| Subject | Date Asked |
|
| Loan to LLC | 10/29/2009 |
Q: In a recent reply you advised the sole proprietor of an LLC regarding loaning the LLC money to ...
A: Ah! Good point! I have a habit of focusing too narrowly on a specific point when I'm answering ...
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| Rental Property Sale | 10/28/2009 |
Q: I am considering the sale of my rental in CA. I purchased the home in 1996 and it was my primary ...
A: You will owe capital gains tax on the difference between your basis in the property and the 290k, ...
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| City has authority to tax church? | 10/28/2009 |
Q: Here's the scenario: The City of Oklahoma City has required a registered 501c3 church in Oklahoma ...
A: Unless an item is specifically excluded by your state from sales tax, even by nonprofits like ...
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| LLC vs S corp | 10/28/2009 |
Q: I am purchasing a franchise from an existing franchise owner with corporate approval. The cost will ...
A: No, that's not true. Neither pays taxes (unless you set up the LLC like a C-Corp, which is rare, ...
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| buying a franchise | 10/28/2009 |
Q: I am purchasing a franchise from an existing franchise owner with corporate approval. The cost will ...
A: The advice has merit to it, but it's not really going to matter for what amounts, essentially, to a ...
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| depositing euros into American bank account | 10/23/2009 |
Q: I am an Irish citizen ( also have American citizenship, as of recently) living in NY. I am a ...
A: If it gains attention, and the IRS questions it, all you need to do is explain the situation. ...
|
| LLC Partnership | 10/23/2009 |
Q: Vanessa I hope you can help. I am actually asking this as an interested third party. I have an ...
A: Yes, the IRS is correct- in matters of tax, they usually are. :0) However, each partner shouldn't ...
|
| Income tax | 10/21/2009 |
Q: I sold my ½ share of a piece of property about 25 years ago and took back a note from the buyer with ...
A: Ah- sorry about that. I forgot to answer that part of your question. Generally, yes. When you ...
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| Income tax | 10/16/2009 |
Q: I sold my ½ share of a piece of property about 25 years ago and took back a note from the buyer with ...
A: You can take a deduction for personal bad debt, but there are limitations and special rules. This ...
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| Business Taxes | 10/15/2009 |
Q: Vanessa, Our company develops custom software applications for various companies. On occasion we ...
A: I'm a little confused about the question. If you're asking whether or not the income to the ...
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| Tax Amendment | 10/15/2009 |
Q: Both of us are resident aliens and got married outside US in Dec 2001. We each earn roughly $100K ...
A: You know what? I had completely forgotten about that rule. You're right. I know you can switch ...
|
| First time HomeBuyers Credit | 10/14/2009 |
Q: The loan is in my name but both our names are on the title. This is my husband's 1st home purchase ...
A: Not for the home purchase, unfortunately. But go here: ...
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| Lines 12A and 12B | 10/14/2009 |
Q: Powell, I had my taxes professionally prepared last year. I do not understand why both my wife's and ...
A: Hm. Tough to say. That wonderful "taxable amount unknown", with regards to civil service ...
|
| Tax Amendment | 10/13/2009 |
Q: Both of us are resident aliens and got married outside US in Dec 2001. We each earn roughly $100K ...
A: 1) Yes, but why would you want to? It'll just end up costing both of you more money in tax, and ...
|
| Lines 12A and 12B | 10/9/2009 |
Q: Powell, I had my taxes professionally prepared last year. I do not understand why both my wife's and ...
A: To answer your second question first, your quarterly tax estimate will include an amount for social ...
|
| First Time Home Buyers Credit | 10/8/2009 |
Q: I recently bought a house, revised and resubmitted my taxes in order to recieve this $8,000 tax ...
A: It has been taking up to six months to receive the credit. The average is around 5 months. So you ...
|
| 16 year old working | 10/7/2009 |
Q: I'm sixteen years old; I was wondering if I will have to pay taxes if I work?
A: It doesn't matter how old you are. What matters is how much money you make and whether or not ...
|
| Tax Law | 10/7/2009 |
Q: We are sorry, but WILLIAM D MCCONNAUGHY wasn't able to answer yourFacts as Follows: 1) John Doe ...
