10 Popular Tax Questions

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10 Popular Tax Questions

Can I income average to pay less tax this year?

Asked Sunday, March 11, 2012 by an anonymous user
No - Income averaging has not been available for over 25 year.
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Can I postpone the gain on the sale of my home if I buy another house?

Asked Sunday, March 11, 2012 by an anonymous user
No- That was an old rule than has not existed since the 1980s. Currently, if you are single and live in your home for 2 out of the last 5 years, you can exclude up to $250,000 of the gain. A married couple filing jointly can exclude up to $500,000 of the gain. Any gains that exceed these amounts would be taxed at the capital gains rate.
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Are funeral costs deductible?

Asked Sunday, March 11, 2012 by an anonymous user
No- Unfortunately burial and funeral costs are not a deduction on your income tax return
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Where do I deduct the contributions to a 529 Plan on my federal tax return?

Asked Sunday, March 11, 2012 by an anonymous user
Contributions to a 529 Plan for your child's education are not deductible on the federal return. However, some states like NY do allow a deduction for contributions to a 529 plan. The advantage of making contributions to a 529 plan are that the earnings in the plan will not be taxed if the distributions are made for qualified educational purposes.
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Can I deduct my girlfriend who lives with me?

Asked Sunday, March 11, 2012 by an anonymous user
Generally the answer is no. There are various tests that must be met for someone to be claimed as a dependent. One of the tests is the "relationship"test. If the person was a qualifying relative that you provided 50% support and they lived with you all the entire year and made less than $4,050 of earned income, then the answer could be yes.
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Where do I deduct the $15,000 gift exclusion I gave my child?

Asked Sunday, March 11, 2012 by an anonymous user
Gifts are not deductions on an income tax return. People misunderstand what the $15,000 gift exclusion represents. The $15,000 gift exclusion is the maximum amount you are allowed to gift to one individual without being required to file a gift tax return.
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I donated my time to a charity. How do I deduct this?

Asked Sunday, March 11, 2012 by an anonymous user
Sorry- you cannot deduct the value of your time for the services you provided. . However you may deduct the actual travel expenses incurred or use a mileage allowance of 14 cents a mile. This can be taken on Schedule A as a non-cash contribution.
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Can I deduct the interest on my credit cards and auto loan?

Asked Sunday, March 11, 2012 by an anonymous user
No - Consumer - non business debt is not an allowable deduction.
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Where's my IRS refund?

Asked Sunday, March 11, 2012 by an anonymous user
Finding out the status of your refund is easy. Just Go to the IRS website at Where's My Federal Refund?
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Why am I now subject to the alternative minimum tax?

Asked Sunday, March 11, 2012 by an anonymous user
In the mid 1980s the alternative minimum tax was introduced to make sure high earners paid their fair share of taxes. Unfortunately over the years, as a result of inflation, more and more individuals are subject to this tax computation. The Alternative Minimum tax is almost like a flat tax in that it limits the tax deductions one can take. If the alternative minimum tax calculation, computed on IRS form 6251, results in a higher tax than the regular income tax computation, then you pay the alternative minimum tax. Certain deductions may trigger the alternative minimum tax including, but not limited to, deductions such as real estate taxes, state taxes and interest on home equity loans , and miscellaneous investment or job expenses.
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