note, you do not n...
Credit for Federal Tax Paid on Fuels - Form 4136 Form 4136 is for claiming a credit for certain nontaxable uses or sales of fuel. You can also use the form to claim the alternative fuel credit, blend...
Social Security and Medicare Tax on Unreported Tip Income - Form 4137 Form 4137 is used to figure the social security and Medicare tax owed on tips you did not report to your employer or allocated tips shown on Form W-2 ...
Depreciation and Amortization (Including Information on Listed Property) - Form 4562 Form 4562 allows you to claim a variety of deductions related to depreciation and amortization including Depreciation of property placed in service d...
Casualties and Thefts - Form 4684 Form 4684 reports casualties and thefts of both personal use property and income-producing business property. Destruction of property by fire, storm, ...
Investment Interest Expense Deduction - Form 4952 You must file Form 4952 to claim the investment interest expense deduction and determine how much investment interest expense you can carry forward to...
Noncash Charitable Contributions - Form 8283 File Form 8283 to report noncash charitable contributions to the IRS, but only if the amount of your deduction for noncash gifts is greater than $500....
Mortgage Interest Credit - Form 8396 Form 8396 is used to calculate the mortgage interest credit for a given tax year as well as any carryforward to a future year. The mortgage interest ...
Low-Income Housing Credit - Form 8586 Form 8586 allows owners of qualified residential buildings in low-income housing projects to claim the low-income housing credit, which is taken over ...
Tax for Certain Children Who Have Investment Income of More than $1,900 - Form 8615 Form 8615 is used to figure the tax for certain children who have investment income over $1,900. Their investment income is then taxed at their parent...
Expenses for Business Use of Your Home - Form 8829 Form 8829 is used to calculate allowable expenses for the business use of your home as well as any carryover of amounts not deductible for the current...
Qualified Plug-in Electric and Electric Vehicle Credit - Form 8834 Form 8834 allows you to claim the qualified plug-in electric vehicle credit and any electric vehicle passive activity credit allowed for that tax year...
Qualified Adoption Expenses - Form 8839 Form 8839 is used to claim the adoption credit and an exclusion of any employer-provided adoption benefits. Both credit and exclusion apply to the exp...
Information to Claim Earned Income Credit After Disallowance - Form 8862 Form 8862 allows those taxpayers who had their Earned Income Credit (EIC) reduced or disallowed after 1996 to claim the credit once again if they now ...
Credit for Qualified Retirement Savings Contributions - Form 8880 Form 8880 allows you to claim the Retirement Savings Contributions Credit, also known as the saver’s credit. The credit was designed to promote savin...
Wage and Tax Statement - Form W-2 Employers must file Form W-2 for every employee they paid more than $600 in wages, tips, and other compensation, and from whom they withheld income, s...
Certain Gambling Winnings - Form W-2G Form W-2G is the tax form for gambling winnings and the federal income tax withheld on these winnings. You must provide a Form W-2G if You receive m...
Hope Credit The Hope Credit is a tax credit available to help students, or their parents and spouses, pay for tuition and related expenses for the first two years...
Individual Retirement Account (IRA) Deduction Contributions to traditional IRAs and Roth IRAs are tax deductible, reducing your taxable income and thus your overall income tax liability. Contrib...
Mortgage Insurance Premium Tax Deduction Your mortgage insurance premiums may be tax deductible, but you must itemize deductions in order to receive it any potential benefit. To deduct the p...
Standard Mileage Rates The standard mileage rates are optional set rates that employees, self-employed individuals, and other taxpayers can use to compute the tax deductible...
What Are Non-Business Deductible Taxes? There are five types of non-business taxes you can deduct on your federal tax return: State, local, and foreign income taxes - you can deduct the sta...
I rent out a property to others; do I have to pay taxes on this income? Yes, you must report and pay taxes on all your rental income using Schedule E [Supplemental Income and Loss]. Note that you could save a little mon...
What types of credits can I get as a student? Students and the parents of students might qualify for the refundable American Opportunity Tax Credit, an expanded version of the Hope Credit, which a...
I had financial aid for college. Is there a credit or deduction I should file for? Students with financial aid may be able to take the Student Loan Interest Deduction, which lets you deduct the interest paid on student loans. The ded...
Can I deduct any of my medical expenses? You can deduct medical and dental expenses that exceed 7.5% of your AGI as long as you itemize your deductions. Expenses include the costs of diagnosi...
I worked more than one job in more than one state during the tax year; how should I file my taxes? You have to report and pay tax on all of your income, from all of your jobs, so be sure to record income from every W-2 or 1099. As for multiple state...
What states do not levy a personal income tax? Seven states have no income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. If you earn money in these states you do not ...
Gambling Losses Deduction You can deduct gambling losses as a miscellaneous itemized deduction on your Schedule A, but only up to the amount you report in gambling winnings on ...
Miscellaneous Deductions Many itemized deductions are grouped under the umbrella term “miscellaneous deductions” and, like other itemized deductions, can be claimed on your Sc...
