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About Neil Johnson (The Tax Dude®)
(Top Expert on this page)

Expertise
CPA to answer Federal income tax related questions for individuals, small business owners, estates and trusts. I also specialize in divorce related tax and financial planning matters. I have extensive experience in nearly all areas of income taxation relating to businesses and individuals. I also regularly serve as a strategic consultant on a wide range of non-tax related business issues. In addition, I provide aggressive, experienced and skilled representation against IRS challenges at the audit and appeals. I have successfully represented clients against the IRS on issues regarding reasonable compensation, valuation discounts, time value of money, travel and entertainment expenses, innocent spouse relief and personal liability for unpaid business taxes.

Experience
Over 18 years in public accounting with an emphasis in taxes.

Education/Credentials
B.A. (Accounting) Loyola University of Chicago Over 300 hours of continuing professional education since June 2001.

   

You are here:  Experts > Business > Corporate Law > Tax Law (Questions About Taxes)

Questions Answered By Expert  Neil Johnson (The Tax Dude®) 
In Category  Tax Law (Questions About Taxes)

SubjectDate Asked

No 10997/21/2009
  Q: We applied for a tobacco-related health class-action suit and have received several checks (total ...
  A: Sue, Damages for personal injury or sickness and the related legal fees and costs are excludable ...
accountant fees7/20/2009
  Q: 1 for a tax return of a family are there any " usual fee " amonts ? 2007, we paid 500 dollars. ...
  A: Bart, Low fees speak directly to the competence of a tax professional. Qualified tax professionals ...
taxes7/20/2009
  Q: I'm not sure who to ask this to... I just got my first paycheck at American Senior Lending. They ...
  A: Madelyn, Are you sure the deduction is for medical insurance and not Medicare? All employers are ...
per diem7/18/2009
  Q: Greetings! I am a resident of California. Last year, I was hired by a company to do contract ...
  A: Wil, Per diem is strictly related to overnight travel for business purposes. There are times when ...
first per diem question!7/17/2009
  Q: Schnabel, I have never received a response from you before this. The only one I got was from ...
  A: Wil, Per diem is strictly related to overnight travel for business purposes. There are times when ...
Inheritance Taxes7/16/2009
  Q: Upon my uncle's death in 2009, he left a portfolio of stocks to be split amoung many people. The ...
  A: Lionel, Typically when an estate sells securities before any distributions are made to the ...
per diem7/15/2009
  Q: Greetings! I am a resident of California. Last year, I was hired by a company to do contract ...
  A: Wil, Per diem is strictly related to overnight travel for business purposes. There are times when ...
Out of state per diem7/15/2009
  Q: Greetings! I am a resident of California. Last year, I was hired by a company to do contract ...
  A: Wil, Per diem is strictly related to overnight travel for business purposes. There are times when ...
pers serv corp net operating loss carryback7/14/2009
  Q: Can a fiscal year personal service corporation carry back a net operating loss to preceding ...
  A: Joe, Assuming the preceding tax years are on a fiscal year, you can carry back the Net Operating ...
perdiem7/12/2009
  Q: my job is forcing me to take per diem,and I do not wish to .the reason is ,once I go into overtime ...
  A: Michael, Per diem payments are strictly for the purpose of covering overnight business related ...
tax liability on exspouse buyout of my interest in jointly owned home7/9/2009
  Q: My husband and I divorced in Jan.'09. I moved out of our home, which we bought in Sept.'74, in ...
  A: Linda, As long as you can claim the property was your primary residence for 24 of the 60 months ...
babysitter7/7/2009
  Q: I have a dependent care account and plan to pay my mother to baby sit for my son. My mom leaves ...
  A: Rodie, If your babysitter is your parent, spouse, your child under-age-21 or someone under age 18 ...
California capital gains on home sale7/6/2009
  Q: I saw a response from Carole Dunton to a question on 10/3/2005 concerning the sale of a california ...
  A: John, Since the property was located in California, the sale was subject to California income tax. ...
Proving Insolvency7/6/2009
  Q: What is the rule of thumb or formula IRS uses in determining insolvency?
  A: Katrina, Insolvency is when your total debts exceed your total assets. When using the insolvency ...
Owner Compensation6/27/2009
  Q: It is a two part question. First, if the CEO/full time employee borrows money from the Corp for ...
  A: Tana, The CEO in your question could have a loan made to him by the corporation reclassified as a ...
Company medical reimbusement to Directors6/26/2009
  Q: My company is reimbursing our directors for medical costs. These directors are on medicare because ...
  A: Mandy, Medical reimbursement plans open a whole can of worms. First of all, medical reimbursement ...
Mileage Reimbursement6/25/2009
  Q: I travel extensively for my job - approximately 25,000 miles per year. Which is of greater benefit ...
  A: Vince, It seems to me you would be better off taking the standard mileage rate from your employer. ...
K16/23/2009
  Q: what is a k1?
  A: Tiffany, K-1 forms are issued by partnerships, S-corporations, trusts and estates to report a ...
vacation pay taxed6/23/2009
  Q: I took all my vacation pay up front. they taxed as a bonus check tax rate. instead of my regular ...
  A: Paul, The rules for withholding federal income tax from salary and other compensation-related ...
1099-r vs. divorce decree5/5/2009
  Q: As per my divorce decree, I was to receive half of my former husband's excess 401K contributions for ...
  A: Traci, You are correct that transfers incident to divorce are not taxable events. The problem is ...
Form 83325/5/2009
  Q: New Law for 2009 taxes - release of exemption. Does this law also apply when you have a divorce ...
  A: Sheree, For tax years beginning after July 2, 2008 (the 2009 calendar year for most taxpayers), new ...
rental property short sale5/4/2009
  Q: I have a rental property that I am short selling. I owe $96,000 and I curently have an offer of ...
  A: Nelson, Your question is difficult to answer without an understanding of your entire tax situation ...
Real Estate Loss4/29/2009
  Q: We have a company that rents real estate and during 2008 sold one of its properties for a big loss. ...
  A: Ed, Passive losses become available when there is an entire disposition of the passive activity. ...
Per diem1/19/2009
  Q: My husband is starting a new job as an employee of a corporation that contracts with the military. ...
  A: Anne, There are three ways an employer can deal with business related travel expenses. The ...
Do I Need A EIN?1/9/2009
  Q: I do have a small business (no employees). I did hired a contractor do some work for me and I want ...
  A: Hector, Technically, you don't need an EIN to issue a 1099 to an independent contractor. There are ...
Non resident father/mother in-law helping with down payment on home1/8/2009
  Q: my in-laws who are not residents of this country are willing to help my wife (recently married but ...
  A: John, Only US citizens or residents of the US are required to file gift tax returns. The donor is ...
Paychecks vs Distributions12/19/2008
  Q: If you have an S-Corp (only 1 shareholder) and take paychecks and distributions/dividends totaling ...
  A: Karen, This a very good and difficult question you are asking. One of the advantages of having an ...
Gift to Employees12/18/2008
  Q: We would like to give a Holiday gift to all our employees of $50.00, must this be considered taxable ...
  A: Steven, Prizes, gifts, and awards, when given to employees, are generally subject to Federal ...
Selling expense12/17/2008
  Q: I have a partner with which I owned a condo (rental property) together at 50/50. We sold it in ...
  A: Jim, Commissions and closing costs are not deductible as itemized deductions. These expenses do ...
Inheritance from Investment Account12/16/2008
  Q: A family member passed away leaving an investment account, not a retirement type account or 401K, ...
  A: G.O., When you receive an inheritance, the inheritance is not considered taxable income and there ...
Paying my sister's mortgage12/15/2008
  Q: If I have been living with my sister, in her condo, for the past 6 months and have been paying her ...
  A: Tony, Since you are not on the condo's title as an owner and your are not obligated to fulfill the ...
relative custody12/14/2008
  Q: My husband and I have been caring for my niece for two years. Her grandparents have custody of her, ...
  A: Natalie, If you and your husband were your niece's parents, you would certainly be able to claim ...
Regarding taxes and back child support12/13/2008
  Q: I plan in getting married in April 2009 my fiance owes back child support for another child a large ...
  A: Faye, If you file a joint tax return for 2009 and your husband still owes back child support, any ...
gift tax implication12/12/2008
  Q: I live in US as a permenant resident.My parents live overseas. Both dont work and aged and depend on ...
  A: Sundar, You can certainly gift money to your US non-resident parents. Gifts of $12,000 per person, ...
solo 401(k) contributions12/11/2008
  Q: I am self employed and I receive a mixture of W-2 and 1099 earned income. My W-2 income comes from ...
  A: Mary, You are certainly on the right track on determining how much you can fund your solo 401(k) ...
payroll taxes12/10/2008
  Q: i live in waterford michigan,talking to an employer in london ontario.almost all my work for this ...
  A: Steven, There a couple of items which need to be considered in answering your questions. First, ...
Vehicle Compensation & Tax12/3/2008
  Q: Neil, I recently went through an audit, and am compelled to pay the IRS for claims I made on ...
  A: Kenn, Some employers chose to offer auto allowances to reduce their paperwork. This eliminates the ...
Travel/business expenses taxed as income12/2/2008
  Q: I've heard that if you travel to the same business for a full year as a consultant, without 25 ...
  A: Andy, None of your reimbursed expenses will be considered taxable income to you. The tax law you ...
How to file without a 109912/1/2008
  Q: I worked as an exotic dancer over the summer. I assume I would be considered an independent ...
  A: Cory, You are on the right track in thinking of yourself as an independent contractor. As an ...
Transportation worker per diems11/16/2008
  Q: I am trying to find out what the transportation employee (like a pilot) per diem rates were in ...
  A: Harold, For airline workers, here are MIE rates and the percentages can be deducted by year: MIE ...
tax on commercial property11/1/2008
  Q: tax break from commercial property sold in 2007.. property was deeded to the son 1980. last parent ...
  A: Linda, If the property was deeded to the son in 1980, it doesn't matter when the either of the ...
life estates...capital gains and gifts10/26/2008
  Q: In 2002, My mother put her principal residence ( in New York) into a life estate, and put my name ...
  A: Theresa, Since your mother is still alive, the life estate is not a factor for tax purposes. A ...
Definition of "Gross Proceeds" on 1099 B10/15/2008
  Q: In the context of exercising a stock option, on a 1099 B in Box 2, should Gross Proceeds be ...
  A: Matt, Gross proceeds on a 1099-B refers to the net sales price of the stock. Net sales price is ...
short sale and 109910/6/2008
  Q: I thought the president passed a law that if you sale your home as a short sale and it is your ...
  A: Kim, The lenders are required to send either 1099-C when a debt is cancelled. The new tax law does ...
K1 form on limitted partnership9/17/2008
  Q: I am considering making an investment in a limited partnership where the investment returns are ...
  A: Lorenzo, When you receive your K-1 package, the partnership should provide you with the necessary ...
Artists, Audits and Taxes!9/16/2008
  Q: I am a working artist who like most creative folks, has a full time day job as well to make ends ...
  A: Blanchjoe, I work with a large number of creatives. The biggest hurdle you would have in an IRS ...
Claiming a child5/16/2008
  Q: When I divorced my ex-husband, he was able to afford an attorney and I wasn't. I tried to get as ...
  A: Julie, Sorry about the delay in answering your question. I forgot to change my availability dates ...
Charitable Donation - Business5/5/2008
  Q: I'm on the board of a foundation that sponsors a race every year. Local businesses donate cash and ...
  A: Ann, If you contribute to a charity and receive something in return, then the charitable deduction ...
Life Estate and Taxes5/4/2008
  Q: Last year, my mother deeded me her 4 family house and reserved a life estate. She is not living at ...
  A: Angel, In most places, a life estate has the right to do anything in terms of use of the property ...
quit claim deed5/3/2008
  Q: my wife's mother owns two pieces of rental property which her children will inherit.she is 86 years ...
  A: Jack, If your mother-in-law quit claims a rental property to your wife, there are a few tax issues ...
my ex and his tax return5/2/2008
  Q: My question is: my ex owes back child support to me and his ex wife. She is suppose to be owed about ...
  A: Sherrie, Based on the amount of your ex-husband's refund of $6,895, you would receive your $1,800 ...
error amt put on fed and state tax form5/1/2008
  Q: After I went ahead and efiled both state & fed return, was expecting a refund from both then a few ...
  A: Laura, Typically when you file a tax return, one of the initial things that happens during IRS or ...
Sale of CA residence3/2/2008
  Q: Aunt and Uncle were married but divorced in the early 1980’s but never separated. They bought their ...
  A: Andrew, I'm going to answer your questions assuming your uncle's living trust named your aunt as ...
IRA Distribution for home purchase2/29/2008
  Q: My wife and I have done all of our savings in our retirement accounts. Now we want to purchase our ...
  A: Ryan, You and your wife should be commended for diligently saving for retirement. I have some ...
Home Flipping Business Related expenses2/28/2008
  Q: My girlfriend and I bought a house to flip 1/07. We currently(2/08) have it up for sale and hope to ...
  A: Ed, Any costs you incur while improving or maintaining the property you plan to flip are added to ...
Mortgage Interest after divorce2/21/2008
  Q: I am paying the mortgage on a home that I received as part of a divorce settlement. Both my ...
  A: Jennifer, You are entitled to the deduction. The issue you will have is the IRS routinely matches ...
Loan Defalcation and Unified Tax Credit2/19/2008
  Q: Actually I have 2 short questions: (1) I made a $15,000 loan to a business 3 years ago which they ...
  A: Steven, Even though the loans were made to a business. The bad debt is considered nonbusiness. If ...
Loan Defalcation and Unified Tax Credit2/19/2008
  Q: Actually I have 2 short questions: (1) I made a $15,000 loan to a business 3 years ago which they ...
  A: Steven, Even though the loans were made to a business. The bad debt is considered nonbusiness. If ...
Loan Defalcation and Unified Tax Credit2/19/2008
  Q: Actually I have 2 short questions: (1) I made a $15,000 loan to a business 3 years ago which they ...
  A: Steven, Even though the loans were made to a business. The bad debt is considered nonbusiness. If ...
Loan Defalcation and Unified Tax Credit2/19/2008
  Q: Actually I have 2 short questions: (1) I made a $15,000 loan to a business 3 years ago which they ...
  A: Steven, Even though the loans were made to a business. The bad debt is considered nonbusiness. If ...
Injured spouse2/18/2008
  Q: I usually file my taxes on line using turbotax or a related product. Is there a way to file an ...
  A: Kim, Unfortunately, there is no way to file an injured spouse claim electronically. I usually have ...
internship2/17/2008
  Q: My daughter graduated from college in June 2007 with a degree in nutrition. In September she ...
  A: Mary, In order to deduct costs associated with the internship, the costs must be required by your ...
Rental of personal property2/16/2008
  Q: I'm currently in the process of filing my income taxes. I have a rental property that I started ...
  A: Brandon, The income and expenses which relate to your rental property are reported on Schedule E. ...
converting a home to a rental2/13/2008
  Q: If I convert my home to a rental and only rent for 3 years, is it possible not to depreciate the ...
  A: Sandy, You could choose not to take depreciation on your rental, but it won't help. When you sell ...
1099 form2/11/2008
  Q: My husband grandmother opened a $1000.00 Cd for him when he was younger. Last Feb-Mar. He cashed it ...
  A: Mandi, The bank should be issuing a 1099 for the interest earned in 2007. If you haven't received ...
tax question on forfeited earnest money2/10/2008
  Q: I am a buyer for a property in florida. I put $5000 as downpayment and would like to get out of this ...
  A: Elizabeth, If the down payment was for a primary or second home, the forfeited amount would not be ...
Self-employed health insurance question2/9/2008
  Q: I am currently working as a self-employed consultant (sole proprietor for now) and was wondering ...
  A: Jon, As long as you are self employed and pay your own health insurance premiums, the full amount ...
company employee tax issues2/6/2008
  Q: at my current place of employment, we recieved w-2 and just recently recieved 1099 for certain ...
  A: Anthony, My apologizes for the delay in responding to your questions. Over the years I have dealt ...
Dependant2/5/2008
  Q: I am a junion in college who made about 25,000 last year. My parents pay for my school each ...
  A: Angie, If your parents provided more than half of your support, they would be entitled to claim you ...
MI tax question2/4/2008
  Q: I live and work in michigan and the company i work for is also based out of michigan. My employer ...
  A: Sierra, Nothing illegal is happening. It's just an unfortunate clerical error made by your ...
Partial Year Incorporation2/4/2008
  Q: I formed a single-owner (I'm the only employee) S-Corp. in Aug. 07. Prior to that I was a ...
  A: Les, On Schedule C, deduct the amount paid to the S corporation as a miscellaneous expense. You ...
Contract Labor2/4/2008
  Q: I am working part-time and also receiving Soc. Sec. Benefits. As you know, I can only make ...
  A: Margie, Asking your employer to pay you "off the payroll" puts your employer at risk. Paying you ...
NYC resident working in NJ2/3/2008
  Q: I live in NYC but im working in NJ. I started to do my taxes. It seems now since my company only ...
  A: Sean, If you live in one state (New York) and work in another (New Jersey) you must first pay state ...
Final K-1 needed2/3/2008
  Q: I was one of three persons listed on an LLC, when I filed taxes for 2006 with my husband. My name ...
  A: Maureen, K-1 forms are part of the LLCs partnership tax return. Partnership tax returns are due on ...
Schedule D2/3/2008
  Q: I've already filed my 2007 federal return electronically. Now I realize that I had forgotten to ...
  A: Don, You have three years to amend your tax return. I recommend amending your tax return before ...
bad refunds2/2/2008
  Q: Every year my husband and i file our taxes, we always owe state but get a refund on federal. The ...
  A: Kate, You might want to revise the W-4 forms with your employers. Employer's use the allowances ...
filing for 17 yr old student2/2/2008
  Q: My daughter was a 17 yr old full time student and made 4645.00 without any fed tax taken out. Not ...