A: No. Insurance proceeds are sometimes taxable income to the recipient, but not to the owner of the ...
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| First- Time home Buyers Credit | 10/6/2009 |
Q: I bought my first home earlier this year, after I had filed my 2008 taxes. Shortly thereafter, I was ...
A: Unfortunately, the current wait time for the credit is as long as 6 months. So if you need it ...
|
| Child Tax Deduction | 10/4/2009 |
Q: Who gets to claim the child tax deduction in a 50/50 joint custody? We, my ex and I, live in ...
A: Whoever the child is with for the most nights out of the year. Even in 50/50 custody cases, the ...
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| Tax on 1099 | 10/4/2009 |
Q: I am an Indian student. I graduated in Dec 2008 after doing MS in Computer Engineering. I am right ...
A: The first thing you'll need to to is to estimate the tax you owe on the $13,000 and make an ...
|
| IRS form 2553 opt for S-Corp | 10/2/2009 |
Q: I just started an LLC and recieved my EIN today. Now I am trying to fill out Form 253 to be ...
A: If you started an LLC, then you can't elect to be an S-Corp. They're two different entities. If ...
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| Taxes on private personal loans | 10/1/2009 |
Q: Powell, I needed to ask my father for a loan in order to pay some debt. He is going to make a ...
A: You don't need to explain anything. If the IRS sends an inquiry letter, or looks into it, you'll be ...
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| child care and taxes | 10/1/2009 |
Q: We are currently paying a friend $125.00 a week ($500 a month) to baby sit our 15 month old. Soon ...
A: Disregarding the legal and ethical implications of your friend evading taxes and you agreeing not to ...
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| Non-Cash Contributions of Artwork to a Charity | 9/30/2009 |
Q: My nonprofit organization is considering organizing as a fundraiser a sale of artwork donated by ...
A: If no appraisal is done, then the donor can only deduct what the organization eventually sells it ...
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| Personal Loan-Gift? | 9/30/2009 |
Q: I have a client with a situation that I am not familiar with. She wants to loan a family member a ...
A: Yes, the interest is taxable. Since it is actually a loan, then, no, it is not considered a gift. ...
|
| Are federal taxes really legal? | 9/30/2009 |
Q: Are federal taxes really legal? I have seen many documentaries and did some research on formed IRS ...
A: Yes, federal taxes are legal. This is a long standing "conspiracy theory" that is, frankly, ...
|
| Mystery 401k Distribution | 9/29/2009 |
Q: I left a former employer in 2003 and recently received a letter from the IRS saying I had ~$10k in ...
A: Unfortunately, the IRS doesn't do much automatically. What you need to do is file an amended return ...
|
| Non-Cash Contributions of Artwork to a Charity | 9/28/2009 |
Q: My nonprofit organization is considering organizing as a fundraiser a sale of artwork donated by ...
A: Okay, let's break this down into the component parts. First of all, you don't need to have anything ...
|
| Negative AGI | 9/28/2009 |
Q: Due to loss of income (personal and rental), I expect that I will be incurring a negative AGI for ...
A: Okay, when I look at your description of *what* you do (since you obviously met the hours test), you ...
|
| Independent contractor | 9/28/2009 |
Q: I just got certified to teach group fitness classes. I am considered an Independent Contractor and ...
A: I'll answer your questions in order: 1) Yes, on the schedule C, it would go under either "taxes and ...
|
| Negative AGI | 9/28/2009 |
Q: Due to loss of income (personal and rental), I expect that I will be incurring a negative AGI for ...
A: There are two types of losses involved here, it sounds like. When you have losses from the rental ...
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| CLAIMING GRANDSON | 9/25/2009 |
Q: Grandson was thrown out of fathers place and then where his mother is living,now lives with me his ...
A: It depends on a few things. First of all, no one else can claim him, and he can't claim himself if ...
|
| gifts | 9/24/2009 |
Q: If someone files a gift tax return in your name and states that it is foregiveness of debt, should ...
A: If there was never any debt between Person A and Person B, and Person B never received any money ...
|
| Dependent | 9/24/2009 |
Q: I am 23 years old, and I just finished school. I decided not to start school this fall, and now I ...