Statement by Person(s) Receiving Gambling Winnings - Form 5754 You must fill out Form 5754 [Statement by Person(s) Receiving Gambling Winnings] before you can receive a Form W-2G [Certain Gambling Winnings] if you...
Sales and Other Dispositions of Capital Assets - Form 8949 Form 8949 is a new form for reporting capital gains introduced in the 2011 tax year. On Form 8949 you must list transactions that in previous years wo...
Proceeds from Broker and Barter Exchange Transactions - Form 1099-B A form 1099-B records all stock transactions and helps you report capital gains or losses to the IRS when you file your return. Brokers and barter ...
Domestic Production Activities Deduction - Form 8903 The domestic production activities deduction, often called the manufacturer’s deduction, is a tax deduction that individuals involved in domestic manu...
Health Coverage Tax Credit - Form 8885 The Health Coverage Tax Credit is available for individuals who qualify and their families to help with their health insurance costs. The HCTC pay...
What is the Adjusted Gross Income (AGI) Adjusted gross income (AGI) is a special calculation of income that determines your eligibility for certain credits and deductions. Most phase out or ...
What is Basis? The basis of a piece of property is usually the cost at which you bought it. This can include the amount you paid in cash, debt obligations, other pro...
Capital Gains or Capital Losses Capital gains occur when a capital asset, such as a home, household furnishings, real estate, stocks, or bonds, is sold. The difference between the am...
What Is a Deduction? A tax deduction is a special tax break that reduces the amount of income on which you are taxed, thus reducing your overall tax burden. Deductions ar...
What Is Earned Income? Earned income is income that you had to work to earn, either working for someone else who pays you or working in a business you own and run. Use your ...
What Is Unearned Income? Unearned income is income that you did not work to earn. Unearned income is often important in figuring out if a dependent needs to file a tax return....
What Is the Standard Deduction? The standard deduction is a set amount, adjusted yearly for inflation, that can be subtracted from your gross income, thus reducing the total income u...
Cancellation of Debt Exclusion - Form 1099-C If a debt you incurred is successfully cancelled by the lender, then the amount of the debt is generally considered a part of your gross income for th...
What Is Modified Adjusted Gross Income? Also known by its acronym MAGI, the modified adjusted gross income is figured by adding back to your Adjusted Gross Income (AGI) specific benefits, ex...
Earned Income Credit The Earned Income Tax Credit is a refundable credit that helps low- and moderate-income workers keep more of what they earn. When the amount of the cr...
What Are Itemized Deductions? - Schedule A Every taxpayer can choose to take either the standard deduction or itemize deductions, usually whichever results in the least tax due. If you choose t...
What Is a Tax Credit? A tax credit is a special tax break put in place by Congress and the President that reduces the total amount of tax you owe the government. In certai...
Supplemental Income and Loss - Schedule E Attach Schedule E to your 1040 to report income or loss from rental properties as well as royalties, partnerships, S corporations, estates, trusts, an...
Earned Income Credit - Qualifying Child Information - Schedule EIC After you have calculated your Earned Income Credit (EIC), attach Schedule EIC to your 1040 or 1040A to provide the IRS information about your qualify...
Who must file taxes? If your gross income was as least as great as the amount shown below and you are under 65 years old, you must file an income tax return Single - $9,5...
I am unemployed; do I have to pay taxes? You are only legally required to file a return if your income is above $9,500 for single filers or $19,000 for married couples filing jointly (see Cha...
What about income not recorded on my W-2? You still have to report and pay tax on any income that’s not included on your W-2. For example, you have to report and pay tax on income from 1099s s...
Do I have to report income from child support payments? No, you do not have to report child support on your tax return because these payments constitute nontaxable income. Nor do they constitute a deductibl...
What is the difference between adjusted gross income (AGI) and modified adjusted gross income (MAGI)? Adjusted gross income (AGI) is your total gross income (which includes all income from whatever source) minus certain above-the-line deductions. Ad...
What is the difference between deductions and credits? Both deductions and credits save you money on your taxes, but they do it in different ways. Credits apply directly to your tax burden, reducing out...
What is the difference between a refundable and a nonrefundable credit? A refundable credit is one that allows you to get money back in the form of a refund if the size of the credit is greater than your tax liability. Ref...
I am self-employed, is there a deduction for me? A number of different deductions could apply to you and your business, too many to cover here. It’s best to look at all of them in depth. But here are...
Do I get a deduction for owning (or buying) a home? There are several tax breaks available to homeowners. The Home Mortgage Interest Deduction allows you to deduct interest paid on a home mortgage. Mo...
Do I have to pay state income tax if I work outside my home state? Yes, you have to file a state tax return for every state in which you live or earn money. File taxes as a resident in the state that contains your mai...
Do I list income from the state in which I live on a nonresident tax form? No, when you file taxes as a nonresident, you only have to include the income you received from that state. Don’t forget, you should be able to take a...
What is an amended return, when is it necessary. and how do I go about filing one? Filing Form 1040X [Amended Individual Return] allows you to correct information on a tax return that has already been filed. Reasons to file an amende...