  A: Anne, Unfortunately, you can't ignore the the W-2 without any federal income tax withheld. The IRS ...
Quit Claim and Taxes2/2/2008
  Q: I'm in the military stationed in Germany. I owned a house in Florida for aprox 3 years. My ...
  A: Darryl, If you simply quit claimed the property to your father-in-law. You don't have a sale or a ...
insurance settlement tax question2/1/2008
  Q: In Gilbert Arizona where I reside. I finally came to an agreement on the amount just a couple of ...
  A: Marco, One of the most basic tenets of tax practice is that if money received merely returns you to ...
Child credits2/1/2008
  Q: My child lives with my ex-wife who is claiming her as a dependent. Since I am Single, can I claim ...
  A: Kas, Even though your ex-wife is claiming your daughter as a dependent, you may still qualify as ...
tax on house flip2/1/2008
  Q: I am a realtor and made a first attempt at flipping a house and had a substantial(but documentable) ...
  A: Tracy, The loss on flipping an investment property is reported on Schedule D. Schedule D is used ...
W-2's2/1/2008
  Q: Today is January 31st and my wifes employer has still not distributed to its employees their ...
  A: Robin, I have two possibilities to offer. First, your wife's employer is currently under a payroll ...
Short Sale and 1099's2/1/2008
  Q: Three years ago I purchased a home that was represented to be worth $330,000. The government and ...
  A: Jim, Fraud or no fraud, your purchase price for the home was $330,000. When you give up your home ...
deposit on home sale1/31/2008
  Q: I got a 40K deposit on a home I was selling. The buyer did not follow through on the purhcase. I ...
  A: Jerry, A seller who retains both the down payment and property must treat the forfeited amount as ...
A previous employer that is currently out of business1/31/2008
  Q: I was employed by a daycare facility from 7/07-9/07 and they decided they were going to shut down. ...
  A: Heather, If you have copies of the payroll checks stubs reflecting your year to date wages and ...
taxes, ira and first home (sort of)1/31/2008
  Q: My wife has had a tratditional IRA for a while. she stopped making contributions a while ago. we ...
  A: Bob, Unfortunately, you have already purchased the property. Taking a withdrawal from an IRA to ...
1099-A Amabdonment of Secured Property1/31/2008
  Q: I just received a 1099-A for the year of 2006, the lender said they sent it last year but did not ...
  A: Gaila, When you lose a home to foreclosure, the tax reporting is the same as if you sold your home. ...
1099-Misc From Vendors1/31/2008
  Q: what should I do with 1099-Misc from vendors? I have recieved tons of them lately.
  A: Stephen, You might want to consider comparing the amounts reported on the 1099s to what you have ...
W-2's1/31/2008
  Q: In the state of Georgia do you have to send in copy 1 into the state department and if so what is ...
  A: Erica, The state copy of your W-2 gets attached to your state income tax return. Here is a link to ...
New S Corp1/31/2008
  Q: My nephew started an Electrical Company in 2007 and invested $50,000 toward material, equipment, ...
  A: Candi, As a shareholder of the S-corporation, your nephew will receive a K-1 reporting the income ...
Filing form 944- employer's annual federal tax return1/30/2008
  Q: my husband owns a small company (sole proprietorship). I am his only employee. He pays me $200 a ...
  A: Trish, The IRS must notify your husband whether or not his business meets the eligibility ...
daycare1/30/2008
  Q: is it my responsibility to give daycare parents a total or is it theirs to give me one?
  A: Heather, If you are a child care provider, you should be providing parents a receipt for the ...
Dependents1/30/2008
  Q: If a father pays child support to the mother of their child and she doesn't work, can her boyfriend ...
  A: Magen, Only the parent with whom a child spends most of the year with is entitled to claim the ...
401K loan1/30/2008
  Q: I was laid off in Nov 2006, and my husband's company was acquired by another in 2007, both after ...
  A: Cami, Unfortunately, you are going to be stuck with paying the tax and 10% on the defaulted loan ...
Rental Property - Secondary residence1/30/2008
  Q: I am trying to fill ou my taxes through turbo tax online and I had a question about the treatment of ...
  A: Mary, Your vacation home unit can be considered a second home for tax purposes. The mortgage ...
2 Offices1/30/2008
  Q: I have an office in which I pay rent. I was going to write the rent off as an expense. I have a ...
  A: Peter, I am assuming you are deducting the office rent on a Schedule C. The rent payments for your ...
Claiming minors that work1/30/2008
  Q: I am the head of household, married with 4 children. My 15 year old twins boys got their first job ...
  A: Steve, You can still claim the boys as dependents as long as you provide more than half of their ...
taxes ib bonus and incentive pay1/28/2008
  Q: At my company, we can opt out of making a 401(k) contribution on any variable pay (bonus) we ...
  A: Pat, Actually there no real difference between having your 401(k) contributions coming out of your ...
10991/28/2008
  Q: I am getting ready to send out a 1099 Misc, to a guy who did some work for me on a rental property ...
  A: Steve, The IRS would prefer you submit a type written 1099, but there is nothing prohibiting you ...
1099-INT1/27/2008
  Q: I sold my shares in a "S" corporation to my brothers for a lump sum of $1,000,000 and monthly ...
  A: Steve, The amount reflected on the 1099-INT should represent the interest portion of the monthly ...
ROTH IRA Conversion1/26/2008
  Q: I am currently doing volunteer work so my income is very low. I made a partial ROTH IRA conversion ...
  A: Norman, If you are still within the 60 day rollover period, there is an easy fix to this issue. ...
Rental Property1/25/2008
  Q: IF we sold our rental property in 2007, I broke even, no profit from the sale, however we did have ...
  A: Ti, Any time you sell depreciable property, Form 4797 is required to prepared. Tax law requires to ...
Filing business taxes quarterly1/25/2008
  Q: Is there a tax program (like taxcut) that will allow me to file my small business taxes quarterly?
  A: Jenny, There really aren't many retail business tax return preparation software packages out there. ...
401k1/25/2008
  Q: Who determines that you are permanent disability for taxes on this as the Doctor has declared this ...
  A: Marlene, As long as licensed physician certifies you with a permanent disability, you qualify for ...
Sub S Corporation1/24/2008
  Q: Can I use an HSA plan for medical expenses if I own more than 5% in my company (California)?
  A: Sue, If you are more than 2% shareholder of a S-Corporation, the company will not be able to make ...
LLC, C-Corp, or S-Corp1/24/2008
  Q: I have a question regarding the three types of Corporations. Myself and two friends of mine are ...
  A: Richard, Most real estate investors are using LLCs because you have more options available for tax ...
delaware/maryland taxes1/24/2008
  Q: I just recieved a letter stating i owe the state of maryland $1,700, from 2004! In 2004 i never ...
  A: Jamie, I imagine if you used a Maryland address to file your 2004 tax returns, Maryland probably ...
Single status when separated1/23/2008
  Q: I live in Pennsylvania. My husband and I have been separated since June and have a signed and ...
  A: Barbara, Unless you are legally divorced, you will need to file as Married Filing Separately. ...
bus office1/23/2008
  Q: I have an S corp. My office is located in my house. HOw do I reflect the expense on 1120S and on ...
  A: Dina, The office in home deduction for a S corporation shareholder/employee should be calculated on ...
tax question1/23/2008
  Q: Me and my husband have three children together we were sepeated for over six months.living in ...
  A: Michelle, If you were not living with your husband for the last six months of the year, you could ...
Rental Property - Income and deductions among joint owners1/22/2008
  Q: Situation: A rental house is owned by two brothers (both on the deed); however, only one of the ...
  A: Steve, Typically if two parties own a rental property, each party would report rental income and ...
1099-misc bonus income1/22/2008
  Q: I received a 1099-misc with an amount on line 7 from my recruiter for my new job. I don't work for ...
  A: Gil, The arrangement for payment of your signing bonus is a bit unusual. With that said if your ...
Filing Exempt1/22/2008
  Q: Is there a penalty for filing exempt for the year and just paying all the taxes at the end of the ...
  A: Toni, Penalties are assessed when taxes are not paid by the appropriate due dates. Will you owe ...
claiming son on taxes1/22/2008
  Q: my son lived with me untill graduating high school in june He had a baby with a girl who moved to ...
  A: Kris, Only one tax return can claim an allowance for your son and it can't be the girl's ...
splitting rental income and deductions1/21/2008
  Q: Situation: A rental house has two brothers on the deed; however, only one of the brothers is on the ...
  A: Steve, Typically if two parties own a rental property, each party would report rental income and ...
Income tax1/21/2008
  Q: I live in pennsylvania and im 19 and go to college. I live with my father. My mother has been ...
  A: Michael, If you live with your father, he should be claiming you as a dependent. Unless your ...
tax write offs1/21/2008
  Q: I am a territory salesperson who pays for all of my own gas, vehicle expenses, clothes, food, home ...
  A: Richie, There isn't an all inclusive list of deductible business expenses. The rule for a ...
capital gains questions - sale of company1/21/2008
  Q: I owned 12% of a software company that was based in Australia. I am in the US. The assets of the ...
  A: Drew, When you sell the assets of a company, the sales price is generally allocated among different ...
1099-A1/20/2008
  Q: I received a 1099-A will this effect any return that I will be getting? I left the home in 2003. I ...
  A: Karie, Form 1099-A is used to report a foreclosure from a lender. Foreclosures are treated the ...
Contract Labor1/16/2008
  Q: I have paid our contract labor with cash the past year. How would I show this on the 1099.
  A: Cindy, The amounts you report on 1099 forms are the amounts actually paid to your contract labor. ...
1099Misc1/16/2008
  Q: I have a website on which I sell a test preparation service, and I have agreed to pay a person $500 ...
  A: Filip, There is no requirement to send 1099s to individuals who you pay less than $600 annually. ...
gifts1/16/2008
  Q: My mother has given each of her grandchildren a gift of 10,000 apiece for a total of 40,000. Is this ...
  A: Diane, Gifts are not deductible on your mother's income tax return. The purpose of gifts is to ...
Exempt status for federal income tax1/12/2008
  Q: I have been reading a lot of articles lately on how it is possible to not pay any FICA on my wages. ...
  A: James, Unless you are clergy member, your chances for avoiding FICA on wages is practically zilch. ...
disability taxes1/11/2008
  Q: is a lump sum social secuity disability payment taxed?
  A: SSDI payments may be taxable based on the amount of income you are reporting on your tax return. ...
Living with roomates1/11/2008
  Q: I have recently bought a house in January of 07. I live there with my roomate and my finace and we ...
  A: Chris, Your roommate (and possibly your fiance if she doesn't co-own the house) is a renter and you ...
TAX RETURN1/10/2008
  Q: My husband and myself work full-time and are full-time students. I was wondering since we are both ...
  A: Jennifer, Since you are a household of students, hopefully you are taking advantage of the ...
Converted Primary Residence to Rental Property1/8/2008
  Q: In June of 2007 we converted our primary residence into a rental property. (This property was ...
  A: Mechelle, Real estate taxes are usually paid in arrears. As a cash basis taxpayer, you are ...
newborn1/8/2008
  Q: how much per newborn do you get on your taxes
  A: Sondra, If your child was born on or before 12/31/07, you will be able to claim the newborn as a ...
1099's1/7/2008
  Q: ello, I work for a law firm and I am in the process of preparing 1099's for 2007. I think that ...
  A: Jen, Generally speaking 1099s are not issued to corporations. There are some exceptions to this ...
child claim on taxes1/7/2008
  Q: my son is 18 soon to be 19 in jan.2008, but he is a senior in high school living at home can we ...
  A: Carla, As long as your son is 24 years old or younger, a full-time student and you provide more ...
sale of business1/7/2008
  Q: we sold our restaurant last May, and the manner in which it was sold was 70% cash, and 30% on a ...
  A: Delia, Installment sales are reported on Form 6252. You will need to include this form for every ...
IRS: Divorce & Pension1/4/2008
  Q: As per a divoce decree I have paid a portion of my pension to my ex-wife each month after I receive ...
  A: Nick, Until your pension administrator is served with a Qualified Domestic Relations Order (QDRO), ...
State Tax Attributes12/31/2007
  Q: Many documents concerning taxes include the term " State Tax Attributes". However, none seem to ...
  A: Liz, The definition of a tax attribute is a characteristic or factor that could result in taxable ...
Post divorce & asset transfer - who gets the 2007 1099Rs?12/30/2007
  Q: My ex-spouse just transferred several taxable mutual funds to me (all remained within same ...
  A: Carol, 1099s for mutual funds will be issued to the owner of record for the period ownership. One ...
LLC & Vehicle Tax Deduction12/28/2007
  Q: Good morning Mike. My Wife will be starting her own "in home" business (licensed home daycare, as ...
  A: Ryan, Business use of vehicle is a tax deductible expense no matter the type of business entity ...
LLC in New Hampshire12/22/2007
  Q: I am a one-person LLC. My business is contracted to provide services to government assistance ...
  A: Gary, It seems to me you are providing commissions to your clients. You should be deducting these ...
Annuity12/22/2007
  Q: I receive Social Security Disability. I'm almost 58 and have been receiving it for 7 years. I have a ...
  A: Dan, You can receive the qualified plan funds before age 59½ without incurring the 10% penalty if ...
Dependent deductions12/22/2007
  Q: My ex-wife and I have 3 children together. We were divorced in 2005. She is the primary custodial ...
  A: Randy, Starting with the 2005 tax year, the rules for who can claim a child as a dependent have ...
estate tax12/21/2007
  Q: My situation is a woman died ten years ago and left her 2 young children her residence in her will. ...
  A: Les, The property was held in the estate for ten years! Are you sure? It seems to me the probate ...
Storage Writeoff?12/21/2007
  Q: I own a contracting business set up as an LLC. I have a utility trailer that I use exclusively for ...
  A: Cliff, Sorry, there is no deduction for parking your utility trailer at your residence. The same ...
Farm Sale Due to Divorce12/21/2007
  Q: I am in the process of getting a divorce and my husband and I own a small farm-15 acres-where he has ...
  A: Deborah, Even though your husband used part of the property to operate his business, the issue ...
son12/21/2007
  Q: My son went to school in 07 senior year--got a small job in the fall--lives with me at home--just me ...
  A: Bill, You can still claim your son as a dependent and use the head of household filing status. ...
sell real estate12/21/2007
  Q: I have residence type real estate that we have been using as a remote business location for four ...
  A: Gerald, Owner financed installment sales are a great way to spread out the income tax on a capital ...
sale of real estate12/20/2007
  Q: I have residence type real estate that we have been using as a remote business location for four ...
  A: Gerry, Owner financed installment sales are a great way to spread out the income tax on a capital ...
Home improvements12/20/2007
  Q: I have $40,000. in receiptes for my home. I have lived there since Jan 06. What percenteg would I be ...
  A: Leopold, Home improvements are not deductible on your tax return. They do increase your cost basis ...
529 College Savings Plan Gift from Business12/18/2007
  Q: Can a small company (one employee) make a gift donation to a 529 college saving plan. How does the ...
  A: Andy, Actually, a contribution to a 529 plan would be considered taxable compensation to the ...
Per diem12/17/2007
  Q: I recently read a per diem discussion on the site and clarified a few details, but there is still ...
  A: Chad, I found your question in the Question Pool, so I'm not sure that Carole answered your ...
Minister's Housing Allowance12/17/2007
  Q: I am a Trustee at at Baptist Church and have some concerns regarding the amount of money the Pastor ...
  A: IRA, The IRS hasn't established a percentage for a clergy person's housing allowance. It's not ...
Inheriting part of a c-corp12/14/2007
  Q: We are settling my mother's estate. She and her brother were the the only shareholders in a c-corp ...
  A: Frank, The best way to handle this is to have your uncle buy your mother's shares of the C-corp ...
Schedule D12/13/2007
  Q: I have to file the schedule D form, and there were several days where I bought and sold the same ...
  A: David, The IRS would rather you list each sale separately, especially as the sales have wash sales ...
LLC / Capital Gains12/13/2007
  Q: If you trade stocks / futures in a LLC, how is the taxable LT / ST capital gains offset by business ...
  A: Bill, I'm not sure if you really want to be treated as professional trader for tax purposes. By ...
SUV Depreciation12/12/2007
  Q: Wellman, In August, 2004, I purchased a new Chevy Suburban and depreciated the entire cost in that ...
  A: Joseph, I found your question in the pool. I'm not sure that Mike answered your question or not. ...
SUV Depreciation12/12/2007
  Q: In August, 2004, I purchased a new Chevy Suburban and depreciated the entire cost in that year ...
  A: Joseph, I found your question in the pool. I'm not sure that Ivan answered your question or not. ...
Recently purchased company12/12/2007
  Q: I work for company "A" and a group of investors purchased company "A", We are now putting in a new ...
  A: Jim, I found your question in the pool. The business can expense up to $125,000 of assets placed ...
filing an amended joint return12/12/2007
  Q: If spouse A has not filed a return and spouse B has filed a married/separate return, then I ...
  A: Chris, Spouse A does not need to file a married filing separate return in order to participate in ...
LLC and sub entities12/12/2007
  Q: I am about to form an LLC in New York State, I would like to have a parent company and sub-entities. ...
  A: Nicole, It's certainly possible to have a parent company and subsidiaries. In order to have ...
Distribution of ltcl to Estate Beneficiaries12/12/2007
  Q: I used TurboTax to help me through the initial 1041. I have ltcl to distribute to the ...
  A: Felix, TurboTax is correct. Capital gains and losses are only distributed to the beneficiaries ...
RV tax deduction12/11/2007
  Q: I am a retired police officer running my own private investigation business. I have for several ...
  A: Jim, You shouldn't have a problem deducting the business use of the RV. In order to protect your ...
Volunteer Fire Department Stipends12/11/2007
  Q: I am currently a firefighter for a volunteer organization in NH. Every December we usually receive ...
  A: Ken, Technically speaking, uniform stipends are considered taxable compensation. In order for the ...
