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Tax Law (Questions About Taxes)/Questions Answered by Expert Vanessa D. Powell, CPA

Subject	Date Asked
Payroll Tax Question	2/8/2011
Q: I process payroll through Peachtree for a small golf course in IL. I have an employee that is over ... A: No, there is no age limit for payroll taxes. You CAN stop withholding income taxes, as his income ...
Changing Depreciation Method	2/8/2011
Q: I am renting out a single house and was wondering if I can change the depreciation method from ... A: Yes, you can change your depreciation method, but just make sure to only depreciate the net book ...
Part year abroad, part year CA (new residency)	2/7/2011
Q: In 2009, I left Massachusetts (where I filed 2009 taxes) to travel. I left my belongings and car at ... A: If by "abroad", you mean out of the country, then you'll need to file a form 2555. You can probably ...
Tax on co-owned rental property	2/7/2011
Q: My three siblings and I inherited our parents' home in California. For the time being we plan to ... A: The best and most simple thing to do is to report all of the income and all of the expenses on each ...
Federal Income Tax Question	2/6/2011
Q: We received a gas lease payment of $3975.00 in 2010 but we did not receive the 1099. Are we under ... A: No, you definitely have to report the $3,975. But, while it's technically after the deadline to ...
documentation of expenses	2/6/2011
Q: I pay many of my bills by EFT, extracting money directly from my bank account. Is a copy of my bank ... A: If the IRS ever examines your return, the EFT records on bank statements would be just as good as ...
esop pay out	2/4/2011
Q: The company that I'm 100% vested in a ESOP program with sold in 8/09. We were told at that time ... A: Let me get this straight- you still work for the company? As in, the company that bought the old ...
W2 box 12a code W	2/3/2011
Q: In box 12a of my W2 it is marked "W 4030". I looked up this code and it says "employer paid HSA ... A: Are you 100% positive that your employer isn't contributing to your HSA? If you are, and you know ...
tax dependants	2/2/2011
Q: My adult daughter and 5 yr. old grandchild lived with me for 11 months in 2010. During that time, my ... A: Your situation is, unfortunately, somewhat complicated. Let's start with your daughter. You can ...
Tax Deductions after Divorce	2/2/2011
Q: My wife and I divorced in mid-2010. One item that was overlooked in our divorce agreement was ... A: You are correct. If the 1098 is reported under your SS#, then you are the one who can report it. ...
short sale on rental property	2/1/2011
Q: We sold on a short sale a rental property last year. We have been forgiven the debt but we have debt ... A: A short sale means that you had debt forgiven, which is considered income in the year it's forgiven. ...
Claiming child as dependant	2/1/2011
Q: I recently heard that the new law on claiming a child on your taxes has changed. I was told that ... A: If you have your son more than half of the nights in the year, you have the right to claim him as a ...
esop pay out	1/31/2011
Q: The company that I'm 100% vested in a ESOP program with sold in 8/09. We were told at that time ... A: When a company is sold or goes bankrupt, there are many complications that occur if there's an ESOP. ...
Filing a return for untaxed wages	1/30/2011
Q: Last year I worked for a a woman helping her start her own preschool. I in turn was compensated for ... A: You'll need to wait for your tax forms to be able to file. Yesterday was the deadline, but, ...
Education reimbursements	1/28/2011
Q: We currently do not include this in an employees income. Any information you could provide would be ... A: Ah- I see. Generally not. Which is why I didn't even consider this loophole in my answer. There ...
Education reimbursements	1/28/2011
Q: We currently do not include this in an employees income. Any information you could provide would be ... A: Yes. Any tuition reimbursement, regardless of whether for undergraduate or graduate (e.g. an MBA) ...
Inherited IRA beneficiary	1/27/2011
Q: I took 2 lump sum distributions from 2 IRAs that I was the beneficiary of. One was for 40K, the ... A: Unfortunately, because the account was a Traditional IRA, you don't qualify to use for 4972. That ...
Relocation package paid back before year end due to job change - Taxes &W-2 ?	1/27/2011
Q: I received a relocation package from my previous employer last year and decided to leave the ... A: The amount you paid back should not have been included in your W-2. The best and easiest thing to ...
capital gains	1/27/2011