A: If you just finished school, then your father can likely still claim you as a dependent. You're ...
|
| business taxes | 9/23/2009 |
Q: My husband owns a construction business and he is sole proprietor. I am on the payroll as the book ...
A: Okay, I think I see what you mean, now. Your husband can, indeed put you on payroll. He can also ...
|
| hardship withdrawal IRA | 9/23/2009 |
Q: This is a tortuous question. I have been unemployed for over two years. My wife is 58. Recently our ...
A: I am so sorry to hear about your situation. What makes it worse for me is that I have to be the ...
|
| business taxes | 9/22/2009 |
Q: My husband owns a construction business and he is sole proprietor. I am on the payroll as the book ...
A: That's not true. Owner draws have nothing to do with income taxes. What matters is the company's ...
|
| gifts | 9/22/2009 |
Q: If someone files a gift tax return in your name and states that it is foregiveness of debt, should ...
A: If there were gift tax returns filed for $20,000 for 5 years, then Person A is saying that they gave ...
|
| Mileage Reimbursement | 9/21/2009 |
Q: When my company hired me 2 years ago, they asked me to move to the Montgomery area. I have recently ...
A: My answers depend on my understanding of your question, so bear with me. When you say you got a ...
|
| childcare | 9/21/2009 |
Q: I am paying an individual for childcare (non-related) since my husband and I both work. We were ...
A: No, it won't hurt her. Well, as long as she's filing taxes if she should be, then it won't hurt ...
|
| gifts | 9/18/2009 |
Q: If someone files a gift tax return in your name and states that it is foregiveness of debt, should ...
A: Wait a minute. Let me get this straight. Person A gave Person B a loan. Then, at some point ...
|
| California Vacation Payout | 9/18/2009 |
Q: My job in California is requiring all vacation time be paid out at the end of the year. I think ...
A: Your vacation pay-out will be taxed just like the rest of your wages. Think about it like this- if ...
|
| Taxable income | 9/17/2009 |
Q: We have hired a new Sales Manager and as part of his enticement to accept employment we offered him ...
A: Yes. That is definitely taxable income. There is actually very little that is not considered ...
|
| Per Diem laws in CA | 9/16/2009 |
Q: My husband has been forced to take an assignment in Milpitas, CA. It's about 2.5 hours from our ...
A: https://www.dir.ca.gov/dlse/2802Regs/2802Regs-ProposedText13700-13706.pdf That is the actual law ...
|
| 1041; qualified dividends and sked D loss | 9/14/2009 |
Q: The only income with complex 1041 trust is ordinary dividends, with a portion being qualified. At ...
A: Total dividends aren't reduced by qualified dividends. You only pay "regular tax" on ordinary ...
|
| gifts to volunteers | 9/14/2009 |
Q: Our high school football coaches want the booster board to pay their volunteer coaches as a ...
A: You're correct. You need to give out 1099's for any payments to volunteers. Gifts cannot be over ...
|
| California Community Property | 9/14/2009 |
Q: My wife passed away in 2008. She had an IRA account without a beneficiary listed valued at a little ...
A: As her spouse, you are the beneficiary of her IRA. Not only is CA a community property state, but ...
|
| Any taxes on lump sum distributions?? | 9/14/2009 |
Q: I am designated as sole beneficiary of my mother's Tiaa-Cref pension. My father is deceased and I am ...
A: No problem- sorry for the confusion. Typically, the administrator will withhold taxes- an arbitrary ...
|
| Any taxes on lump sum distributions?? | 9/12/2009 |
Q: I am designated as sole beneficiary of my mother's Tiaa-Cref pension. My father is deceased and I am ...
A: The distribution would be taxable to you as the beneficiary. You will receive a 1099-R for the ...
|
| LLC company and 1099's vs. W2's | 9/11/2009 |
Q: There are 3 individuals that want to start an LLC company but I have some tax questions I am hoping ...
A: An LLC is, essentially, a partnership with certain liability advantages. That being said, the ...
|
| payment via 1099 | 9/11/2009 |
Q: I have a job that pays me the traditional way, where taxes are handled by the employer. I have ...
A: If you find that you would like some professional help with tax matters, I would go to either a CPA ...
|
| Taxes on Deceased Vet's Estate | 9/10/2009 |
Q: My uncle recently died at age 88. He was a 100% disabled WWII American veteran who received ...