Bene-IRA trfr and rmd12/11/2007
  Q: son was to have inherited fathers IRA Sept 06 at fathers death. took 06 rmd for dad. has never ...
  A: Ralph, The beneficiary of an IRA needs to retitle ownership within 5 years of the decedent's date ...
Taxes on property condemned by eminent domain12/11/2007
  Q: I am a member of a HOA. The state of Alabama acquired a portion of our common property. The ...
  A: Byron, Capital gain rules that apply to individuals do not apply to homeowners associations. ...
money received from sale of parents home12/8/2007
  Q: My parents had their home in their name& alson my name & my son's name. They had life estate. On ...
  A: Jackie, Gifts are not taxable income to the recipient. The donor is generally responsible for ...
Estimated Tax?12/5/2007
  Q: Our adjusted gross income in 2006 was around $35,000, and this year would have been the same, except ...
  A: Joseph, As long as your 2007 Federal income tax withheld is equal to or greater than your 2006 ...
From K1 back to W212/5/2007
  Q: Can I go back to filing a W2 after I have received a K1 from the same company?
  A: Tammy, I'm going to present some situations in which you could receive a W-2 and/or K-1: If you ...
tax12/5/2007
  Q: in a business if i own it how do i get paid, and file a personal return at closing of the tax year
  A: Incorporated, How you pay yourself depends on what kind of entity you are for Federal income ...
treasury stock12/5/2007
  Q: If a company has treasury stock that was recently turned in by a shareholder and wishes to issue ...
  A: Laurie, I could give you a lengthy, complicated answer to your question. The simple answer is the ...
Self-Contractor Taxes and Paying Minor Children12/5/2007
  Q: My wife is going to be doing the cleaning at our church. We have a contract stating that she is a ...
  A: Joe, I'm going to address your questions in the same order: 1. As a sole proprietor, your wife's ...
Self-Contractor Taxes and Paying Minor Children12/5/2007
  Q: My wife is going to be doing the cleaning at our church. We have a contract stating that she is a ...
  A: Joe, I'm going to address your questions in the same order: 1. As a sole proprietor, your wife's ...
Self-Contractor Taxes and Paying Minor Children12/5/2007
  Q: My wife is going to be doing the cleaning at our church. We have a contract stating that she is a ...
  A: Joe, I'm going to address your questions in the same order: 1. As a sole proprietor, your wife's ...
Foreclosure as income12/5/2007
  Q: I lost my Michigan home to foreclosure in 2006. My tax advisor said Michigan did not consider this ...
  A: Patty, Whenever there is a foreclosure, there is the possibility of debt forgiveness. Debt ...
GIFT TAX12/5/2007
  Q: this past weekend my wife won a fishing boat valued at about 40k from a local radio station. i will ...
  A: Leonard, I'm sure it was very exciting to learn your wife won a boat. Now comes the bad news. You ...
Allowable Deduction12/4/2007
  Q: Greetings! I am a sole proprietor with a home office. I primarily create and maintain web pages for ...
  A: Lynn, Unfortunately, your five stunning new suits are out. Although you generally can deduct the ...
forgiveness of debt12/4/2007
  Q: I am married and have filed previous returns with my husband. I also had a home accounting business ...
  A: Brenda, Submitting a married filing separate tax return is not a factor is determining if one is ...
capital gains tax on charitiable gift in will or beneficiary12/4/2007
  Q: If I name a charity as beneficiary on an investment account - either with the brokerage or in my ...
  A: Robert, Charitable organizations with a 501(c)3 classification will not need to recognize your ...
IRA and Roth IRA conversion12/3/2007
  Q: I was laid off in 2006 and took my 401K and rolled it into a IRA at my investment firm. My account ...
  A: Sharman, At the time you converted the rollover IRA to the Roth IRA, you had a taxable event. You ...
S-Corp loss deduction against personal income12/3/2007
  Q: I have formed an S-Corp for my restaurant business and I am the 100% owner. My wife is an employee, ...
  A: Jittra, As long as you have basis in your stock, you will be able to deduct the losses from the S ...
S-Corp loss deduction against personal income12/3/2007
  Q: I have formed an S-Corp for my restaurant business and I am the 100% owner. My wife is an employee, ...
  A: Jittra, As long as you have basis in your stock, you will be able to deduct the losses from the S ...
real estate sale12/3/2007
  Q: When a person sells a business property and the sales price is 500k, and if he gets 200k down and ...
  A: John, Essentially you have the right idea. The first step is to compute the gain on the sale. The ...
S-Corp loss deduction against personal income12/2/2007
  Q: I have formed an S-Corp for my restaurant business and I am the 100% owner. My wife is an ...
  A: Jittra, As long as you have basis in your stock, you will be able to deduct the losses from the S ...
S-Corp loss deduction against personal income12/2/2007
  Q: I have formed an S-Corp for my restaurant business and I am the 100% owner. My wife is an ...
  A: Jittra, As long as you have basis in your stock, you will be able to deduct the losses from the S ...
capital gains12/2/2007
  Q: I bought 12 acres of raw land 16 months ago for $650,000 in Colorado. I just got it under contract ...
  A: Norm, You should expect to have Federal income tax of $108,750 ($725,000 at 15%) and Colorado ...
Help - can I claim my mother in law?12/1/2007
  Q: My mother in law is in an adult asst. living facility-(dementia and needs total care in every ...
  A: Tami, In order to claim your mother as a dependent, you will need to provide more than half of her ...
Carryover on 1041 Schedule D12/1/2007
  Q: Last year I prepared the worksheet that showed a long term loss carryover (for a trust) from 2006 to ...
  A: Herb, There will be a line on the 2007 Schedule D that you will report the capital loss ...
Independent Contractor - 1099Misc12/1/2007
  Q: This is my first year with an income as an Independent Contractor, therefore will be receiving a ...
  A: Becky, As an independent contractor, you don't file quarterly tax returns. It may be necessary to ...
spec houses12/1/2007
  Q: When can I begin depreciation on a spec house that I am building to sell? thank you
  A: Patches, You can't depreciate a spec house. Technically what you are doing is the same as ...
Establish Primary Residence in NV12/1/2007
  Q: If my primary residence is in NV on December 31, 2007, would I file NV state income taxes for 2007 ...
  A: Beatrice, The move to Nevada is a clever idea, but it won't work out the way you hope. ...
gift tax?11/30/2007
  Q: After my father passed away three years ago, my mother had a rental house put in mine and my ...
  A: Jo Ellen, You should be able to argue the gift of the rental property was not a completed gift, ...
tax ques11/30/2007
  Q: I am living in AL and I have created a learning center that I would like to sell at a teacher ...
  A: Lauren, Sounds to me like you are starting a business selling the learning center you have created. ...
capital gains tax11/29/2007
  Q: I understand that in 2008, 2009, and 2010 that capital gains earned by individuals in the 2 lowest ...
  A: Martha, I think you have the right idea. While it's possible to have a 0% tax on capital gains if ...
Condemnation11/28/2007
  Q: We have been offered $750,000 for our investment property in a condemnation proceeding; however, we ...
  A: John, The clock starts when constructive ownership is transferred. This would be at the time the ...
Capital gains vs. Normal Income11/28/2007
  Q: Starting this year on a part-time basis, my wife began purchasing foreclosures, rehabing them, then ...
  A: Matthew, The short term loss incurred with the 2007 sale is reported on your 2007 tax return. ...
benificiary of IRA11/28/2007
  Q: My dad died in September 2007. His IRAs, insurance and other assets were all left equally to my 4 ...
  A: Diana, I can appreciate why you are confused. Something isn't right. There is no way your ...
land in miami11/25/2007
  Q: I bought a land in miami (5 acres) in 1986. I payed taxes for 3 years and then after I leaved ...
  A: Ali, Chances are the county took possession of the land and auctioned the property to pay the back ...
Foreclosed Property11/24/2007
  Q: In 2006, I sold vacant land to an LLC. I received 25% down payment and I held the mortgage. THe ...
  A: Brian, You want to amend the tax return in which you reported the sale. Since the sale never ...
401K hardship withdrawal and penalties11/24/2007
  Q: I am purchasing a home in Nevada to be closer to my company. this home will be my primary residence. ...
  A: Andy, Unfortunately, there are no exceptions to the 10% penalty or the income tax when taking a ...
Vehicle mileage log11/24/2007
  Q: I am wondering if there is any legitimate way to avoid having to keep a mileage log for business use ...
  A: Jonathan, I can certainly appreciate the pain of keeping a contemporaneous log of your business ...
Tax question ref to car11/24/2007
  Q: I bought a 1995 Honda 2 door civic in June of 2007. I paid 3500.00 for the car at a small dealer. ...
  A: Jeannie, I'm sorry your automobile purchase didn't turn out so well. Unfortunately, there isn't ...
Tax11/24/2007
  Q: I bought a 1995 Honda 2 door civic in June 2007. Paid 3500.00 from a small dealer. I took the car ...
  A: Jeannie, I'm sorry your automobile purchase didn't turn out so well. Unfortunately, there isn't ...
Vehicle mileage log11/23/2007
  Q: I am wondering if there is any legitimate way to avoid having to keep a mileage log for business use ...
  A: Jonathan, I can certainly appreciate the pain of keeping a contemporaneous log of your business ...
Medicare and gift laws11/23/2007
  Q: My Mom is currently residing in an assisted living facility in Illinois. The facility has notified ...
  A: Joanne, Your mother is in a tough spot. When applying for Medicaid, there is something called a ...
RV as a vacation home11/22/2007
  Q: My family and I enjpy using our 5th wheel trailer for camping,hunting and fishing trips. It is a ...
  A: William, In order for a RV to save at tax time, it needs to pass the test of being a second home. ...
401 account withdrawal11/22/2007
  Q: Hey "Tax Dude", I'm 58 years old (soon to be 59; and not long thereafter to be 59 1/2). I work in ...
  A: Barry, I'd love to answer your question, but it's impossible to answer without knowing more ...
Tax question11/22/2007
  Q: I was named as Executor of my mother's estate. Taxes were filed for 2005. A distribution of $62,000 ...
  A: Paul, I'm not really clear on a number of things. Was the distribution to you as a beneficiary or ...
inheritance tax11/22/2007
  Q: I ask this question once but did not explain it enough. I am purchasing my house through a divorce ...
  A: Cathy, I understand your issue, but fail to understand why you think you are liable to pay the ...
Per diem for OCONUS travel11/22/2007
  Q: I work for a helicopter company based near my home town in Oregon, half of the year I am traveling ...
  A: Andrew, Here is the best solution for you. Have your employer pay for your airfare and provide you ...
inheritance tax11/21/2007
  Q: I ask this question once but did not explain it enough. I am purchasing my house through a divorce ...
  A: Cathy, I understand your issue, but fail to understand why you think you are liable to pay the ...
401 account withdrawal11/21/2007
  Q: Hey "Tax Dude", I'm 58 years old (soon to be 59; and not long thereafter to be 59 1/2). I work in ...
  A: Barry, Any withdrawals taken after age 59 1/2 are subject to tax at your individual tax rates. ...
1031 EXCHANGE DEPRECIATION11/21/2007
  Q: if I exchange raw land (non depreciable) for a building can I depreciate the building?
  A: Jerry, If you use the building in a trade or business you can depreciate the building. Rental ...
Inheritance tax11/21/2007
  Q: I am purchasing the house because of a divorce that I live in that my husband purchased 31 years ago ...
  A: Cathy, It was quite clever of you to do a deed search on the house. You can learn a lot about a ...
TAXABLE REFUNDS AND CAPITAL GAINS & LOSSES11/20/2007
  Q: HOW DO YOU DETERMINE A TAXALBE REFUND OR WHEN DOES IT APPLY? ...
  A: Carolyn, Generally speaking, you have a taxable state refund if you deducted state income taxes on ...
IRA withdraw11/20/2007
  Q: I'm 62 and no income. I want to withdraw $50K from IRA each year until 66 instead of (wages)then get ...
  A: Anna, IRA distributions are not subject to Social Security tax. Withdrawals from your IRA will not ...
Early ESOP distribution rollover11/20/2007
  Q: I am age 57. Last year I took my first ESOP early distribution with a rollover into our 401K plan. ...
  A: Harry, There are no Federal standards that define distribution schedules for early distributions. ...
IRA withdraw11/20/2007
  Q: I'm 62 and no income. I want to withdraw $50K from IRA each year until 66 then get full social ...
  A: Anna, IRA distributions are not subject to Social Security tax. Withdrawals from your IRA will not ...
CPA Mistakes - Who is liable?11/20/2007
  Q: Tax Dude! We had a move to a new state and an extension filed. When the CPA estimated our return ...
  A: Lisa, I'm sorry to hear the IRS audited your tax return and you are looking at some significant ...
401 account withdrawal11/20/2007
  Q: Hey "Tax Dude", I'm 58 years old (soon to be 59; and not long thereafter to be 59 1/2). I work in ...
  A: Barry, Whenever you leave a job, you have the ability to withdraw your 401(k) account. No matter ...
estate account, form 104111/20/2007
  Q: my grandfather past away and split his estate [ his house]roughly $100,000 between me and my uncle, ...
  A: Andrew, When an individual dies, there are potentially three tax returns which need to be filed. ...
work for one state and live in another11/20/2007
  Q: I work at home in Wisconsin for a company in Arizona. I noticed that they are only taking out ...
  A: Angie, Have you discussed this with your company's payroll or HR department? They should be able ...
filing returns while spouse is incarcerated11/19/2007
  Q: My husband is currently incarcerated. On last year's return I filed "married filing separate" and ...
  A: Debra, There is no reason you couldn't file a joint tax return with your incarcerated husband. You ...
tax on condo11/19/2007
  Q: I have owned a very nice condo (good location in Pasadena, CA in a historic building) since May ...
  A: Alex, Unless your adjusted gross income is over $150,000, you should be receiving some tax benefit ...
Stepped up basis on assets from Irrevocable Trust11/19/2007
  Q: Facts: Grandfather died in April 1964. Upon his death his will split his assets and set up 2 ...
  A: John, There are no additional step-ups on the basis of the assets held in an irrevocable trust. ...
Is it legal for businesses to tax shipping & handling online11/19/2007
  Q: I usually like to purchase online products because it's convenient and sometimes cheaper, but the ...
  A: Madeleine, It's true some state do require sales tax for sales of service. Service is typically ...
sale of residence11/19/2007
  Q: My client lives in a rent controlled apartment. He was asked to sell his "rights" to this apartment ...
  A: Following up to my previous response: Contrary to my earlier position, I have concluded the sale ...
US Tax Law on Rental Income from Apt in Dubai11/19/2007
  Q: I was wondering what the US Tax Implications are for rental income obtained from an investment ...
  A: Alok, You will need to report the rental income on Schedule E of your US tax return. You will also ...
mom going to college11/18/2007
  Q: I am currently getting divorced from my husband. Next year my children and I will be moving back ...
  A: Katie, Child support and student loans are not taxable income. Most grants are also not taxable. ...
Short term investment property11/18/2007
  Q: I invested in a property for 17,000 and invested about 12,000 in materials. I did most of the repair ...
  A: James, Unfortunately, the value of your labor can not be added to the cost basis of the property. ...
gas mileage deduction11/18/2007
  Q: My wife is a Social Worker who travels a lot as part of a mobile unit. When she asks her boss about ...
  A: Frank, Your wife is entitled to deduct all business mileage which is not reimbursed by her ...
Multiple Home Offices11/18/2007
  Q: ..I am in the midst of an audit where the agent stated I could not have more than one office. I am a ...
  A: Suzanne, What a tough spot you are in? While it's possible to have more than one office, ...
deductions for advertisers11/18/2007
  Q: my partner and i are starting a small newspaper publication containing current arrests, missing ...
  A: Susan, This is quite an endeavor! Have you considered setting up your activity as a not for profit ...
Paid in one state and Living in another11/17/2007
  Q: I just got a great job with a international company. My pay comes from San Fran, my "local" office ...
  A: Eric, I'm not sure you have a situation. "PRI State Tax" probably refers to Primary State Tax. ...
Is it legal for businesses to tax shipping & handling online11/17/2007
  Q: I usually like to purchase online products because it's convenient and sometimes cheaper, but the ...
  A: Madeleine, Shipping and handling is not subject to sales tax in any state I am aware of. You need ...
Taxes from paycheck11/17/2007
  Q: The Fed and State taxes were taken out of my paychecks each week, however, she is behind on paying ...
  A: Juanita, From a personal tax filing standpoint, your taxes are considered paid when withheld. It’s ...
donation of family loan to start up business11/17/2007
  Q: i got a loan of $9000 and donated it to my business start up capital what are the tax implications ...
  A: John, While it may seem overly formal to document a loan to a family member, without one, the ...
S-corp transfer of assets11/16/2007
  Q: Situation: the sole shareholder of two S-Corps is considering dissolving one and transferring assets ...
  A: Eli, Fortunately, since we aren't dealing with C-corporation we don't have any issues with built-in ...
US Tax law11/16/2007
  Q: I've heard that before WWII there was no wage taxation and President Roosevelt(with US Congress ...
  A: Jack, Wages were subject to income tax before World War II. Prior to World War II, most people ...
gift of real property11/16/2007
  Q: I own 2/3 of an acre zoned residential and adjacent to a hospital. I am interested in donating the ...
  A: Ron, Form 8283 will be required, but I would get an actual appraisal or have a realtor prepare a ...
tax11/15/2007
  Q: I had my taxes prepared by H&R Block last year. How can I look at my tax papers and find out what % ...
  A: Al, I'm not sure which two lines you are wanting to subtract. However, the formula I provided ...
Short Sale vs Foreclosre11/15/2007
  Q: What is the difference between a short sale and foreclosure? What are the tax ramifications on each ...
  A: Lois, From a tax reporting standpoint, there is no difference between a short sale and a ...
Withholding from a distribution11/15/2007
  Q: If an S-Corp shareholder employee takes a distribution in addition to his salary on one check, can ...