Q: Vanessa, Just sold my home of 20yrs yesterday. Purchased for $67,000.00. Sold for $125,000.00. ... A: First of all, congratulations on the sale of your home for a profit! I'm sure the moment is a tad ...
Inherited IRA beneficiary	1/26/2011
Q: I took 2 lump sum distributions from 2 IRAs that I was the beneficiary of. One was for 40K, the ... A: If you took the distributions in during the current tax year (2010), then you will get 1099s for ...
Severance Pay Withholding	5/21/2010
Q: Ms. Powell - I understand that lump sum severance pay is subject to 25% withholding. Is this also ... A: Usually severance pay uses the same withholding as your regular pay. If they've changed it, they ...
State Income Tax	5/19/2010
Q: My permanent residence is in Colorado, but I work in California...in which state do I owe State ... A: You owe state income tax to the state in which you earn money. So if you're working in CA, any ...
dividends	5/19/2010
Q: What is the tax difference between profits from buying and selling stocks vs dividends from stocks? A: The tax itself. Buying/selling stocks at a gain results in capital gains taxes. Dividends result ...
students and taxes	5/18/2010
Q: I am a 24 year old fulltime student attending community college on a pell grant. Can I legally file ... A: Whether or not you can claim "exempt" on your W-4 depends on your income, not your circumstances. ...
Capital Gains Tax in Florida	5/16/2010
Q: We are getting ready to do a short sell with the offer being 50,000.00 and we owe 108,000.00. We ... A: You will have to pay tax for the cancellation of debt. However, there are some tax credits ...
Trust fund	5/14/2010
Q: I've been divorced from my ex-husband for 5 years. We have two children. He claims our son, I get ... A: Your daughter's age doesn't matter. If she's the sole beneficiary, then it is her responsibility to ...
taxes on selling a home with miultiple owners	5/6/2010
Q: My 4 siblings and I own the home our parents are living in. My parents transferred it to me first ... A: Yes. Each of you "owns" 1/5 of the basis, and when it is sold, each of you will need to claim 1/5 ...
CALIFORNIA CAPITAL GAINS TAX	5/6/2010
Q: I LIVE IN WYOMING. MY TWO BROTHERS AND I CO-OWN A HOUSE IN SOUTHERN CALIFORNIA. THEY LIVE IN ... A: That depends on what your basis is in the property. If your basis is less that your share of the ...
Capital gains/losses(stock sales)	5/2/2010
Q: In 2001 and 2002 I accumulated over $61,000 in stock losses.Some years I used $3000/yr(max at time ... A: First of all, your capital losses aren't limited to $3,000 if you have gains. They're limited to ...
holiday bonus taxed?	4/30/2010
Q: My employer gives all employees a "holiday bonus" every year. The bonuses range from $50-$1000, ... A: Your friend is correct. Anything over, generally, $25 must be included in your gross wages and ...
stocks	4/29/2010
Q: I would like to know if I can transfer stocks to my children and not pay taxes. Say I bought them ... A: You can, most definitely, transfer the stocks to them and not pay taxes, as long as the FMV of the ...
reportable and taxable?	4/29/2010
Q: To offset my loss of income and to help me some financially, my father is having sent to me his loan ... A: You do not report it on your personal income tax return. The amount is a gift, and, as such, would ...
Travel/Mileage reimbursement from Employer in CA.	4/27/2010
Q: I am trying to verify what mileage I can submit to my employer for reimbursement. They pay what the ... A: The general rule is, yes, you deduct your normal commute from your TOTAL miles (that means, include ...
1041 Estate	4/27/2010
Q: Husband deceased leaving 401K with me as beneficiary. I plan to leave the money alone, however, he ... A: The determining factor is what ID# is listed on the 1099-R. Even though it says it's to his ...
independent contractor income tax	4/25/2010
Q: I am an independent contractor at my job, so I do not have any taxes withheld when I get paid. How ... A: You'll need to estimate your income tax liability for the year, then divide that by four and pay it ...
Gains/Loss on 1040, Personal/Sole Prop.	4/23/2010
Q: First let me say thank you for your time! I will do my best to explain as best as I can. RE: 1040 ... A: Okay. At the bottom of page 1 of your schedule C, you'll see the Net Profit or (Loss). It tells ...
report forign company ownership	4/21/2010
Q: I work and live and file my taxes in the US. My aunt died and left me her 50% ownership in an ... A: The only time you would need to report your investment on your income taxes is if you receive income ...