A: If your uncle does, indeed, owe back taxes on these annuities, then his estate is responsible for ...
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| Taxes on Deceased Vet's Estate | 9/10/2009 |
Q: My uncle recently died at age 88. He was a 100% disabled WWII American veteran who received ...
A: It could definitely be true. If your uncle should have filed income tax because of these annuities, ...
|
| money off the books? | 9/10/2009 |
Q: I have been doing odd jobs for "my boss" for quite some time. I help him out, he pays me in cash. ...
A: $400. If you make over $400, then you'll have to file a tax return as being self-employed and then ...
|
| Corporate Inheritence | 9/10/2009 |
Q: This is a little unusual. A C corporation was assigned a partnership interest in an LLC upon ...
A: This is a complicated situation, but from what I can gather here, it sounds like the corporation ...
|
| Investments | 9/9/2009 |
Q: I recently graduated from college and have proven myself when it comes to investing. I have 5 people ...
A: First of all, depending on what state you live in, you may not be able to form an LLP. For ...
|
| payment via 1099 | 9/7/2009 |
Q: I have a job that pays me the traditional way, where taxes are handled by the employer. I have ...
A: Of course you should accept the extra compensation if you have the time and desire to take the extra ...
|
| ESOP Tax Question | 9/7/2009 |
Q: I am almost vested and looking at paying off debt, but I would like to know what penalties would I ...
A: ESOPs seem much more confusing than they really are. Think about the plan like a 401(k). The only ...
|
| 1099 filing | 9/7/2009 |
Q: I work for a property manager (sole proprietor) He hires leasing agents from a broker. The broker is ...
A: No, it's not necessary. Some companies provide 1099s to all individuals and very small business ...
|
| Financial Aid for married college students | 9/6/2009 |
Q: I was told that married couples in college received more financial aid for college. However, I was ...
A: If you are married, it doesn't matter where you live for financial aid purposes. When you marry, ...
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| Permanent resident abroad with a US inheritance | 9/6/2009 |
Q: Vanessa, I am a US citizen living in Japan since 2005. I payed US taxes on my 2005 income, but ...
A: Jocelyn- The problem isn't the bank account. Go ahead and have it sent wherever is most convenient ...
|
| real estate | 9/4/2009 |
Q: We are about to sell a piece of property that we had lived on, but, the house burnt down (total ...
A: If you lived on it (regardless of whether or not the house itself is no longer standing) for that ...
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| Taxed by both Georgia and Florida? | 9/4/2009 |
Q: I am technically a resident of Georgia, however, I am now living and working in Florida. I have not ...
A: Florida doesn't have an income tax, so you don't need to worry about that. As for Georgia, you only ...
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| Estate Account | 9/3/2009 |
Q: State of Texas Letters Testamentary states me as "qualified according to law as INDEPENDENT ...
A: You're not required to set up a separate account, but it's almost always best to do so. Where ...
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| volunteer gifts | 9/2/2009 |
Q: what are the rules in compensating volunteers with gift cards through a business that works with ...
A: Unless you're only planning on giving them less than $25, you shouldn't give volunteers any gifts. ...
|
| Milage | 9/1/2009 |
Q: Are the miles driven back and forth from my job everyday tax deductible?
A: No. Commuting miles aren't deductible. Only those miles you drive for your job that you aren't ...
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| LLC and Spouse Income | 8/31/2009 |
Q: I do consulting work and have formed an LLC this year. My husband is a realtor that has had a loss ...
A: That's not limited to realtors. On schedule A, if you itemize and have over 7.5% of your AGI in ...
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| Owner Pay vs Family Pay business entity | 8/31/2009 |
Q: Currently, my husband and I are equal portion owners of an LLP in MN. We were going to change the % ...
A: Let me break this down into the different questions you've asked. First, how to make you the ...
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| Managing member refuses to provide K-1 info | 8/30/2009 |
Q: and thank you for taking my question. My husband was part owner of over 30 LLC's in Florida ...
A: I honestly don't know whether or not it's technically illegal, but I CAN tell you that the IRS isn't ...
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| tips and taxes | 8/29/2009 |
Q: If I can give away $1 1,000 dollars to anybody tax- free why are tips taxable income?