  A: David, Shareholder distributions should not be run through payroll unless you are intending these ...
gave my share of the house to my sister11/15/2007
  Q: I bought a house with my two brothers in 1993. I gave my share of the house ( 1/3 )to my sister ...
  A: Ann, You should have filed a gift tax return for 2006. You wouldn't owe any gift tax assuming you ...
Business charitable contribution11/14/2007
  Q: If my business (carpentry) makes a donation of building materials to Habitat for Humanity, can I ...
  A: Bob, If your business is a sole proprietorship (reporting business income and expenses on Schedule ...
audit question11/14/2007
  Q: can a business be shut down for not paying taxes during a sales use and withholding tax audit? I ...
  A: Suzanne, I'm not an expert on sales and use taxes, but a business can not be shut down until the ...
Who gets it?11/14/2007
  Q: Neil, My mother owns a dance studio; she and her husband, my stepfather, both file jointly each ...
  A: Roxie, This really couldn't be Joe's business expense, because it's not Joe's business. Assuming ...
Inheritance11/14/2007
  Q: My 96 year old uncle in NY has an estate worth over $10 million. There are 4 heirs and the estate ...
  A: Ruth, This is a hard question to answer without knowing if your uncle has any taxable gifts made ...
Sale of Inherited Real Estate11/13/2007
  Q: My siblings and I are beneficiaries in a trust that is split evenly between the three of us. We ...
  A: Gary, K-1 forms are used to report income, losses and deductions. Based on your scenario, I would ...
federal income tax on inheirtance11/13/2007
  Q: In 2006 I received an inheritance from my uncle in California (I live in Texas) regarding the ...
  A: Irene, If you received cash, there is no income tax due to the IRS, California or Texas. The IRS, ...
SIGNING BONUS REPAYMENT11/13/2007
  Q: I recently took a job starting September 2007 and received a total of $25,000 in signing bonuses. ...
  A: Vic, You should draft a letter to your employer that you will not be able to fulfill the terms of ...
where do i claim a fire in rental property11/13/2007
  Q: I had a fire in a rental. Insurance paid me $37000 but spent over $40000. I originally bought the ...
  A: Daryl, I'm at a loss for why the insurance company would issue a 1099-MISC for proceeds from the ...
Stepped up basis on trusts11/12/2007
  Q: My father wants to put his stocks and mutual funds into a trust for my brother and I. My question ...
  A: Lindsay, When securities are transferred to an irrevocable trust, the basis remains the same as the ...
Sub S Corp - Taxpayer sells his interest11/12/2007
  Q: How is the tax liability determined for a taxpayer who no longer owns an interest in a Sub S corp at ...
  A: Bill, You should be receiving a final K-1 from the S-Corporation reflecting any pass through ...
Minor's Earned Income11/12/2007
  Q: I have a 17 year old daughter who worked part-time over the last year. What amount of gross wages ...
  A: Danielle, Yes, you can claim your daughter as a dependent on your tax return. On your daughter's ...
perdiem overage11/12/2007
  Q: On the matter of per diem, if I am paid x per day in per diem and my documented expenses are 1/2x, ...
  A: Mark, The amounts not used for lodging and meals while away from home are considered taxable ...
trust account11/11/2007
  Q: Before my Dad passed away he set up a trust account through Merril Lynch for my son to use for ...
  A: Bill, If handled properly, the trust should have been filing income tax returns and paying it's own ...
Transfer real estate to corporation11/11/2007
  Q: If I run a small strip center as sole propriety and now I want to switch to corporation, how do I ...
  A: Phy, There would be no income tax due with transferring the real estate to the corporation. The ...
federal income tax on inheirtance11/11/2007
  Q: In 2006 I received an inheritance from my uncle in California (I live in Texas) regarding the ...
  A: Irene, The amount you receive as an inheritance is not taxable income. No special reporting is ...
casualty loss deductions11/10/2007
  Q: Are casualty losses limited to physical casualties? What if land is rezoned from the 500 year flood ...
  A: Pat, If you've suffered the results of a theft, accident, fire, flood, or some other casualty ...
LLC in a Living Trust11/10/2007
  Q: I have a client who has 3 LLCs in his Living Trust. The Living Trust has its own separate tax id. ...
  A: Nikki, Since each LLC has more than one member and assuming it has not elected to be treated as a ...
Inheritance11/10/2007
  Q: My questions are: 1) If an American citizen has inherited money in another country because her ...
  A: Nikki, Inheritances are not taxable to the recipient, no matter if the decedent is a US resident or ...
exemption11/10/2007
  Q: I currently claim single and 2 exemptions--divorced with son in school---son now is out of school ...
  A: Bill, This is not an easy question to answer with out knowing your salary, whether or not you ...
LLC taxation11/9/2007
  Q: I'd like to ask for help in below simple case: Limited Liability Company formed in Delaware has 2 ...
  A: Jerzy, In your scenario and the LLC members or the business do not have a physical presence in the ...
Minor's Earned Income11/9/2007
  Q: I have a 17 year old daughter who worked part-time over the last year. What amount of gross wages ...
  A: Danielle, If your daughter had less than $5,350 in gross wages, she will not be required to file a ...
Corporation taxes11/9/2007
  Q: We plan to buy a small real estate property under a corporation. If we file for the corporation now ...
  A: Phy, You can absolutely deduct any business expenses on the initial return without showing any ...
Home Office ded. >2% S-corp Shareholder11/8/2007
  Q: When the owner of an S-corp runs the business our of their home and wants to take the home office ...
  A: Warren, If you own your home it makes little sense to claim an office in home deduction. The two ...
business exp. - contract work11/8/2007
  Q: I am working with Robert Half doing temp contract work. Sometime the gig is a week, or a month or 6 ...
  A: Michael, The drive to and from the assignment is considered commuting. Commuting expenses are not ...
Divorce and Dependent Spending Account11/7/2007
  Q: I was recently divorced in January of this year. I have one kid which i have joint custody. Both ...
  A: Mecklin, The best way to figure this out in future years is to determine which of you will be ...
Per Diem while using Secondary Residence11/7/2007
  Q: There is an employee whom was hired at a company who lives in Seattle. He has an office in Seattle, ...
  A: Katy, The company can treat the per diem payments as a travel expense. In this scenario, the ...
Assets11/7/2007
  Q: I'm thinking of starting a business with a friend from college. He is 45, but I have just come to ...
  A: Brandon, I seriously doubt your friend is under the IRS radar. Not filing tax returns doesn't keep ...
Recently Divorced11/7/2007
  Q: My ex-husband and I will finalize our divorce on Dec 3, 2007. Should we file the 2007 return ...
  A: Josie, If you are no longer married as of December 31st, you will not be able to file a joint tax ...
Claiming Dependants11/7/2007
  Q: Last year my two sons lived with me for 5.5 months and lived with their father for 5.5 months, ...
  A: Yvette, Beginning in 2005, the rules for who can claim a qualifying child as a dependent changed. ...
Estimated Taxes when Divorced11/7/2007
  Q: Our divorce was final 11/01/07. We have been paying estimated taxes jointly all year. How do we pay ...
  A: Wayne, The fourth quarter payment should be made with separate estimated tax vouchers. Before ...
Obtaining ITIN & Tax Filing11/6/2007
  Q: I am currently working in US on H1B visa, came in 11th Jan 2007 and planning to stay till 31st Jan ...
  A: Subbanna, You should try and visit an IRS authorized Acceptance Agent for processing the W-7. You ...
501c711/6/2007
  Q: I am the treasurer of a military spouse club. We have a 501c7 status. How much can we make in fund ...
  A: Tara, A section 501(c)(7) organization may receive up to 35% of its gross receipts, including ...
tax11/6/2007
  Q: I had my taxes prepared by H&R Block last year. How can I look at my tax papers and find out what % ...
  A: Al, Nothing on your tax return will tell you what tax bracket you are in. Federal income tax is ...
social sec taxes11/6/2007
  Q: My husband, by definition is NOT self employed or a subcontractor. He earns an annual salary, does ...
  A: Joy, Schedule C and SE will not be required. You should report the 1099 income as wages on the ...
social sec taxes11/6/2007
  Q: My husband, by definition is NOT self employed or a subcontractor. He earns an annual salary, does ...
  A: Joy, You have great timing with this question. IRS just announced a new form (Form 8919) to deal ...
Rental Property LLC Protection11/6/2007
  Q: My husband and I purchased an investment property in Alabama in our names and now have formed an LLC ...
  A: Karen, Placing a rental property in a LLC can protect your personal assets in the event the LLC is ...
self employed contract work per diem11/5/2007
  Q: My husband is going to be an independent contract working out of state for 3 months. Currently our ...
  A: Laura, It's fine to use per diem payments as long as you follow two rules. 1. The per diem ...
SHORT SALE AND 1099's11/5/2007
  Q: When a property is sold as a short sale is the lender required to file a 1099 for the amount not ...
  A: Dawn, The lender will report the difference between the amount owed on the mortgage and the amount ...
College Tuition Tax deduction11/5/2007
  Q: My husband has two sons and he and his exwife decided to split when it comes to claiming dependents. ...
  A: Heidi, Only the parent who claims the student as a dependent can claim the education credit or ...
deductability of interest on Hm Eq Line11/5/2007
  Q: My husband and I have recently converted our primary residence into a rental home. (We moved into a ...
  A: Doris, A clever tax pro could make an argument to deduct the equity line interest against your ...
retirement from Greece11/4/2007
  Q: My husband is a military retiree in Greece and we are planning on moving to the state of Florida. ...
  A: Lisa, While living in the U.S., you will be required to file U.S. income tax return. Florida does ...
Tax Impact of Charitable Donation11/4/2007
  Q: I run a self storage business and am investigating the potential of approaching charities in the ...
  A: Bob, You handle this one of two ways. You can give the charitable contribution to the new ...
relocation with 2 houses11/2/2007
  Q: If we own a primary residence and a secondary residence which is a rental in California and I take a ...
  A: Cathy, Selling your second home will not qualify for the capital gain exclusion. In order for the ...
Inheritance tax11/2/2007
  Q: I have an uncle that passed way and has left me and my 3 siblings in his will we will be getting ...
  A: Renee, Assuming your uncle's gross estate was under $2,000,000 there would be no Federal estate ...
Taxability of IRA Distribution to an Estate11/2/2007
  Q: My mother died in July, leaving a small ($2650) regular IRA payable to the estate. Since the total ...
  A: Don, Assuming the estate's assets were distributed to the beneficiaries within one year of your ...
Renting a recently inherited home11/2/2007
  Q: Recently my father passed away. His home was in a trust for which I am the sole trustee. Now, I am ...
  A: Allyson, If you decide to sell the property, you would only pay tax on the capital gain. The ...
Taxability of IRA Distribution to an Estate11/1/2007
  Q: My mother died in July, leaving a small ($2650) regular IRA payable to the estate. Since the total ...
  A: Don, Generally speaking, inherited assets are not considered taxable income. Retirement assets, ...
Tax on bonds11/1/2007
  Q: My mother bought a number of bonds for me in her name while I was a child and she recently cashed ...
  A: Daniel, Unfortunately, your mother will have the burden of reporting and paying the tax on the ...
Stock option tax11/1/2007
  Q: I am Japanese working for a American company in Tokyo. Recently I exercised my stock options and 40% ...
  A: Jiaeyo, The withholding was on the gross proceeds of the stock sale and not on the capital gain. ...
1099 for foreigh employees11/1/2007
  Q: We are a small LLC company and we are looking to get some short term employees. All work is done via ...
  A: David, Your "employees" will need to obtain ITIN numbers from the IRS. The ITIN is used in place ...
Roth IRA Contribution11/1/2007
  Q: I am currently working overseas and would like to open a Roth IRA. In the past few years I have not ...
  A: Daniel, Assuming your adjusted gross income is under $110,000 (assuming you are single), you could ...
Per Diem--tax home10/31/2007
  Q: I have a similar question as a couple that you have already addressed but mine may be a little ...
  A: Ron, Assuming your are "living" in Kentucky while on a "temporary" assignment, you should be able ...
Sale of Land10/31/2007
  Q: We bought a piece of land to build a retiring home for 52000 in Year 2006 and taxes paid are 1800$. ...
  A: Chetna, You will have a taxable capital gain on the sale. The gain is the difference between the ...
Per diem and working out of state as a contractor10/31/2007
  Q: I am going to be starting a new job in Erlanger, KY. I live in Dayton, OH. A current co-worker ...
  A: JC, Per Diem is one of the most misunderstood terms used as it relates to our tax system. To help ...
Subcontract Labor Taxation10/31/2007
  Q: Please advise on the followingWe issue 1099's for non-incorporated subcontractors that we pay over ...
  A: Amy, There is nothing that prohibits you from issuing 1099s to corporations. The instructions for ...
Sales of inherited property10/31/2007
  Q: My mother passed away in August, there are 4 heirs. I wish to get her house on the market right ...
  A: Bridget, You basically have two options. First would be to disclaim your interest in your mother's ...
Per Diem--tax home10/31/2007
  Q: I have a similar question as a couple that you have already addressed but mine may be a little ...
  A: Ron, Per Diem is one of the most misunderstood terms used as it relates to our tax system. To help ...
failing business10/30/2007
  Q: Would it be better for me tax wise to sell for whatever I can get for the business and equipment or ...
  A: Wanda, Tax wise it really doesn't make a difference. When you sell a business, the purchase price ...
Tax Saving10/30/2007
  Q: My husband has a salary of about 130K. We are NRI's, I am not working as we are on H1b/H4 visa. ...
  A: Annie, It's better to itemize deductions if you can. You should be claiming the higher of your ...
per diem10/30/2007
  Q: I AM WORKING FOR A COMPANY THAT HAS ALWAYS PAYED A PER DIEM PER DAY RATE. THIS COMPANY IS NOW BEING ...
  A: Danielle, Per Diem is one of the most misunderstood terms used as it relates to our tax system. To ...
s corp10/30/2007
  Q: Are the distributions from an S corporation taxed as a qualified divedent at 15% or at the ...
  A: Russ, Distributions from S corporations come first from the entity's Accumulated Adjustments ...
1099-misc. vs 1099-B10/29/2007
  Q: I am an art dealer in Chicago. I acquire work to sell by two methods: 1. Buying it outright from ...
  A: Tom, I can appreciate your frustration with the 1099 issue. The IRS admits its difficult to ...
Babysitter tax responsibilities10/29/2007
  Q: My husband and I are planning to pay my father to babysit our child two days a week. What is the ...
  A: Danette, The figure is $1,500 in 2007. Unless that babysitter is your parent, spouse, under age 21 ...
Investment vs Day trading10/28/2007
  Q: I have 2 brokerage accounts with different brokers. One account is used for day trading. The other ...
  A: Richie, What an interesting question! You must be thinking about the application of the wash sale ...
Inheritance IRA10/27/2007
  Q: I inherited an IRA account from my mother who passed away. If I withdraw the money, can I return it ...
  A: Doug, As long as you didn't roll your mother's IRA into an existing IRA of your own, the ...
Incorporation10/27/2007
  Q: I plan on starting an acupuncture practice and a (separate private investigation agency; a little ...
  A: Mike, Unless your Article of Incorporation or By-Laws prohibit you from operating different ...
hi neighbor10/27/2007
  Q: i have a friend who has had to become corperate and the taxes are eating him up 2500.oo every three ...
  A: Barbara, The amount your neighbor is paying quarterly is a reflection of his income. Will it get ...
Per diem10/26/2007
  Q: My husband has been getting per diem at his current job. He is almost at the one year mark and we ...
  A: Melanie, Taxable per diem is treated the same as wages for income tax purposes. Per diem does not ...
how do i calculate tax deductions on extra income10/26/2007
  Q: I have a question that I'm unsure as to where to find the answer so I hope you are the right person. ...
  A: Kris Based on what you are telling me, you could expect to pay approximately 25% in Federal income ...
sale of home10/25/2007
  Q: My brother and I helped our parents purchase a home in 2001. My parents supplied the down payment ...
  A: Doris, The idea of gifting the your ownership in the home is clever. Honestly, it may be a bit ...
converting primary home to rental10/25/2007
  Q: Neil- If I move a primry home into an LLC, would the cost basis of the property for the LLC then ...
  A: Adam, Transferring your home your home to an LLC will not increase your cost basis to the ...
sale of home10/25/2007
  Q: My brother and I helped our parents purchase a home in 2001. My parents supplied the down payment ...
  A: Doris, It sounds like you and your brother, along with your parents own the property. With this ...
tax law on life insurance inheritance10/25/2007
  Q: My fiance and I have a life insurance policy together and listed each other as the sole beneficiary ...
  A: Rachel, From an income tax standpoint, proceeds (death benefits) from a life insurance policy is ...
how do i calculate tax deductions on extra income10/25/2007
  Q: I have a question that I'm unsure as to where to find the answer so I hope you are the right person. ...
  A: Kris, I found your question in the pool, probably because it is difficult (if not impossible) to ...
head of household10/24/2007
  Q: i live in a home that i guess it would be renting a room in. i pay rent make my own meals. public ...
  A: Tiffany, It really depends on the facts and circumstances of the room you rent. For example if ...
1041 Grantor Trust10/24/2007
  Q: Do you know if a deferred compensation plan has to file a 1041? ANSWER: Don, The annual filing for ...
  A: Don, Okay, we are talking about a nonqualified deferred compensation plan. A rabbi trust is ...
1041 Grantor Trust10/24/2007
  Q: Do you know if a deferred compensation plan has to file a 1041?
  A: Don, The annual filing for a deferred compensation plan is done using either Form 5500 or Form ...
US taxation of Income in Mexico10/24/2007
  Q: My friend is a US citizen moving to Mexico to work and live the rest of her life in Mexico and ...
  A: Ty, Citizens of the U.S. are taxed on their worldwide income regardless of where they live. She ...