Gift or Income?	1/13/2010
Q: My dad passed away in Feb '08, my mother moved in with me Feb '09, I sold my house and together we ... A: Gifts are taxable to the "gifter", not the "giftee". However, there are both annual exclusions and ...
Write off insurance premiums	1/13/2010
Q: I am a union carpenter and as part of my pay package my health insurance is deducted hourly from my ... A: Before I get into the medical expense deduction, let me say, up front, that you have to itemize your ...
Tax?	1/12/2010
Q: Mike, I am permanent resident of U.S with Chinese citizenship. I have an account in China. If I ... A: You don't need to worry about taxes, but you do need to worry about documentation just in case the ...
dependant claim	1/12/2010
Q: I have two grandchildren ages 3 and 6 that have been living with me since June 5, 2009. They were ... A: What you need to do is file as early as possible ON PAPER. Don't efile, because it will be ...
6month old	1/12/2010
Q: My baby boy will be turning 6 months February 6th, Can I still claim him this tax season? And Im a ... A: The age of your child doesn't matter. As long as the child was born in 2009, then he can be claimed ...
Dependent tax issue - now ex-husband wants to claim child!	1/11/2010
Q: Powell, My daughter is 21 y/o and a f/t college student. I am divorced from her father and ... A: No need to apologize, and you're certainly NOT being dense. The tax code is, more often than not, ...
child support and taxes	1/11/2010
Q: Are you allowed to write off child support as a gift? I have two children with my ex husband. He and ... A: There are several major points here. First, no, child support is not a gift. It is not deductible, ...
Dependent tax issue - now ex-husband wants to claim child!	1/11/2010
Q: Powell, My daughter is 21 y/o and a f/t college student. I am divorced from her father and ... A: If you're sure that she lives with you for more than half of each year (are semesters really that ...
Head of Household	1/11/2010
Q: I am divorced and my ex-husband and I have joint custody - I have physical custody. On the even ... A: I'm not sure what program you're using to file your taxes, but it sounds like it's just being ...
Dependent tax issue - now ex-husband wants to claim child!	1/10/2010
Q: Powell, My daughter is 21 y/o and a f/t college student. I am divorced from her father and ... A: There are a few issues at hand here. First of all, does she live with you for more than half of the ...
Schedule C, DBA, NOL	1/7/2010
Q: Vanessa, During tax year 2009 I opened a DBA account at a local bank and started operating as a ... A: Yes, you'll file a schedule C unless you formed a separate entity (a DBA isn't an entity, it's just ...
Commission wages	1/7/2010
Q: I am a skin care specialist who works for a dermatologist. I get paid commission only. He has not ... A: If you're sure you're not an independent contractor, then he HAS to withhold taxes. It's not an ...
Claim boyfriend as Dependent	1/5/2010
Q: Can I claim him in my taxes this year? Also he owes child support for this two kids, since he isn't ... A: You can claim him if he meets all of the following criteria: He's not a qualifying child of another ...
old vs new year for cash donation	1/4/2010
Q: I volunteer for a church and prepare annual statements for donations given by individuals. On ... A: You are correct. Taxes are on a cash basis, so just because this individual dated the check as of ...
Gift of cash	1/3/2010
Q: My Mother is going to give me a check for 25000 dollars. Will the IRS be taking a piece of this? Or ... A: With gifts, any tax is the burden of the gifter, not the "giftee". So if anyone has to pay tax, it ...
gifting a car	1/2/2010
Q: Not sure if you can answer this question, but thanks in advance for trying. I recently purchased ... A: You most likely won't need to pay any gift taxes. You might have to file a gift tax return, though, ...
Can I Claim 19 year old Daughter?	12/31/2009
Q: My daughter turned 19 in October. She was a full time high school student from January to May 2009, ... A: If she was a full-time student for 5 full months or more, then you can claim her under the ...
tax penalty on receiving money from family	12/27/2009
Q: My mother wants to give her money and money market funds to me to look after but have it all in my ... A: If your mother gives you more than $13,000 during the year, she'll have to file a gift tax return. ...
Trust is not on calendar year but 1099's are	12/27/2009
Q: My father in law passed away in late July of 2009. I applied for an EIN for his trust (while he was ... A: The 1099s will, indeed, be on a calendar year, but that doesn't matter for the trust's reporting ...