A: Actually, it's $13,000 per year before you pay gift taxes. But you're right in that the person ...
|
| Contract work | 8/29/2009 |
Q: I am an occupational therapist that just took a 14/hr a week contract job in my towns elementary ...
A: What you'll need to do first is print out the 1040-ES from the IRS website. There's a worksheet ...
|
| 2nd home sale | 8/28/2009 |
Q: I have been reading some about long-term capital gains for 2008 and 2009; if you're in the 10-15% ...
A: That actually goes all the way through 2010, and you are correct. It has nothing to do with real ...
|
| married but filing separately and mortgage | 8/28/2009 |
Q: My husband recently purchased a home. Although, I co-signed, he makes all payments. We always file ...
A: 1) Unless you claim the interest as an itemized deduction, no. And you don't have to claim the ...
|
| S Corp tax liability | 8/27/2009 |
Q: I recently sold my shares in a California S-corp back to the company. I never received profit-share ...
A: S-corporations most commonly "behave" like partnerships. While those starting the organization have ...
|
| Small business Sales Tax | 8/27/2009 |
Q: My partner and I run a small business based in Utah, but we sell our product mostly out of state. ...
A: You should withhold sales tax if you actually go to these places. If you were only selling online, ...
|
| i need help | 8/27/2009 |
Q: The job that i am currently "employed" at is paying me under the table.I graduated beauty school ...
A: The best, easiest, and most effective way to report tax fraud (which is what this is) is to complete ...
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| Lottery winnings/ trust fund tax | 8/26/2009 |
Q: Father in Law won State of Ohio lottery few years back. Gets yearly payouts, he passed away two ...
A: Okay. This is, indeed, a pretty complicated issue from the sound of it. I'll do my best. 1) With ...
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| Can I claim my siblings as dependents? | 8/26/2009 |
Q: My father and step mother signed a Power of Attorney for me to have rights over 4 of my younger ...
A: You cannot claim them as qualifying children if they did not live with you for more than half of the ...
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| 1099 vs W2 | 8/26/2009 |
Q: A North Carolina employer has its employees working under a W2 tax status; state and federal taxes ...
A: I'm not sure why they mentioned a 1099. You're right about the difference between a W-2 and a 1099, ...
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| Tax write off (mortgage) question | 8/25/2009 |
Q: For the last few years (3-5 to be exact) my husband and I have been paying the mortgages on my ...
A: Ah, yes, we accountants have a bad habit of accidentally terrifying taxpayers. I'm sure that wasn't ...
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| Inheriting Death Benefit from Retirement Plan | 8/25/2009 |
Q: My uncle passed away and left behind two accounts totaling $125,000. I've done the paperwork to ...
A: One thing you need to consider is whether or not your uncle's estate was large enough to require ...
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| ESOP Distribution | 8/25/2009 |
Q: I am eligible for an ESOP distribution from a employer I left 5 years ago. I my total share is about ...
A: Unfortunately, ESOPs work the same way as any other defined contribution plan as far as ...
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| fed and state taxes | 8/24/2009 |
Q: I was wanting to know how many exempts I need to claim in order to have no taxes taken out of my ...
A: That's a bad idea, considering that you'll then owe penalties and interest far in excess of whatever ...
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| Personal Loan From A Relative | 8/22/2009 |
Q: My father loaned my son $60,000 to start a business. My son agreed to pay his grandfather $500 a ...
A: With gifts, it's the giver who must pay tax. However, as long as this is truly a loan, then it's ...
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| Tax write off (mortgage) question | 8/21/2009 |
Q: For the last few years (3-5 to be exact) my husband and I have been paying the mortgages on my ...
A: You don't need to worry about the IRS coming and knocking menacingly on your door. While ...
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| Taxes | 8/21/2009 |
Q: Are student loans taxable to the extent they are not used for school?
A: No. While grants and scholarships usually are taxable if not used for qualified education expenses, ...
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| Mystery 401k Distribution | 7/30/2009 |
Q: I left a former employer in 2003 and recently received a letter from the IRS saying I had ~$10k in ...
A: Your employer is supposed to make a reasonable effort to find you if they need to (for whatever ...
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