Non US resident sales tax rebate10/24/2007
  Q: We have recently moved to a border town in Canada (Sarnia). When we shop in the US - Michigan - we ...
  A: Brian, Sales tax is on goods and services and is set by each of the fifty states, and state ...
S-Corp Fringe benefits10/23/2007
  Q: Do fringe benefits get S Corporations in trouble due to the possibility of disproportionate ...
  A: Brian, Fringe benefits should not be treated as shareholder distributions. They need to be ...
Airline per diem on a CDO10/23/2007
  Q: I work for an airline, and get paid per diem for all of my trips that I work. I get taxable and ...
  A: Marc, Based on a Federal Circuit case in 2000 between American Airlines and the IRS, it was ...
401k hardship10/23/2007
  Q: My wife and I are adopting a baby. The expenses have been almost double what we originally thought ...
  A: Tim, Adoption expenses are not considered a hardship for the purposes of getting a withdrawal from ...
Tax laws on Grants10/23/2007
  Q: I have been seeing internet sites that say that the US government has billions of dollars in grants ...
  A: Coby, I have no way of knowing if the advertised grants are legitimate. If they were, chances are ...
2005 Amended Return10/23/2007
  Q: In paying this year's taxes, I noticed that my father -- who prepared my 2005 federal return -- ...
  A: Shawn, You will need to complete Form 1040X for your amended tax return. When preparing the 1040X, ...
Mutual Funds LTCG tax10/22/2007
  Q: I bought shares in early 2006, and more a few months ago. What I want to do is sell the exact ...
  A: Cliff, You can certainly use the FIFO method for selling mutual fund shares. There something you ...
IRA 60 Day Rollover10/21/2007
  Q: Mr. Johnson Regarding the 60 day rollover rule for a traditional IRA, I have a CD that is maturing ...
  A: Ron, As long as the new account is not funded before the date the old account is distributed, you ...
Inherited pension taxes10/21/2007
  Q: I inherited rights to my deceased husband's vested qualified pension. I (at age 58) elected to ...
  A: Janet, There are actually two problems. First if you elected to take monthly pension payments ...
deduction10/21/2007
  Q: A couple of weeks ago I purchased “Energy Star” Pella windows. My understanding is that if I ...
  A: Al, You don't get a deduction. You actually get a tax credit. Tax credits are more valuable than ...
is it worth the deduction10/21/2007
  Q: Question..i have a 2nd mortgage loan ( 8K ) at 4.9. I put that money in an account that is paying ...
  A: Bailey, There can be a slight advantage (based on your federal and state tax rates) for using the ...
shareholder loan10/20/2007
  Q: If a person made a business loan to his s Corporation, the s Corporation went out of business and ...
  A: Karen, It is reported as a long term capital loss on Schedule D. To qualify as a loan, an advance ...
Long term capital gains10/20/2007
  Q: I am completely baffled as to how long term capital gains get treated at a different tax rate than ...
  A: David, Capital gains to get added to income on line 13, but you compute the tax differently. There ...
Life estate sale of property10/20/2007
  Q: My mother did a life estate on her house with my sister & I as remaindermen on the deed. My mother ...
  A: Judy, A capital gain is the difference between the sales price and cost basis. Generally, cost ...
capital gains10/20/2007
  Q: I purchased 10 acres of land over a year ago for $650,000 I have it under contract for $1,050,000 ...
  A: Norm, There is a little more to the capital gain issue. It's true your gain will be taxed at a ...
1099 commissions vs. W-2 salary10/20/2007
  Q: ..hopefully this will be an easy one for you. Simply put, if you are a 100% commissioned sales rep, ...
  A: Scott, Honestly, it's really the other way around. As a 1099 "employee", you are subject to Self ...
renting a room(s) in my home10/20/2007
  Q: I am currently renting a room out in my mobile home to an unrelated friend. I was for part of the ...
  A: Amy, You may be required to report the rental income on your tax return, but rental income is not ...
Parent as Dependent10/19/2007
  Q: If I am married, can I have my Dad as a dependant? And does it make a difference if I do it under ...
  A: Luly, As long as you provide more than half of your father's support, you can claim him as a ...
Audit Letter10/19/2007
  Q: I received an audit letter for the Head of Household (California). I filed under this with my parent ...
  A: Mary, Under the Federal tax rules as long as you did not live with your husband the last six months ...
1099c10/19/2007
  Q: I was leasing a vehicle from a company that I also paid them for inhouse comp and collision ...
  A: Josh, Here is what I suggest. You need to report the 1099-C as other income on your tax return. ...
U.S. income when living outside US10/18/2007
  Q: If I am an American citizon but my wife and children not, and I live outside the US, but I earned ...
  A: Abe, You can file a joint tax return with your wife and claim your children as dependents. Since ...
Tax lien10/18/2007
  Q: Once a tax lien judgement has been entered, can interest still continue to be assessed and ...
  A: Beverly, You should contact the title company and find out if they actually paid the IRS. If they ...
Tax lien10/18/2007
  Q: Once a tax lien judgement has been entered, can interest still continue to be assessed and ...
  A: Beverly, The IRS files tax liens to increase their collection capabilities and to protect their ...
What can I claim on a home I'm leasing?10/17/2007
  Q: I am "leasing" a home from my parents. When the home was purchased, I didn't have good enough ...
  A: Jennifer, First, are your parent's claiming rental income and deducting your home's expenses on ...
Deductions for lease option10/17/2007
  Q: I have a friend/client that was purchasing a home in 2006 under a lease option contract. The sale ...
  A: Tania, The lease payments are considered rent payments. The property's owner should be reporting ...
inheritance tax question10/17/2007
  Q: I have a question about my inheritance. My grandfather passed away and left a will to nine ...
  A: Sheena, Sorry for the delay in responding to your questions. I wanted to think through my reply. ...
Who claims the child?10/17/2007
  Q: My bf just got 50% custody of his child. I know he wont be able to claim him this year but for the ...
  A: Lian, If it's not addressed in the mediation order, it should be. The court will not add it. Your ...
Who claims the child?10/17/2007
  Q: My bf just got 50% custody of his child. I know he wont be able to claim him this year but for the ...
  A: Lian, Beginning with 2005, the rules for who can claim a dependent have changed. The issue of who ...
Money from an inheritance10/17/2007
  Q: ...I'm picking you as I've seen other inheritance questions directed to you. I and my sister are ...
  A: Dave, Sorry to hear of your mother's passing. Assuming all of the estate taxes have been paid, one ...
IRA early withdrawal penalty10/16/2007
  Q: I receive systematic monthly payments on my IRA. In the past I have been charged the pre-age 59 1/2 ...
  A: Dorothy, If you were receiving substantially equal periodic payments from your IRA, you shouldn't ...
Who is tax exempt?10/15/2007
  Q: Are government contractor in Iraq tax exempt for their hole tour over there in Iraq? My husband ...
  A: Darbi, Government contractors do not qualify for the exclusion for income earned while in a combat ...
federal withheld taxes10/15/2007
  Q: My recent paycheck showed a slight increase in the federal tax withheld (meaning I got less money in ...
  A: Lisa, There hasn't been any changes to the withholding tables during this year. My guess is your ...
form 1041 - Decedants estate10/14/2007
  Q: I am having to file form 1041 for my late father's estate. His income consisted of social security ...
  A: Casaundra, Both items should be reported as other income on Form 1041. Social Security benefits ...
nonrental real estate deductions in LLC10/14/2007
  Q: I am a sole owner of a LLC that brokers forest products to wholesale distributors and OEMs. For tax ...
  A: Dean, The purchase of a "business" condo would be similar to if the business purchased an ...
FSA Dependent Day Care10/14/2007
  Q: My husband contributes to a flexible spending account for dependent daycare. I have my own ...
  A: Jill, The rules for using a flexible spending account for child care differs from the rules for ...
sale of nonprimary residence10/14/2007
  Q: This question is somewhat similiar to a previous one you answered. When my mother was 90ish, her ...
  A: Virginia, Your friend/lawyer is correct about your basis being $175,000. I can certainly ...
foriegn tax credit10/14/2007
  Q: my wife is from Colombia, she gets about 50k a year from a business she owns in Colombia. she pays ...
  A: Larry, This is true. Foreign tax credits are only available at the Federal level. New Jersey ...
Taxes10/14/2007
  Q: I am self-employed...housecleaning business/sole propriership. How much should I be sending in ...
  A: Pam, Tax is based on taxable income, not on gross income. Taxable income is gross income less ...
joint ownership tax question10/13/2007
  Q: I am a Florida resident. My sister is a Massachusetts resident. In 1984 we inherited rental ...
  A: Elizabeth, Your sister seems to be wrong. If she pays you a sum equal to half the present value ...
Potential taxes on criminal restitution10/13/2007
  Q: My brother was murdered in 2004, in Waterloo, Iowa. As a result of the criminal trial, the ...
  A: Rick, I deeply sorry for the loss of your brother. Restitution is reimbursement for loss and not ...
shipping and handling10/13/2007
  Q: I own a web based business and would like to know if I should charge tax on S&H and are big ...
  A: Jim, You don't charge sales tax on shipping and handling charges. Most businesses that charge ...
spouse death10/12/2007
  Q: My husband died suddenly 2 weeks ago. He has a car financed in his name.I notified the company that ...
  A: Darlene, I'm sorry to hear of the sudden death of your husband. What a horrible thing to happen. ...
deductionson sale of investment property10/12/2007
  Q: I am selling an investment property i have owned for 9 months. What are all the deductions from the ...
  A: Monica, Basis is your investment in property for tax purposes. The difference between the selling ...
Form 104110/12/2007
  Q: I have a relative who is in the process of creating a Grantor’s trust. It will consist of various ...
  A: Ray, My first choice would be your relative to be the trustee and you being the successor trustee. ...
tax deduction of tuition10/11/2007
  Q: I am looking at going back to school while continuing to work. Are tuition, books, fees a tax write ...
  A: Jude, The Hope Scholarship is a tax credit, not a scholarship. Tax credits are subtracted directly ...
estate tax return involving an IRA10/11/2007
  Q: I hope you can help, my mother in law passed away in August 2003 leaving a will with my husband and ...
  A: Teresa, Did your mother-in-law designate your husband and his sister as beneficiaries of the IRA ...
Who qualifies as a dependant?10/11/2007
  Q: O.K. My fiance and I live together and have all year. We aren't planning on getting married until at ...
  A: Melissa, Your fiance will not be able to claim you or your son as a dependent on his tax return. ...
LLc and start up costs10/10/2007
  Q: I started an LLC this year and was in business for one, yes, just one day. Long story. Anyways, I ...
  A: Beth, Income tax deductions are allowed with respect to expenditures incurred while carrying on a ...
child tax fraud10/10/2007
  Q: me and my ex have a four year old daughter together, we were never married , and he is the ...
  A: Jessica, Beginning with the 2005 tax year, new rules were put in place regarding who can claim a ...
Can't sell house - tax implications of renting10/10/2007
  Q: I recently moved for employment purposes from MD to PA. The housing market in MD has dropped and ...
  A: Russell, Renting the Maryland property is not a bad idea. Many people are faced with the same or ...
Income tax on an estate10/10/2007
  Q: My father in law died March'07 and my wife is the estate executor. In '06 he had an unpaid income ...
  A: Nathan, One of the most important tasks of an executor is to pay the debts of a decedent. Income ...
Real estate appreciation10/10/2007
  Q: It was bought in 2004 and sold in 2007, so we meet the total exclusion. My question is this; are we ...
  A: Billy, As long as you can exclude all of your capital gain from the sale of your house, the ...
worker comp settlement10/9/2007
  Q: My wife's grandmother ( 85)lives in Arkansas and has been offered a $45K settlement to close out her ...
  A: James, Amounts received under a worker's compensation settlement due to a work-related injury ...
DBA/Ficticious Business Name question10/9/2007
  Q: I was recently offered a job where I can be placed on the payroll or be payed as a business. I was ...
  A: Skylar, An employer that offers this option clearly hopes you will choose to be an independent ...
Capital Gains10/9/2007
  Q: In the fall of 1996 I brought my mother and stepdad from California to Oklahoma to live with us for ...
  A: Susan, Owning a property under joint tenancy with right of survivorship works if the intent is to ...
Investment real estate10/8/2007
  Q: I live and work in Pa and I own investment property in FL which I rent it out. every year I am ...
  A: Vladimir, Florida doesn't have a state income tax, so there are no worries in this regards. ...
becoming independent maybe10/8/2007
  Q: I am disabled (paralyzed waist down) and I work in a call center taking customer orders. I have seen ...
  A: Preston, Many employers want to hire people as independent contractors to avoid employer payroll ...
Loan to LLC10/8/2007
  Q: I have a LLC with 3 members. The LLC is a broker firm, to put it simply, we broker energy and make ...
  A: NL, As I understand this, you paid $90,000 for the right to receive $128,000 in commissions. This ...
loss carryover?10/8/2007
  Q: If our income this year is maybe $7000 less than the standard deduction plus our two personal ...
  A: Priscilla, It sounds like you have a net operating loss. The losses from the farm and Schedule C ...
Deductibility of Rental Property Auction Fee10/7/2007
  Q: My father engages owns rental property and reports this activity on Schedule E. During 2006, he ...
  A: Mike, I would deduct this on Schedule E. Treat this as a separate property on Schedule E. The ...
2 houses, LLC10/7/2007
  Q: Neil, This one gets tricky... I have two houses. House #1 I purchased in 2000 as my primary ...
  A: Mike, Transferring the house to an LLC won't work. If you sell that property to the LLC, you won’t ...
disability and stock options10/7/2007
  Q: My uncle opened an online trading account to trade options, he place 10k to start the account, with ...
  A: Drew, Income from trading options is considered investment income. You can not lose disability ...
Loan to LLC10/7/2007
  Q: I have a LLC with 3 members. The LLC is a broker firm, to put it simply, we broker energy and make ...
  A: NL, You are correct, the $42,000 isn't the profit of the LLC. There needs to be some kind of ...
llc to possibly c10/6/2007
  Q: I am about to startup a small company with the potential to grow in the future (ipo possible). I ...
  A: Jeff, For tax purposes, a LLC is not taxable entity. This means a LLC could be a sole ...
NYS child support querstion10/6/2007
  Q: My husband is a contractor and starting working for a company. He filled out a W-2 instead of 1099 ...
  A: Anjie, Ultimately your husband is responsible for paying the child support. When someone falls ...
1031 reverse10/6/2007
  Q: I'm not an accountant but I do have a question to which I can't find an answer after hours or ...
  A: Eric, The interest would be deductible somewhere on your tax return. If the 1031 is an exchange of ...
tax exemptions & home repairs10/6/2007
  Q: My mom is selling her house. She is going to have a profit of over $250,000. She bought the house ...
  A: David, Improvements are expenditures that add life to your home, increase its value or adapt it to ...
Consultant living in NJ working for a company based in NY10/6/2007
  Q: I just moved to NJ this month and will be working as a consultant part time for the few months. I ...
  A: Jenifer, To answer your questions in the order asked: 1. Yes, you will be able to deduct those ...
Gifts10/6/2007
  Q: Does one need to claim taxes on a gift received in the form of money(Large Sum)?
  A: Chris, Gifts are not taxable income to the recipient. Depending on the amount of the gift, the ...
LLC Guaranteed Payments / SE Tax10/6/2007
  Q: Is there any difference regarding when SE Tax is due if a member receives a guaranteed payment on a ...
  A: Bob, The total amount of the SE tax doesn't change based on the frequency of payments. You may ...
Divorce and claiming children10/5/2007
  Q: I was divorced halfway through this year (2007) and my ex and I have joint custody, with the ...
  A: Adam, Since you were divorced during 2007, you can not file a joint tax return with your ex-wife. ...
IRS per diem policy change10/5/2007
  Q: I had a contract house call me about a new job, and in the course of our discussion I was told that ...
  A: Brad, I have never hear of a 7-day or a 5-day per diem. Per diem is literally per day and ...
Waitstaff10/5/2007
  Q: I need help on claiming/filing tips earned. Obviously I waitress :). The restaurant takes out a ...
  A: Pamela, What you need to know if you earn tips ... 1. 100% is the magic number: All tips are ...
Form 1041 and 111610/5/2007
  Q: I'm trying to help a friend, and maybe you can help me. She's filing a 2006 Form 1041 for a complex ...
  A: Stan, To ensure the foreign tax credit carryforward, attach the completed Form 1116. This will be ...
Form 1041 and 111610/5/2007
  Q: I'm trying to help a friend, and maybe you can help me. She's filing a 2006 Form 1041 for a complex ...
  A: Stan, Any unused capital losses from the 2006 tax return are carried forward to subsequent tax ...
capital gains on home10/4/2007
  Q: I have owned and lived in my home for 17 years (in California) and have rented it out for the last ...
  A: Teri, Converting your former residence to a rental property can cause a little bit of complication ...
IRA transfer to spouse10/4/2007
  Q: I am 68 and my wife is 60. I have heard that I can do a one time transfer of my traditional IRA to ...
  A: Ernest, Not true while you are alive. Your wife would need to be the beneficiary of your IRA and ...
estate tax10/4/2007
  Q: My father died in May 2000. Brother 1 and 3 (I am 1) did not know what was in his estate. He was ...
  A: Scott, It's safe to say brother #2 and the attorney are doing a poor job of effectively ...
Rental of our Primary Residence10/4/2007
  Q: My husband and I recently purchased our first house, but due to a job transfer were forced to move ...
  A: Priya, You would use Schedule E to report the rental income on your property. You will still be ...
Per Diem10/4/2007
  Q: My company is located in Louisville, KY. I was deputed to a client side in April '06 for short term. ...
  A: Aqeel, I'm not sure what you mean when you ask if you are eligible for per diem. Here is the way a ...
Per Diem10/4/2007
  Q: My company is located in Louisville, KY. I was deputed to a client side in April '06 for short term. ...
  A: Aqeel, I'm not sure what you mean when you ask if you are eligible for per diem. Here is the way a ...