independent contractor	12/26/2009
Q: I recently relocated to California temporarily to take an independent contractor job 6 months ago. ... A: You won't need to pay CA state income tax on any income earned in WA, so don't worry about that. ...
tax	12/26/2009
Q: If I receive a lease check in 2010 but the check is dated 2009 can I claim the income in 2009 ? ... A: Taxes are cash-basis, which means that you claim monies received and spent in the period they were ...
Social Security Card after marriage	12/24/2009
Q: I got married in April of '09 and I have yet to change the name of my Social Security card due to ... A: No, it won't matter. Just make sure you use the name on your social security card when filing. ...
Mileage Reimbursement	12/24/2009
Q: My employer reimburses mileage, but not at the Federal level of $.55/ mile. Can I write off on my ... A: Yes. The difference will go on your Schedule A, line 21- "unreimbursed employee expenses." ...
CA bonus withholdings	12/23/2009
Q: In California, are employers legally required to withhold Ca/Fed income taxes, along with all the ... A: This is not just a California issue, but also a Federal one. Yes, they are required to withhold tax ...
Selling 1/2 interest in property	12/22/2009
Q: My wife(before we were married) and her brother(and his wife) bought a vacation house in Cambridge, ... A: Your side issue got cut off, so I'm not sure what you're asking there, but I'll answer your other ...
taxes	12/21/2009
Q: A non-profit received some farmground from an estate. A local farmer wants to buy farmground from ... A: The main issue at hand here is what the not-for-profits "normal" business is. If selling soybeans ...
estate tax	12/20/2009
Q: my wife and I inherited a commercial building from her father, which we later sold. I understand ... A: That's not true. The depreciation affected HIS cost basis, not yours. To simplify it a little, ...
Renting vs. Selling an inherited home	12/20/2009
Q: I inherited a house with my sister in August after my mother passed away. She and her husband very ... A: I think your ideas about the situation are by far the more reasonable. The tight spot results from ...
Taxes	12/18/2009
Q: I actually have two questions. First, If my ex wife and I share 50/50 custody of our two sons but ... A: First: You can only claim HOH if you have physical custody of the children for more than half of all ...
LLC owned and operated by spouses	12/16/2009
Q: My wife and I are both licensed psychotherapists and we formed an LLC in Florida for the purposes of ... A: It all seems a lot more complicated than it is. Even so, your best bet is to hire a CPA to help you ...
incorrect vesting percentage for 401k distribution	12/15/2009
Q: I was laid off September 2007 from Countrywide. I rolled my Fidelity 401K over into an IRA at USAA ... A: You only owe them money if you spent it. If you haven't cashed out the IRA, then the excess is just ...
Trust related taxes	12/15/2009
Q: My father and mother have revocable trusts and in the trusts are various bonds, preferred stocks, ... A: Hm. Credit Shelter Trusts are complicated creatures. But it sounds like a new trust is set up upon ...
self employed minor	12/15/2009
Q: 15yr. old, walks dogs and earns around 500 per year for doing this. Files taxes so she can ... A: If she is only performing this work for one family, then it changes things. If this is, indeed, the ...
tax addendum	12/14/2009
Q: I filed an addendum to my '08 tax return when I purchased a home for the first time in October 2009. ... A: Yes, you can just file for the credit on your 2009 return. I don't think you need to do anything as ...
self employed minor	12/14/2009
Q: 15yr. old, walks dogs and earns around 500 per year for doing this. Files taxes so she can ... A: There is no such thing as "too young" from the IRS's perspective. They collect tax from anyone and ...
Head of Household	12/11/2009
Q: I am divorced and my ex-husband and I have joint custody - I have physical custody. On the even ... A: Not if he's remarried, no. If he's legally married, then he can only file either married, filing ...
Trust related taxes	12/11/2009
Q: My father and mother have revocable trusts and in the trusts are various bonds, preferred stocks, ... A: Trusts can be complicated and a lot depends on the details. Generally, if the trust assets were ...
Head of Household	12/10/2009
Q: I am divorced and my ex-husband and I have joint custody - I have physical custody. On the even ... A: Yes on both counts. If you meet all of the requirements for the EIC and HOH filing status, then it ...