I received another tax document (such as a W-2) after I submitted my tax return. What do I do? In this case it is generally best to file an amended return. If you are receiving a W-2 or a 1099, that means the IRS has been notified of this income...
What Is a Tax Extension? You must submit Form 4868 to file for a tax extension. This will give you an additional six months to file your tax return, making your new tax deadli...
Above-the-Line Deductions Above-the-line deductions are deductions that you subtract directly from your gross income and are separate from normal itemized deductions, which you...
Certain Government Payments - Form 1099-G Those who received payments from either the federal, state, or local government during the year should receive a Form 1099-G, listing the amount they ...
Nontaxable Combat Pay Election Members of the military can elect to have their nontaxable combat pay included as part of their overall income towards the earned income tax credit (E...
What types of tax credits are available in my state? State and local governments offer a raft of state or locality specific tax credits aimed at both qualifying individuals and small and medium businesse...
How long until I receive my tax refund? A refund typically takes less than 21 days to reach e-filers who choose direct deposit. E-filers who request a paper check instead may have to wait up...
What are the types of filing statuses? There are five possible filing statuses, based on your marital status and family circumstances, which determine the amount of your standard deduction,...
Single Filing Status Single is the default filing status for taxpayers who are unmarried or considered unmarried. Your marital status on the last day of the calendar year...
Married Filing Jointly Filing Status Married filing jointly is one of two filing statuses available to married taxpayers, the other being married filing separately. Married filing jointly...
What is my tax liability? Your tax liability is the amount of money you owe the government. Taxpayers meet (or pay) their federal tax liability through withholding, estimate...
Married Filing Separately Filing Status Married filing separately is one of two filing statuses available to married taxpayers, the other being married filing jointly. Married filing separat...
What Is the failure to File penalty? The failure-to-file penalty results when you do not file your tax return by the deadline. The penalty usually amounts to 5% of your unpaid tax liabil...
Head of Household Filing Status Head of household is a special filing status that allows for several unique tax breaks such as a higher standard deduction, lower tax rates, and more ...
Qualifying Widow(er) with Dependent Child Filing Status Those who lose a spouse during that tax year can file a joint return for the tax year of their spouse’s death. But for the next two years those who ha...
What is the failure to pay penalty? As its name suggests, the failure-to-pay penalty results when you fail to pay your taxes by the April tax return deadline. The penalty amounts to 0.5...
What is my principal residence? Your principal residence, also known as your main home, is the home you live in most of the time. It can be a house, houseboat, mobile home, cooperati...
What is the interest on unpaid tax When you fail to file your tax return on time or pay your tax due, not only will you face failure-to-file and failure-to-pay penalties, but interest c...
What is withholding? Withholding is the money that employers take out of their employees’ paychecks for federal income tax, social security and Medicare taxes, and state a...
What should I do about a change of address? You need to let the IRS know if you change your permanent address. If it’s tax time, all you have to do is fill in your new address in the address sec...
What are personal exemptions? A personal exemption is a tax deduction that allows you to reduce your taxable income, thus reducing the amount of income tax you owe. The amount of...
What tax breaks can a dependent get me? For every dependent you have, you are allowed to claim a dependency exemption, which decreases the amount of income on which you are taxed. For 2011 t...
How do I update my withholding? You can change your withholding at work by submitting a new Form W-4 [Employee’s Withholding Allowance Certificate]. It’s a good idea to submit a new ...
What Is a Dependency Exemption? In addition to the Personal Exemptions for you and your spouse, the IRS allows you to substract an equivalent exemption amount from your taxable incom...
Who qualifies as a dependent? Dependents are divided into two categories: qualifying children and qualifying relatives, each with its own set of requirements. If your dependent is ...
What qualifies as support for a dependent? For the purpose of determining if someone is your dependent, total support includes the amounts spent to provide food, lodging, clothing, education, m...
If I received a refund from the IRS, can I expect a refund from my state also? If you receive a refund from the IRS on your federal tax return, you can most likely expect a refund on your state return as well, though this is by n...
Who Is a Qualifying Child for Tax Purposes? A qualifying child allows you to claim several tax breaks not available to taxpayers without children, such as the exemption for a dependent, the Chil...
Who Is a Qualifying Relative for Tax Purposes? Several conditions must be met before an individual can qualify as your relative. Namely, He or she cannot also be claimed as a qualifying child. Th...
Can an adult qualify as a dependent? You may be able to claim certain adults who are permanently and totally disabled, regardless of age, as a qualifying child. You may also be able to...
How can I find out if a college student is a dependent? You can claim a full-time college student under the age of 24 as a qualifying child, provided they pass all of the other tests. Education is considere...
Can I claim my boyfriend as a dependent? You cannot claim your boyfriend or girlfriend as a qualifying child. But you may be able to claim them as a qualifying relative, provided they lived w...
Can someone who is in prison be listed as a dependent on your income tax return? Yes, provided they meet all the requirements of either a qualifying child or qualifying relative. Generally this is going to require that the person i...