Ohio income taxes10/3/2007
  Q: Does Ohio have a statute of limitations as far as collecting passed due income taxes?
  A: Loren, Sorry, there is no statue of limitations for collecting past due taxes. Past due taxes are ...
carryback and finders fee10/3/2007
  Q: Maybe I should refer the wholeJed johnson is the owner and president of Teal Bank. One day last ...
  A: Pedro, The $25,000 finder's fee is considered taxable income in the year of receipt. The finder's ...
Buying a house while offer in compromise pending10/3/2007
  Q: I have sumbitted an offer in compromise in July 2007. How long it takes to be adjudicated. Does it ...
  A: Shahid, In my experience, it usually takes two to three months to get an answer from the IRS on an ...
1040 ES10/3/2007
  Q: I have a couple different questions. I just recently filed my 2006 taxes through Turbotax. I am ...
  A: Ed, Without looking at your tax return, it's hard for me to say whether or not you should be making ...
Taxes10/2/2007
  Q: My husband and I are thinking about traveling around to churches and holding concerts for a love ...
  A: Sarah, If you are not being paid for these concerts, you may have some charitable deductions for ...
Buying a house while offer in compromise pending10/2/2007
  Q: I have sumbitted an offer in compromise in July 2007. How long it takes to be adjudicated. Does it ...
  A: Shahid, In my experience, it hasn't taken a year and a half to get an offer in compromise ...
Real Estate Gift Tax?10/2/2007
  Q: My mom's husband signed a warrantee deed giving the condo he and my mom were living in 50% to his ...
  A: Greg, I would recommend all of the heirs to sign the quit claim deeds to your mother. There is no ...
Unified Tax Credit Question10/1/2007
  Q: Over the last 30 years my wife and I have gifted money to our children with the understanding that ...
  A: Steven, Both of your sons can each gift $12,000 per year to you and your wife. This could ...
personal vehicle10/1/2007
  Q: I work in the gas&oil fields industry I use my personal truck to travel to location to location and ...
  A: Brent, You could deduct the difference between the cost of the work related expense and ...
Corporate CEO payroll9/30/2007
  Q: I have a client who has come up with the scheme of paying himself an annual salary of $100,000 on a ...
  A: Connie, I have a number of business client who take one paycheck on December 31st. We do this to ...
Inheritance Tax?9/30/2007
  Q: Our father died Feb. 8, 2007. Our mother (his wife) died June 28, 2006. My brother and I are their ...
  A: Donda, There are no income tax implications with the receipt of inherited assets. However when you ...
College deductible expenses9/30/2007
  Q: My daughter is going to be studying abroad next year for 6 months. I pay a certain portion of her ...
  A: David, Travel expenses are not considered qualified education expenses. Once qualified education ...
tax ramification for me as inheritor of property9/29/2007
  Q: After my friend's death, I will be inheriting her home. My friend (87) and I (55) would like to know ...
  A: Mika, Here is an idea. Have your friend visit her attorney and draft a living trust agreement. ...
working out of state9/28/2007
  Q: In terms of tax burden, would there be any advantage to claiming residence in one state (TX) and ...
  A: James, If you will be in California longer than a year, you can't consider this a temporary ...
Tax Return9/28/2007
  Q: I used the web site, TurboTax to file my 2006 federal return. Because I did not have the information ...
  A: Sean, Did you receive an acknowledgement from Turbo Tax that the Federal and Ohio tax returns have ...
w4 withholding9/28/2007
  Q: i was reading a book on real estate and they said that to get a max return i should not wait until ...
  A: Ervin, Yes by increasing your W-4 allowances, your take home pay will increase. The reason is you ...
Gifting property9/27/2007
  Q: What, if any, are the tax implications of filing a quit claim from myself (sole owner of a rental ...
  A: Trent, There are no income tax implications with doing this transfer. You will need to file a gift ...
Real Estate losses9/27/2007
  Q: I am trying to figure out if the limits ($1 for every $2 of income from $100,000-150,000) on taking ...
  A: Mike, There are only two types of corporations. A regular corporation and a Subchapter S ...
filing taxes sperate9/27/2007
  Q: My husband owns his own business and I was wonding if I can file my own taxes, We always have to pay ...
  A: Michelle, In my experience, 95% of my clients do not benefit by using the married filing separate ...
w4 withholding9/26/2007
  Q: i was reading a book on real estate and they said that to get a max return i should not wait until ...
  A: Ervin, Without working through calculating the W-4, the idea the book is trying to get across is ...
Government per diem9/26/2007
  Q: I am a government civil servant on a temporary assignment. I'm retired but was "re-hired" as an ...
  A: Maynard, There really isn't any guidance regarding the amount of time you need to return home ...
Estate - capital gains tax9/26/2007
  Q: My father died last year. In 1999, 2000, and 2001, he transfered portions of his property (his ...
  A: Tracey, You will certainly have some capital gains to pay tax on. The upside is capital gains are ...
Tax question regarding estate9/26/2007
  Q: My father died last year and I was on his bank accounts as a right to survivorship. I have 6 ...
  A: Tracey, You won't be liable for any taxes on the inherited accounts, but you will be paying taxes ...
Rental sale9/26/2007
  Q: I am considering selling my rental house in Fl. This house is paid off and has been a rental for ...
  A: Robert, It's true you will have to recapture the depreciation as taxable income. The tax rate on ...
Real Estate losses9/25/2007
  Q: I am trying to figure out if the limits ($1 for every $2 of income from $100,000-150,000) on taking ...
  A: Mike, Nice idea, but it really doesn't work. The losses from your S-corp would also be treated as ...
Income tax9/25/2007
  Q: I have been working as an independent contractor doing transcription work, so I will receive a 1099. ...
  A: T.S., How much you will owe in taxes? The amount varies depending on your filing status, other ...
exchange student9/25/2007
  Q: I know I can claim up to $50.00 monthly while hosting an exchange student. Since the student is ...
  A: Michaek, You can claim a charitable contribution up to $50 per school month for housing an exchange ...
Gift Tax (Shares)9/25/2007
  Q: In 1995 Darlene's father gave her 3600 class B shares (non voting) in a privately held company. The ...
  A: Stephen & Darlene, The IRS is partially correct. You should have reported the stock sale on your ...
10 Year Old 501(c)7 - Never Filed IRS 9909/25/2007
  Q: I just took over the leadership of a 10 year old 501(c)7 organization. It appears that we have not ...
  A: Eric, I always advise my clients (even the tax exempt ones) to always file a return. This way ...
Delinquent tax information9/24/2007
  Q: I recently heard that CPA's routinely receive information from the IRS listing delinquent tax ...
  A: Charlie, CPAs do not receive information from the IRS regarding delinquent taxpayers. The IRS can ...
donation9/24/2007
  Q: "If you donate $10 million in goods as a company and take the tax credit and then after the tax ...
  A: Ernie, If you take the goods back, then you really don't have a charitable contribution. The ...
Tax Deduction9/24/2007
  Q: My spouse salary is 130K. I am not working. We dont have any kids. How much deduction max. can he ...
  A: Annie, I am assuming you file a joint tax return with your husband. You can not claim a spouse as ...
Do I file for taxes?9/24/2007
  Q: I am currently starting my last year at UCLA. I am working 21 hours a week and bring home $180/week. ...
  A: Sam, Since your employers are treating your compensation as an independent contractor and not an ...
Government per diem9/24/2007
  Q: I am a government civil servant on a temporary assignment. I'm retired but was "re-hired" as an ...
  A: Maynard, The reason you are getting the per diem is because your are on "temporary assignment". ...
Establishing residency to avoid capitol gains tax upon sale of seasonal out of state home9/24/2007
  Q: My parents are residents of Florida and own a home there. They are snowbirds and spend their summers ...
  A: Lori, First of all, the New York property needs to be their primary residence. How would they ...
Capital gains tax on sale of non-primary home9/23/2007
  Q: The home was originally purchased in 1977 by myself and my parents for 34,000. In 1980, I moved out. ...
  A: Adam, The taxable capital gain is computed like this. You take the gross proceeds, subtract the ...
Government per diem9/23/2007
  Q: I am a government civil servant on a temporary assignment. I'm retired but was "re-hired" as an ...
  A: Maynard, Personally, I rather see you return home for a period of time. How much time? Well, ...
Gift from brother!9/23/2007
  Q: My brother wants to give me his car with a market value of $35,000. Since my brother and I are both ...
  A: Wing, If your brother and his wife made split gifts to you and your wife, no gift tax would be due. ...
Do I file for taxes?9/23/2007
  Q: I am currently starting my last year at UCLA. I am working 21 hours a week and bring home $180/week. ...
  A: Sam, It's not easy to tell you how much you should expect to pay in taxes. Are your parents ...
Capital gains tax on sale of non-primary home9/22/2007
  Q: The home was originally purchased in 1977 by myself and my parents for 34,000. In 1980, I moved out. ...
  A: Adam, To better answer your question, I need some additional information from you. First, how did ...
Housing Allowance9/22/2007
  Q: I am planning to provide housing allowance to my employees. do I put it as non taxable allowance on ...
  A: Ibrahim, Company-provided housing is generally a tax-free benefit for travelers who, during a ...
scorp9/21/2007
  Q: Client owns property and debt in an scorp holding all shares. Would it be reasonable to recap and ...
  A: Brian, Your client could take a S-Corp distribution of property in lieu of cash. This would ...
land tax9/21/2007
  Q: Im non resident and have held land from 2001 in Florida. If i sell i know there is a percentage ...
  A: Dave, I made a mistake in mentioning the withholding rate is 30%. The withholding rate is 10% on ...
Sales Incentive pay deductible to employer?9/20/2007
  Q: I am an independent insurance agent with several agents working with me on my team. I want to ...
  A: Bo, You have two choices. Deductions for business gifts are limited to $25 per person, per year. ...
retirement taxation9/20/2007
  Q: I have cashed in all funds from IRA's. Some is for home purchase. What is the common tax rate for ...
  A: Joe, It's a little hard to answer your question about a "common tax rate". IRA distributions (even ...
Trust bene for Deferred comp9/20/2007
  Q: I live in the State of CA. My father-in-law (FIL), passed away a few months ago. His estate will ...
  A: Susan, Estates can file two types of returns. The first type is an estate tax return filed on Form ...
My Mother's Trust9/20/2007
  Q: My mother and father are now deceased. I am the trustee of their estate. There is about $400,000 in ...
  A: Cheryl, How much tax will you pay will be determined on how much income is earned at the trust ...
Gift tax credit9/20/2007
  Q: My family friends wants to give me money for a down payment on a house for me and my wife. Are they ...
  A: Charles, It's great to have such generous friends. An individual can gift you up to $12,000 per ...
land tax9/20/2007
  Q: Im non resident and have held land from 2001 in Florida. If i sell i know there is a percentage ...
  A: Dave, You could do a 1031 exchange as long as it's a like kind (land) located in the U.S. A ...
Rental - Casualty Gain and Sale9/19/2007
  Q: I have a Residential rental property that was severely damaged by flood waters in 2005 and then sold ...
  A: Denis, There are a couple of issues here. First, you really shouldn't have reported the insurance ...
Amanded Tax Return Question!9/19/2007
  Q: My name is Arshak. And I would appreciate if you could help me with my question. I recently filed ...
  A: Arshak, Are you married or single is the first question? If you are married, you can not file as a ...
Amanded Tax Return Question!9/19/2007
  Q: My name is Arshak. And I would appreciate if you could help me with my question. I recently filed ...
  A: Arshak, Are you married or single is the first question? If you are married, you can not file as a ...
Foreign partnership9/19/2007
  Q: If I have a foreign partner who has US Tax ID too and he gets a $20000 share, how much should he ...
  A: Jimmy, The IRS doesn't require a written contract, but it couldn't hurt considering this is a ...
FULL-TIME STUDENT QUESTION9/19/2007
  Q: I AM A 22 YEAR OLD FULL-TIME COLLEGE STUDENT WITH A FULL-TIME JOB AS WELL. I WOULD LIKE TO KNOW IF I ...
  A: Zahavah, The reason you don't know any full-time student exempt from income taxes is because there ...
Tax9/19/2007
  Q: My sister had a baby recently. She is working a minimum wage job and her husband does not work. She ...
  A: Rose, It's very generous of you to help out your family. You might be able to claim your niece as ...
Lump Sum Tax Changes9/18/2007
  Q: Neil, I've heard rumblings of a new tax law that supposedly is coming with regards to Lump Sum Tax ...
  A: Ray, I suspect it's just rumor, since this is the first I have heard of any new legislation in this ...
Medicare or gov't lookback on assets9/18/2007
  Q: We have a mother that may enter a nursing home/assisted living center. The nursing home and Medicare ...
  A: Randy, Every state handles qualifying for Medicare a little differently. Most states seem to want ...
Sale of home9/18/2007
  Q: I purchased a 3 family home in Feb,2005. I lived in one unit for 2 months then switched it to ...
  A: Jeanne, The rental portion is reported on Form 4797. The amounts from 4797 are carried over to ...
Sale of home9/17/2007
  Q: I purchased a 3 family home in Feb, 2005. I lived in one unit for 2 months and then switched it to ...
  A: Jeanne, First, you will need to compute the gain or loss on the sale of the property. Your gain or ...
Small Business Startup Tax Information9/17/2007
  Q: My fiance and I recently started building a home based internet business in Arizona. We will offer ...
  A: Trinity, You probably should have incorporated before starting your business. Internet businesses ...
Paying taxes in 2 states9/17/2007
  Q: I have a coworker that lives and works in VA, but his family (wife and children) reside in GA. He ...
  A: DJ, Your co-worker is required to file tax returns for Virginia and Georgia, but really doesn't get ...
Business transfer upon death of sole proprietor9/17/2007
  Q: I am the sole proprietor of a soon to be new LLC business in Ohio and am presently writing up my ...
  A: Sue, I'm not sure you need to have a provision in the LLC operating agreement to deal with the ...
Dad's inherited property transferred to me to protect it...9/17/2007
  Q: My grandmother's home has been in my father and his brother's name for at least the past 10 years to ...
  A: Jennifer, Sorry to hear about the loss of your grandmother and uncle. If you decide to rent the ...
capital gains on sale of rental house9/17/2007
  Q: We have recently sold our rental house after having it 3 years. What portion of that income has to ...
  A: Graham, Assuming you haven't taken receipt of the proceeds from the sale, you may be able to do a ...
Rental income on primary residence9/15/2007
  Q: I am considering selling my home in Louisiana and buying a condo in Florida. I will continue to ...
  A: Robby, There are different tax implications for renting your home for more or less than a total of ...
IRS mileage reimbursment9/15/2007
  Q: I work for a large company, whose corporate office (In New Jersey)is about 200 miles, round trip ...
  A: Steve, All the commuting mileage from your home office to various temporary work locations (client ...
Farm residence9/14/2007
  Q: According to www.irs.gov (Farmers ATG - Chapter Three - Basis on Farm Assets, Farm Sale) Land ...
  A: Dan, More info...Revenue Rulings and the Treasury Regulations governing Section 121. In Rev. Rul. ...
Farm residence9/14/2007
  Q: According to www.irs.gov (Farmers ATG - Chapter Three - Basis on Farm Assets, Farm Sale) Land ...
  A: Dan, I haven't worked with many farms but my understanding is, there is no maximum size of property ...
Buying a Home9/14/2007
  Q: I am buying a first home. I have thirty thousand in a mutual fund. I know I can take out ten ...
  A: Bruce, Is your mutual fund held as an IRA? If not, there is no penalty on liquidation. You would ...
Profit Sharing Question9/14/2007
  Q: My husbands employer had a profit sharing plan and then the place of business changed owners so the ...
  A: Tracy, The 20% withholding is required by the IRS when a retirement plan distribution is not rolled ...
Donation9/14/2007
  Q: 1. If I give $1000 to my poor sister, can I claim it as donation in my personal tax return. 2. ...
  A: Jimmy, The same rules apply. If she is not a US citizen and does not have a social security number ...
EE Saving Bond Taxes9/14/2007
  Q: I was left some EE Savings bonds and from what i understand there is federal tax on the interest. ...
  A: Darryl, The only way to figure this out is to obtain copies of the decedent's prior tax returns and ...
Sale of home9/13/2007
  Q: I purchased a 3 family home in Feb,2005. I lived in one unit for 2 months then switched it to ...
  A: Jeanne, First, you will need to compute the gain or loss on the sale of the property. Your gain or ...
inheritance tax9/13/2007
  Q: I am one of six siblings who will share equally in the 80k cash estate of my mom who died recently. ...
  A: Jim, There is no Federal estate tax due on your mother's estate since it is under $2,000,000. ...
Donation9/13/2007
  Q: 1. If I give $1000 to my poor sister, can I claim it as donation in my personal tax return. 2. ...
  A: Jimmy, Money given to your sister is not a tax deductible donation. It can only be a gift, loan or ...
Taxing of Disability & (Early) Pension9/12/2007
  Q: Have been on SDI since 2000 & will be 61 in Jan. I expect 1662/mo in 2008 after Cola and could ...
  A: Hugh, You haven't filed a tax return in six years. Even if you don't owe any taxes this is not a ...
Donating Land to a church9/12/2007
  Q: I would like clarification on the value of the donation of land to a church with a basis to my ...
  A: Joan, You will be able to deduct the FMV of the donated land on your Schedule A. Charitable ...
estate income tax9/12/2007
  Q: Is the amount paid to a state (pa) for the value of an estate deductible on the federal estate ...
  A: Jon, Generally state inheritance taxes are not deductible on the 1041. There is one exception. The ...
margin loans9/12/2007
  Q: I want to buy a flip house without getting a mortgage. I would like to get a margin loan against my ...
  A: Keith, If you are not a professional flipper, you might be able to justify the margin interest as ...
medicaid9/11/2007
  Q: This question may not be up your alley but if you can shine light and give direction, Thanks. I ...