tax return	12/10/2009
Q: An person is not required to file if he/she makes less than how much? Thank you A: That depends on your situation. Using 2008 amounts, if you're a wage earner (meaning, you get a ...
calculating basis of personal residence following legal separation	12/10/2009
Q: My husband and I bought our home for 180,000 and made capital improvements of about 10,0000. So far ... A: It's actually neither of those things. Since you "bought out" your ex-husband's equity, you now ...
LT cap gains	12/7/2009
Q: our joint taxable income this yr (09) will be 20K +/-. i rec'd a ltd partnership cap gain this yr ... A: Good afternoon, Mr. Irwin. Let me do my best to help you. When I use examples, I'm just going to ...
1041	12/5/2009
Q: My mom passed away in mid June-2009. No will no trust or anything. My dad had a will drawn up and a ... A: First of all, I'm sorry for your loss. Hopefully we can get this figured out for you. It sounds ...
Volunteer Doctor Tax Deductions	12/5/2009
Q: We're trying to recruit dentists and opticians to volunteer their time and services to help 2-3 ... A: You are correct in that they can't deduct the value of their time. But yes, they can deduct any ...
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 ...
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, ...
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 ...
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, ...
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 ...
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 ...
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 ...
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 ...
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: ...
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 ...
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 ...
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 ...
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 ...
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 ...
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 ...
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 ...
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 ...
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, ...
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 ...
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 ...
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 ...
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 ...
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 ...
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 ...
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 ...
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 ...
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 ...
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 ...
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, ...
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 ...
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 ...
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 ...
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 ...
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 ...
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 ...
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, ...
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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Vanessa D. Powell, CPA

Top Expert on this page

Expertise

General taxation and tax law questions. Federal income tax, California income tax, payroll tax, sales tax, estate tax. Individuals, trusts, estates, partnerships, corporations, exempt organizations, employee benefit plans. No property tax questions, please.

Experience

I'm a CPA, licensed in the state of CA. I work for a large accounting firm in Southern California. Half of every year I spend in the tax department, and the other half in the audit department.

Organizations
California Society of CPAs. American Institute of Certified Public Accountants.

Education/Credentials
I graduated summa cum laude from Colorado Tech with a B.S. in accountancy. In order to maintain my license, I take 80 hours every two years, and take at least 16 hours of CPE every year in taxation.

Awards and Honors
Graduated Summa Cum Laude (highest honor)

Past/Present Clients
I have clients from all over the world and United States of all varieties. I work with a lot of employee benefit plans, farms, not-for-profits, partnerships, and wealthy individuals.

Encyclopedia

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