Frequently Asked Questions
The most frequently asked tax questions related to Frequently Asked Questions
What is a 1099-C and why did I receive this?
Asked Tuesday, March 27, 2012 by an anonymous userCPA Answer:
When you make a settlement with a credit card company, the amount of forgiven or cancelled debt is considered income and is reported to the IRS. A 1099-C, or cancellation of debt tax notice, reports the amount of money you need to include on your tax return. For example, if you settle $50,000 in debt with your credit card company you might still owe the IRS $20,000 in taxes - and the IRS is not as forgiving as the credit card companies.
*There is an exception for mortgage debt cancelled on your primary residence as this cancelled debt is not considered income.
Can I deduct the interest and real estate taxes I paid for my adult child who has been out of work?
Asked Tuesday, March 27, 2012 by an anonymous userCPA Answer:
To be able to deduct the interest and real estate taxes, your name must be on the mortgage as well as the title to the real estate property.
Can I income average this year?
Asked Tuesday, March 27, 2012 by an anonymous userCPA Answer:
No, income averaging has not been around since 1986.
Can I postpone the tax on the gain on the sale of my house if I buy another home within a year?
Asked Tuesday, March 27, 2012 by an anonymous userCPA Answer:
This is another rule that went out in the 80’s. However, the good news is there is usually no need to worry about taxes on the sale of your residence. If you are single you can exclude $250,000 of your gain or, if you are married and filing jointly, you can exclude up to $500,000 of the gain as long as you lived in your home two out of the last five years.
Where do I deduct the $15,000 gift I gave my child to pay some bills on my tax return?
Asked Tuesday, March 27, 2012 by an anonymous userCPA Answer:
People often misunderstand what the $15,000 gift exclusion represents as gifts are not deductions on an income tax return. Instead, 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.
Can I income average to pay less tax this year?
Asked Sunday, March 11, 2012 by an anonymous userCPA Answer:
No - Income averaging has not been available for over 25 year.
I donated my time to a charity. How do I deduct this?
Asked Sunday, March 11, 2012 by an anonymous userCPA Answer:
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.
Where do I deduct the contributions to a 529 Plan on my federal tax return?
Asked Sunday, March 11, 2012 by an anonymous userCPA Answer:
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.
Can I deduct my girlfriend who lives with me?
Asked Sunday, March 11, 2012 by an anonymous userCPA Answer:
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.