  A: Cynthia, I'm sorry to hear of your troubles with Medicaid. The problem with Medicaid is each state ...
Filing Taxes for a 16 year old9/11/2007
  Q: My 16 year old just started working. Someone at work told me to have her fill out her W-2 forms as ...
  A: Cindy, As long as your 16 year old will earn less than $5,350 (total income) and have less than ...
Mileage per diem9/11/2007
  Q: "I am working on a loan file for a truck driver and I am being required to explain a situation I ...
  A: James, I've written a number of loan packages and I can certainly tell you the reimbursement is not ...
Mileage per diem9/11/2007
  Q: "I am working on a loan file for a truck driver and I am being required to explain a situation I ...
  A: James, It sounds like your loan applicant's employer is using a per diem rate to reimburse their ...
No Taxable Mileage rate9/11/2007
  Q: I am working on a loan file for a truck driver and I am being required to explain a situation I ahve ...
  A: James, Reimbursements to employees for business-related overnight lodging and meals can be handled ...
Tax on Death Benefits9/10/2007
  Q: My wife and I each received money from my Daughter's life insurance policy. I assume this is ...
  A: Pat, Proceeds from life insurance policies are not considered taxable income. Sometimes an ...
Real estate tax question regarding in-laws9/10/2007
  Q: My husband's parents made a move in 2004 that both my husband and I felt was a bad move. They went ...
  A: Erin, You and your husband's inclination that this was a bad move is right on target. When it ...
Defense Base Act Settlement -- Taxable or not?9/10/2007
  Q: Are the settlements under the DBA taxable fromthe point of personal income tax? Thanks, Dragan
  A: Dragan, It would depend on the nature of the payments. If the payments are for a personal injury ...
Independent Contractor or employee?9/10/2007
  Q: My husband has been doing tiling work for a man who has been paying him as an independent ...
  A: Lynn, This is one of those areas where if you think you are an employee, then you probably are one. ...
dependents9/9/2007
  Q: How do i go about stopping my ex from filing the kids on his taxes. Many places dont ask for proof ...
  A: Billie, Short of getting a court order (which may be cost prohibitive), this will be handled ...
dependents9/9/2007
  Q: How do i go about stopping my ex from filing the kids on his taxes. Many places dont ask for proof ...
  A: Billie, If both of you claim the kids as dependents, here is what to expect. The IRS will send ...
dependents9/9/2007
  Q: My ex said he was claiming our kids this year, he only pays child support nothing more. he sees them ...
  A: Billie, As long as you are the custodial parent and the kids spend more than half the year with ...
depreciaiton of residential rental property9/9/2007
  Q: Alas, I have read that depreciation taken is taxed at 25 percent. But, where is it reported? on ...
  A: John, The 25% tax on depreciation occurs in the year you sell the asset. Sales of business use ...
Employee Business Expense Deductions9/8/2007
  Q: My Husband is a salesman and gets paid salary and commission. His commission is based on a ...
  A: Charlotte, You can deduct unreimbursed out of pocket work expenses on Form 2106. If the employer ...
I owe a lot in Taxes9/7/2007
  Q: I have a payment plan paying $300 a month for taxes from 2002 to 2006 (federal for about $45,000). ...
  A: Hector, The one thing I wouldn't do is contact those firms who advertise they can settle your back ...
1041 Deductions9/7/2007
  Q: Neil, I am the Administrator and sole heir to my brother's estate which has completed probate and am ...
  A: Matt, Here is an outline with answers to your questions. 1. The realtor commissions and other ...
1099 sign on bonus9/7/2007
  Q: We will be hiring independent contractors(1099)and would like to offer a sign on bonus. How would ...
  A: Troy, The simple answer is to add the sign on bonus to the 1099 with the other non-employee ...
taxes on short sale9/7/2007
  Q: I have a house in Az in a short sale for $169,000. I owe $218,000 and have $20,000 invested in it. ...
  A: Marilyn, Assuming the sale does occur this year and the lender agrees to accept the short sale, you ...
IRS Audit9/6/2007
  Q: I own a house with my cousin. We are both on the title and live there as roommates and we split the ...
  A: Terri, I'm sorry to hear you are being audited. Your situation is not that unusual. The 1098 form ...
Filing quarterly taxes9/6/2007
  Q: I recently left my job voluntarily to take some time off and think about starting my own busines ...
  A: Frances, If you expect to report a loss on your tax return for the new business, its unlikely you ...
Taxes on 401k Cash out9/6/2007
  Q: I am aware of the 20% income tax and 10% penalty on cashing out 401k plans prematurely. My question ...
  A: Sharron, Technically, there isn't a 20% tax on premature distributions from 401(k) plans. The 20% ...
Closed Corporation which was losing money9/6/2007
  Q: I recently closed down operations of a corporation that I was sole stockholder of. It had loss carry ...
  A: Bill, If the loans were made to the company and personally secured by you, I don't think you need ...
Sale of business9/6/2007
  Q: Hopefully you can help me out on this one. A client of mine is selling their business, a diner they ...
  A: Jeff, I would try to get as little as possible allocated to goodwill. Goodwill is taxed as ...
taxes on short sale9/6/2007
  Q: I have a house in Az in a short sale for $169,000. I owe $218,000 and have $20,000 invested in it. ...
  A: Marilyn, I am assuming what you mean as a "short sale" is you have held the property less than one ...
Mortgage Interest & Principal in Divorce9/5/2007
  Q: My soon to be ex-husband and I each paid 50% of the mortgage on our house Jan - Aug 2007. He moved ...
  A: Beth, If you file a joint tax return for 2007, allocating the mortgage interest will not matter. ...
Filing Requirements of Club9/5/2007
  Q: I have a client who just took over the books for a Veteran Descendants organization. They applied ...
  A: Barb, Even though the organization is under the limits for filing a 990, you might have some state ...
Closed Corporation which was losing money9/5/2007
  Q: I recently closed down operations of a corporation that I was sole stockholder of. It had loss carry ...
  A: Bill, The loss carryforward at the corporate level will be lost as the corporation is dissolved. ...
Selling house before 2 years due to divorce9/5/2007
  Q: My wife and I have been in our house for 20 months. We are divorcing and the terms of the ...
  A: Jason, IRS Publication 523 defines an unforeseen circumstance as "the occurrence of an event that ...
Home Office9/4/2007
  Q: I work full-time for IBM and have a home office as my only office. I have purchased several items ...
  A: Jan, You will be able to expense these items using Section 179 as unreimbursed business expenses. ...
Filing Requirements of Club9/4/2007
  Q: I have a client who just took over the books for a Veteran Descendants organization. They applied ...
  A: Barb, You really need to get the 1024 filed. Without it, the organization is a taxable entity. ...
Child dependant9/4/2007
  Q: My husband is divorced and his daughter is in college out of state. We are paying for her college ...
  A: Ebbie, The tax laws for claiming a dependent changed in 2005. Under the old rules a parent ...
Reporting K1 info on 10409/4/2007
  Q: I received my one and only K1, which is also a final K1. On my 1040, I know where to report from ...
  A: Tobey, Yes, you do need to include Schedule E (second page) to both the Federal and Virginia tax ...
write offs9/4/2007
  Q: I was curious if receipts are required for write offs? I currently have not been saving my receipts ...
  A: Brent, The burden of proof for your deductions is on you. If your tax return is examined by the ...
convert IRA to Roth now or wait to keep EIC9/4/2007
  Q: My husband and I file joint returns, have 3 kids, and expect to have about $27,000 in taxable earned ...
  A: Kim, I usually tell my clients not to pay tax before they have to. This typically means I don't ...
1031 exchange and section 121 exclusion9/2/2007
  Q: I have been residing in one of the apartments of a two family home ( equal size units)for the past ...
  A: Alfredo, The $500,000 exclusion applies only to your principal residence. If half of the building ...
Capital Gain or Loss on Sale of house8/31/2007
  Q: My siblings and I inherited a house that was in my Father's Trust and subsequently passed on to us. ...
  A: Kenny, Life estates can sometimes complicate matters, but I believe this one is reasonable to deal ...
taxes8/31/2007
  Q: the tax arte on harriet walker's 80,000 vacation home is 20 mills. the property is assessed at full ...
  A: Danie, I'm sorry, but I don't quite understand your question. Is Harriet selling the vacation ...
Home purchase for disabled adult8/31/2007
  Q: I am in Texas, disabled on SSDI, single. I would like to know if there are any tax advantages for my ...
  A: Kely, Since your mother and sister do not give you any financial support right now, they can not ...
INHEIRITANCE8/31/2007
  Q: MY HUSBAND IS AN ONLY CHILD, BOTH PARENTS DECEASED (MOTHER MOST RECENT). OUR DILEMMA IS, HIS MOM'S ...
  A: Sharon, First of all, profits from the of your mother-in-laws house are not tax free. This doesn't ...
Capital Gains Tax while separated8/31/2007
  Q: My soon to be ex-husband and I will file taxes married/separately this year. For tax filing ...
  A: Beth, Before you file married filing separate tax returns, I might reconsider filing a joint return ...
Home purchase for disabled adult8/31/2007
  Q: I am in Texas, disabled on SSDI, single. I would like to know if there are any tax advantages for my ...
  A: Kely, There aren't any special tax incentives to helping family members with disabilities. If your ...
Mileage to college - Write Off8/30/2007
  Q: I'm a business owner of an LLC company. My business is expanding and I decided I need to continue ...
  A: Scott, If your home office qualifies as your "principal place of business," you can deduct daily ...
Gifting a car8/30/2007
  Q: We live in SC and wish to give our son, who lives in GA, an older car. Do we/does he have to pay ...
  A: Mary, Recipients of gifts do not pay gift tax. Gift tax is the obligation of the donor. If the ...
Little brother on taxes filed8/30/2007
  Q: My husband and I for the past 2 years have had his little brother as a dependent on our taxes, we ...
  A: Elsie, First of all even though your brother-in-laws parents are illegal, he is probably still your ...
Inherited Money8/30/2007
  Q: I live in CA, but my Aunt from PA left me money when she died. I am about to recieve the payout, ...
  A: Heather, If you owe any tax, it will not be on the principal part (the bulk) of your inheritance. ...
Sale of Rental Property after Divorce8/29/2007
  Q: In my recent divorce, I gave my ex-husband the marital house and I kept the house next door which ...
  A: Cynthia, If you live in your current residence for two out of the last five years, you could ...
Investment property which did not rent8/29/2007
  Q: I purchased an out of state investment property (the property is in Texas and I live in Illinois) ...
  A: Paul, There is three possible ways to go about this. First, you could treat this as investment ...
not filing taxes for 8 years8/29/2007
  Q: My ex-husband (8 years divorced) has refused to file taxes for the last 8 years due to the fact that ...
  A: Chrystal, The failure to pay child support has developed into a quasi-criminal type of case, in ...
W4 and Tax Return Filing8/29/2007
  Q: How do I fill W4 withholding for I am on H1-B visa and my wife on G-4 visa.(International ...
  A: Wunna, Here is a web link which has instructions for filling out the W-4 form for your employer: ...
buy out other owners on a deed8/28/2007
  Q: I hope you can add some insights to this situation. My parents purchased a house in california by ...
  A: Carmen, Assuming she meets the lenders criteria, it won't be a problem for your sister to get a ...
DEPENDANT8/28/2007
  Q: I WANT TO CLAIM MY MOTHER SHE IS 65YR OLD AND IS ON DISABILITY. I GIVE HER MORE THAN 1/2 OF WHAT ...
  A: Louis, You could claim your mother as dependent without affecting her disability payments. The ...
Capital Gains / Social Security Tax on Sale of Company8/28/2007
  Q: I was involved in starting a company with two other persons. I have a letter showing the amount of ...
  A: Jerry, Without the stock purchase and other agreements to review, it's really difficult to give you ...
Staffing agency switch from w2 to 1099?8/27/2007
  Q: I've be employeed along with 18 other workers at a Staffing agency to provide work for one company, ...
  A: Claude, Working for temporary staffing agency does not make you an independent contractor. Seems ...
inheritance/tod account taxes8/27/2007
  Q: My mother died in June, leaving behind myself, and my brother and sister. In terms of cash assets, ...
  A: Jocelyn, Here is an action plan to help get you started in the right direction and answer your ...
real estate sale and tax8/27/2007
  Q: I purchased a condo in May of 2006. Both my girlfriend and I are on title, although I am the only ...
  A: Tom, The IRS has been fairly liberal on the unforeseen circumstance front. With that said, I don't ...
real estate sale and tax8/27/2007
  Q: I purchased a condo in May of 2006. Both my girlfriend and I are on title, although I am the only ...
  A: Tom, How did you get a lender to only put your name on the mortgage when the title is in both of ...
1041 form8/27/2007
  Q: A woman inherited only $335.00 from her mother's estate. She was told that she had to fill out a ...
  A: Shelia, Was the $335 the total amount received from the estate? Chances are there is little to no ...
Social Security Entitlement8/27/2007
  Q: I'm trying to find out if I'm entitled to any of the money my Mom paid into social security all her ...
  A: Susie, You can not transfer Social Security retirement benefits from parent to child. Your ...
Mileage to college - Write Off8/27/2007
  Q: I'm a business owner of an LLC company. My business is expanding and I decided I need to continue ...
  A: Scott, If you are making this commute from home and back it's not deductible. If you are going to ...
K-18/27/2007
  Q: Neil, How does one determine what figure is entered on Form K-1? I have muddled through Form 1041 ...
  A: John, First of all, there will be two K-1 forms. One for each heir. The amounts transferred to ...
401K disbursement8/27/2007
  Q: I am single, started a new career a few months ago and like everyone else already has bills to pay. ...
  A: Christine, The IRS code that governs 401k plans provides for hardship withdrawals only if: (1) the ...
Form 10418/26/2007
  Q: I'm handling my aunt's estate which had CD's and tax free municipal bonds. She died in January 07 ...
  A: Jeri, You should absolutely file the 1041. The lawyer and fiduciary fees are required to be ...
non profit assoc's8/26/2007
  Q: Is money paid to officers of a non profit association considered taxable income and should a 1099 be ...
  A: Grumpy, Monies paid to officers of for profit and not for profit entities are taxable income. How ...
Dependent?8/26/2007
  Q: I got a question. I am a us resident and my fiancee she is an international student and I am paying ...
  A: Kayam, The tax laws for claiming a dependent changed in 2005. Under the old rules for dependents, ...
Taxes For Civilian Contractors8/25/2007
  Q: Mr Johnson, I'm Luke, and I'm working for L3 Vertex Aerospace here in Mosul, Iraq. We were told ...
  A: Luke, You can exclude $82,400 of earned income while living abroad. There is some truth to the ...
rental property8/25/2007
  Q: I have property I recently gained possesion of from my ex. I am renting it out and having it ...
  A: Mary, The remodel costs are generally considered improvements and must be depreciated. Most ...
resident alien estate taxation8/24/2007
  Q: Both of my parents are resident aliens (greencards) in the US and have been since 1960. In terms of ...
  A: Stewart, Resident aliens are for the most part treated the same as US citizens for estate tax ...
Reporting 1099-Misc income, line 78/24/2007
  Q: On our joint return, my husband and I were unsure about how to report 1099-Misc funds of $3520.00 ...
  A: Jodi, You should be reporting this income on Schedule C (or C-EZ) or on line 21 of Form 1040. The ...
Assets In/Out of Trust8/24/2007
  Q: My parents are recently deceased. They have a revocable trust that contains most of their assets ...
  A: Tony, If the securities were sold by the estate before distribution, the estate would be liable for ...
Assets In/Out of Trust8/24/2007
  Q: My parents are recently deceased. They have a revocable trust that contains most of their assets ...
  A: Tony, Your tax basis in the inherited assets will get a step up. Assets held outside of the trust ...
Filing status for next 3 yrs8/24/2007
  Q: I have accepted a 3yr contract to work in Dallas,TX. in oilfields starting in Oct of 2007. My wife ...
  A: James, You only have two choices for the federal filing status, married filing jointly and married ...
Is a settlement for injuries recieved taxable8/23/2007
  Q: Neil; As a professional driver I was forced to drop down from a full time schedule to very part time ...
  A: Stefan, Internal Revenue Code Section 104(a)(2) excludes from gross income amounts received from ...
Taxes on a Divorce Settlement8/23/2007
  Q: My ex owes me $48,000 for 4.5 acres of land that she wanted to keep. Full sum to be paid this month. ...
  A: Ken, There is no IRS reporting requirement. The general rule under Section 1041 is that no gain or ...
10998/23/2007
  Q: My fiancee just got a new job where he was hired as an employee. After over a month's work (and ...
  A: Cristen, You fiance's employer is full of it. Decreasing his pay because it will save him money? ...
Min Dist/ when8/22/2007
  Q: I see when I need to start different than plan person. Was 70 on 8-14-07, so I turn 70-1/2 in 08 and ...
  A: Curtis, You are required to take a minimum distribution in the year you turn 70 1/2. In your case, ...
Preparation of form 10418/22/2007
  Q: I am looking a the instructions for Form 1041 "deductions subject to the 2% limitation" and I see ...
  A: Jennifer, Unfortunately, the expenses for maintaining the home or storage costs before distribution ...
Inheritance tax8/22/2007
  Q: I live in Florida My father in law passed no will the house went in the children name the house has ...
  A: Kim, Beneficiaries from an estate do not pay inheritance taxes. The estate would be liable for ...
Re: Roth 40l and 403b8/22/2007
  Q: Can one roll over employer 403b amount to individual Roth 401 because I changed employers and would ...
  A: Joann, Since a 403(b) is considered a qualified plan, it can not be rolled over to a Roth 401(k). ...
chart for 70-1/2 min dist.8/22/2007
  Q: Where may I find a chart to figure Min. distribution. thanks, Curtis
  A: Curtis, Here is a weblink for the required minimum distribution table: ...
Do I have to file?8/22/2007
  Q: I was payed 1600$ in 1099 this year. I have $1660 in expenses. Do I need to include this in my end ...
  A: Robert, You will include the 1099 income earned in 2007, on your 2007 tax return (due by 4/15/08). ...
Stipend8/22/2007
  Q: I apologize if this question is not in the correct forum and I have included what I feel is ...
  A: David, If your employer provides you with a computer, car and housing it's still taxable ...
individual taxes8/21/2007
  Q: I am trying to find in the tax guide where I am required to file taxes on my labor, while ...
  A: John, If you get paid (in cash, goods or services) for your labor, it's taxable income. Here's a ...
foreclosed home8/20/2007
  Q: hey neil, i hope you can help me. the short version. due to illnes,i wound up foreclosing on my home ...
  A: Al, Unfortunately you can't take a capital loss on the sale of residence. A residence is ...
Rental8/20/2007
  Q: I have a apartment above my garage that I have rented for 2 years. My current tenants are moving out ...
  A: Joe, There is nothing you need to do currently about the depreciation. It just stops once you ...
Loaning money8/20/2007
  Q: Is there a limit as to how much I can loan a person (brother, friend, etc.) as long as I don't ...
  A: Jer, With that kind of an amount, you need to charge interest. I suppose you can stretch out the ...
Loaning money8/20/2007
  Q: Is there a limit as to how much I can loan a person (brother, friend, etc.) as long as I don't ...
  A: Jer, There are some rules for interest free loans. The easiest interest free loans are those ...
divorce claiming children8/20/2007
  Q: my ex-husband and I have been divorced for 2 years.In our divorce degree nothing was mentioned about ...
  A: Christie, There are new guidelines beginning this year for claiming dependent children. The ...
Form 10418/20/2007
  Q: I am the PR of my deceased brother's estate. After selling his house, it's time to file the estate ...
  A: John, Your brother's last tax return would be for 2006. You actually have a choice to elect a ...
living in one state and working in different state8/20/2007
  Q: i am living in Nj and got a job in NYC, so i want to know how this will work .Do i have to pay 2 ...
  A: Soha, The tax reporting is not too complicated. Your situation happens quite frequently. Your new ...
Form 10418/19/2007
  Q: I am the PR of my deceased brother's estate. After selling his house, it's time to file the estate ...
  A: John, Let's try to address your questions, one by one. 1. The proceeds from a savings account are ...
selling my house8/19/2007
  Q: My name is Jill and I had a question about selling my home. I hope it's somthing you can help me ...
  A: Jill, In theory, you could sell half the duplex without selling the other. There is no income tax ...
selling a second house8/19/2007
  Q: I sold a house that was inherited to me in 2005. I owned the house the two year period.I am 71 years ...
  A: Arthur, I think you should be filing a tax return. The title company which handled the closing ...
LOSS8/18/2007
  Q: I HAVE EXPERIENCED A SUBSTANTIAL LOSS OF MONEY THAT WAS INVESTED BY MY QUALIFIED RETIREMENT PLAN. ...
  A: Paul, What a terrible thing to happen. Unfortunately, my news won't be much comfort. You really ...
health insurance deductibility8/18/2007
  Q: I have a small LLC and want to hire someone [my first employee]. She lives in California, and I am ...
  A: Kyle, You can pay her COBRA premiums directly, take a deduction as an employee benefit. This would ...
1099 taxes8/18/2007
  Q: I am self employed and will get a 1099 at the end of the year. How do I know what my taxes are going ...
  A: Sherri, Here is a breakdown of your projected federal tax return: Net Schedule C income: $23,000 ...
stock gift basis8/18/2007
  Q: My father received stock from his employer over a period of time at no cost or very little cost to ...
  A: Terry, Your mother's basis would be the stock's fair market value on the date of your father's ...
1099 taxes8/18/2007
  Q: I am self employed and will get a 1099 at the end of the year. How do I know what my taxes are going ...
  A: Sherri, As a self employed individual, you will report your 1099 income and business expenses on ...
Inheritance from abroad.8/17/2007
  Q: My grandfather was a citizen of a different country and recently passed away. Me left some money and ...
  A: Ed, Beneficiaries do not pay inheritance tax. If your grandfather's assets were all abroad, the ...
Giving Family Members a Portion of Lottery Winnings8/17/2007
  Q: My wife and I recently won a large amount of money in our state lottery: $5.2 million is what we ...
  A: John, I might have a waited a bit before cashing in the lottery ticket. There are ways to help out ...
rent to own and capital gains8/16/2007
  Q: My husband and I are renting to own our current home. The rent to own agreement was on paper, but ...
  A: Nancy, This is a really good question. Here are the IRS requirements: To claim the exclusion, you ...
step up estate tax8/16/2007
  Q: Mother died in 2005 and that set up a family trust and my Father's trust. When my Father died in ...
  A: Richard, Your father's trust (often referred to as the marital trust) will get the step up for the ...
Basis in Property with Life Estate8/16/2007
  Q: My 95-year old aunt transferred title to her home to me two years ago and retained a life estate. ...
  A: Larry, Clearly you have done a bit of research on this issue. If you are comfortable with taking ...
income tax and college grants8/16/2007
  Q: I got married on April 13 2004, and on March 2006 I kicked his butt out. It wasn't till the very ...
  A: Danica, The problem is both you and your husband can not file as head of household. Generally to ...
gifting a car8/15/2007
  Q: I live in MA, and as part of an arrangement we made to purchase a condo from a private seller my ...
  A: Tiffany, Here is a link to a MA website for transferring automobile titles: ...
selling a lot8/15/2007
  Q: my wife and i currently live in NC,we are in the process of making settlement on a lot in Pa we have ...
  A: Wilson, Honestly the only options are to sell the lot and pay the tax, or do what is called a 1031 ...
estate tax8/15/2007
  Q: I am executrix for as estate. No estate taxes will be due since the value of the estate is below $1 ...
  A: Sharon, Yes, you will need to file a 1041 for the estate. The IRS hasn't finalized the 2007 forms ...
Basis in Property with Life Estate8/15/2007
  Q: My 95-year old aunt transferred title to her home to me two years ago and retained a life estate. ...
  A: Larry, The code section applies to the estate's valuation of the life estate for Form 706 purposes, ...
Protecting Assets when Making Gifts to Children8/15/2007
  Q: We are considering gifting one of our children with a home they are currently renting from us. How ...
  A: Marilyn, I would consider creating an irrevocable trust and placing the house in the trust. This ...
Sale of an inherited house8/15/2007
  Q: My mom passed in 2006.We(5 sibblings) inherited the house. We are selling it August 2007 now that ...
  A: Shari, You and each of your siblings should be reporting 1/5 of the sale on your individual tax ...
Malpractice insurance8/15/2007
  Q: Is there any other way to deduct, besides on Form 2106, a physician's malpractice insurance premium ...
  A: Dan, Moving expense...I don't think that will fly. The revenue agent was correct in wanting to ...
tax lien, OIC8/14/2007
  Q: Here's my story in a nutshell: Due to a major mistake made by a lack of filing of some conversion ...
  A: Jeff, Unfortunately if #1 and #2 doesn't apply, then the 240 rule is irrelevant. You need to meet ...
tax lien, OIC8/14/2007
  Q: Here's my story in a nutshell: Due to a major mistake made by a lack of filing of some conversion ...
  A: Jeff, I'm sorry to hear about your experience. Somehow I'm not surprised hear about the finger ...
Basis in Property with Life Estate8/13/2007
  Q: My 95-year old aunt transferred title to her home to me two years ago and retained a life estate. ...
  A: Larry, The constructive use argument is a good try, but it doesn't work. In order to accomplish ...
who can claim a dependant?8/13/2007
  Q: I told my ex he could claim my son on his taxes for 3 years, starting with 06 to 08, even though my ...
  A: Kim, If your return is rejected online, then by all means file a paper return with an attachment ...
Basis in Property with Life Estate8/13/2007
  Q: My 95-year old aunt transferred title to her home to me two years ago and retained a life estate. ...
  A: Larry, I recently answered a similar question a couple of days ago. The person who asked question ...
who can claim a dependant?8/13/2007
  Q: I told my ex he could claim my son on his taxes for 3 years, starting with 06 to 08, even though my ...
  A: Kim, Under the new rules (starting with this year) if the children live with you more than half of ...
eldercare8/13/2007
  Q: My parents have reached a point where they can no longer stay alone. They do not, however, want to ...
  A: Kim, If you go with the gifting option, you would have no taxable income. Your parents would not ...
eldercare8/13/2007
  Q: My parents have reached a point where they can no longer stay alone. They do not, however, want to ...
  A: Kim, This may be something you can do yourselves or maybe have an accountant help set up. An ...
Home based business8/13/2007
  Q: I am trying to start a Home Business on the internet by joing a couple businesses( marketing ...
  A: Stephen, I would file your next tax return with a Schedule C. This form is for self-employed ...
Capital gains from trust8/13/2007
  Q: I am executor of a trust for which I can use the income to live on. I also have my own trust which ...
  A: Chuck, It depends if your trust document allows for capital gains to be passed to the ...
gifting a home8/13/2007
  Q: My mother wrote over the deed to her home to me("gifted it" to me). She left in the deed a ...
  A: Thomas, I would love to read the article you have referenced. When a property is placed into a ...
Capitol Gains - primary residence or rental property?8/12/2007
  Q: I recently built a new house on the Oregon coast which has already increased in value quite ...
  A: Alexis, As long as you have the Portland apartment, it would be hard to argue the beach house as a ...
tax-protecting a lump sum employee stock payout8/12/2007
  Q: My husband worked for a company in which he participated in an employee stock ownership plan. He no ...
  A: Tracey, Unfortunately, the only thing to do is report the capital gain on your tax return. ...
eldercare8/12/2007
  Q: My parents have reached a point where they can no longer stay alone. They do not, however, want to ...
  A: Kim, It depends on how much you will need to offset your salary. Each of your parents can gift you ...
newly married, bought a house, what to put on W-4?8/12/2007
  Q: I got married last July and we just bought a house this year. My husband lost his job and drew ...
  A: Tiffanie, You might not be doing anything wrong. If your husband collected unemployment benefits, ...
newly married, bought a house, what to put on W-4?8/12/2007
  Q: I got married last July and we just bought a house this year. My husband lost his job and drew ...
  A: Tiffanie, Try doing the calculator again. On the Deductions screen, input an estimate for mortgage ...
newly married, bought a house, what to put on W-4?8/12/2007
  Q: I got married last July and we just bought a house this year. My husband lost his job and drew ...
  A: Tiffanie, This is one of the hardest questions I get. The calculation is not hard. There are a ...
sale of house inherited8/10/2007
  Q: I received my share ($22,000)of the sale of my mother's house this year. (She died 2 years ago) How ...
  A: Autumn, The taxable amount from sale of your mother's house will be your share of the difference ...
Inheritence Tax8/9/2007
  Q: I'm receiving a small inheritance (less than $10k) and I'm curious how it will be taxed? Should I ...
  A: Sean, Beneficiaries do not pay inheritance taxes. Estates pay these taxes before final ...
inheritance/estate tax8/8/2007
  Q: My fiance recently purchased a new home for us. He paid cash (approximately $500,000 )and the home ...
  A: Jennifer, Texas is a community property state. Since the house was purchased before marriage it ...
Renting from my in-laws8/8/2007
  Q: My in-laws own a second home(not considered a vacation property) near their home. They would like ...
  A: Patty, There is no requirement that a second home needs to be a certain distance from the primary ...
Will I be responsible for my fiance's balance with the IRS8/7/2007
  Q: My fiance has a payment arrangement with the IRS for his 2005 return. Last year he was laid off and ...
  A: Shay, I might consider postponing the wedding until your fiance has settled up with the IRS. If ...
Estate/inheritence8/7/2007
  Q: I was just asked for my social security number by the accountant and Attorney for my Aunt's estate. ...
  A: Liz, Generally, you would receive your share of the estate from the attorney's office and the K-1 ...
Real Estate transfer8/7/2007
  Q: Due to financial problems, I have been paying my parents mortgage for about 4 1/2 years now totaling ...
  A: Andrew, I would discuss the situation with the mortgage company. They will probably suggest ...
Tax Treatment of a lump sum payout8/7/2007
  Q: An individual (over age 70) sold his share of ownership in his small business. As part of the term ...
  A: Lori, Having the new owners put money into the annuity is really the same as handing cash to ...
Estate/inheritence8/6/2007
  Q: I was just asked for my social security number by the accountant and Attorney for my Aunt's estate. ...
  A: Liz, This is a common occurrence. Estate's can generate income before assets are passed to ...
Real Estate transfer8/6/2007
  Q: Due to financial problems, I have been paying my parents mortgage for about 4 1/2 years now totaling ...
  A: Andrew, This sure is a messy situation. From a tax perspective, it's not too complicated. If the ...
Social Security/Sale of Land8/6/2007
  Q: My parents are retired and aged 75 and 78. The only income they receive is Social Security Income. ...
  A: Debra, The worst case scenario is your will be your parents will need to file a tax return and ...
Tax Treatment of a lump sum payout8/6/2007
  Q: An individual (over age 70) sold his share of ownership in his small business. As part of the term ...
  A: Lori, Unless the new owners would like to defer the final lump sum payment into another installment ...
giving money to family member without it being income...8/5/2007
  Q: I live in Michigan, and was wondering how much money a family member(father and mother, brother, ...
  A: Duane, There is no limit to the amount of money you can give to a family member. A long as it's a ...
More onTaxes on retirement funds8/5/2007
  Q: Neil, I am a single woman, nearing retirement, and am concerned about possible taxes my children ...
  A: Jane, The issue with the 403(b) account depends on the plan itself. Some 401(k) and 403(b) plans ...
Estate taxes on retirement funds8/5/2007
  Q: Neil, I am a single woman, nearing retirement, and am concerned about possible taxes my children ...
  A: Jane, I'm not sure where you read that qualified plans are not subject to federal estate taxes. ...
U.S. military + German national married tax implications8/5/2007
  Q: I am a U.S. military soldier and I recently married a German national (not a U.S. resident and no ...
  A: Ricky, Congratulations on getting married! Honestly, I really can't answer the question about the ...
Renting from my in-laws8/5/2007
  Q: My in-laws own a second home(not considered a vacation property) near their home. They would like ...
  A: Patty, Your in-laws will have to report the rental income and expenses on their tax return. When ...
Filing Form 10418/4/2007
  Q: A client of mine formed a revocable trust for tax planning purposes. It's a family trust and my ...
  A: Jeff, As long as the income is not being reported under the TIN of the trust, I would prepare 2007 ...
Filing Form 10418/4/2007
  Q: A client of mine formed a revocable trust for tax planning purposes. It's a family trust and my ...
  A: Jeff, Without reading the trust document itself, it is difficult to answer your question. If the ...
INSOLVENCY8/4/2007
  Q: Iam negtiating a short sale with the bank. I owe 400,000. The bank accepts 300,000. 1099s me for ...
  A: Jay, I apologize, but perhaps I'm not entirely clear what you are asking. The bank sends you a ...
Educational tax write-off for a small buisiness...8/3/2007
  Q: I'm an engineering intern for a small civil firm. I'm also a student of engineering. I'm curious ...
  A: Eli, The company is getting a deduction no matter the amount. You can receive $5,250 of benefit ...
Penalties for Not Taking IRA Distributions8/3/2007
  Q: My father had an IRA at the time of his death which I inherited. I had the acct retitiled in my ...
  A: Nancy, New rules were enacted 1/1/07 that allowed non-spouse beneficiaries to rollover IRA proceeds ...
Inhertance Tax8/2/2007
  Q: My wife will be receiving 1.7 million dollars from the death of her father. No property etc...only ...
  A: Alex, The is no income tax for the inheritance. There may be some income tax due on the amount of ...
INSOLVENCY8/2/2007
  Q: Iam negtiating a short sale with the bank. I owe 400,000. The bank accepts 300,000. 1099s me for ...
  A: Jay, The bank will issue a 1099-C for the $100,000. This amount will be reported on your tax ...
Educational tax write-off for a small buisiness...8/2/2007
  Q: I'm an engineering intern for a small civil firm. I'm also a student of engineering. I'm curious ...
  A: Eli, Your company can provide you with tuition assistance up to $5,250 per year, tax free to you. ...
Home selling question8/1/2007
  Q: I am remodeling my house to sell. I have lived here for 1 1/2 yrs and will have to relocate for my ...
  A: Kelly, If you lived in your house for less than two years, you can exclude a part of your gain on ...
tax on sale of home by estate8/1/2007
  Q: I am personal representative of my deceased brother's estate. He died intestate, with my two ...
  A: Patrick, The gain on the sale of his residence is the difference between the sales price and it's ...
selling off a lot8/1/2007
  Q: We are planning to buy a vacation home, which includes an extra lot, from our parents. After the ...
  A: Jane, Did you inherit the lot from your parents? If not, the fair market value for cost basis ...
Question about Duplexes7/31/2007
  Q: Neil, If I purchase a duplex and live in one while renting out the other, how do I account for it ...
  A: Wen, Half of the duplex would be considered a personal residence and the other half rental ...
401k cash out7/31/2007
  Q: I need to come up with $72,000 to buy out my soon to be Ex’s share of our house. My 401K is worth ...
  A: Mike, Can you borrow from your 401(k) plan? Most 401(k) plans have provisions to borrow up to half ...
taxes on sale of second nonrental home7/30/2007
  Q: We are selling our second home, which we use for personal/vacation purposes. We do NOT rent it out. ...
  A: Jennifer, Unfortunately, you will have to pay tax on the capital gain. Be sure to gather all of ...
pre construction condo7/30/2007
  Q: I put a 20% down payment down and now the market is falling. I am considering walking away from my ...
  A: Lou Ann, The loss would be considered a capital loss. Capital losses can be used to offset capital ...
Renting from my in-laws7/30/2007
  Q: My in-laws own a second home(not considered a vacation property) near their home. They would like ...
  A: Patty, Your in-laws can charge you below market rent. If they incur any tax losses on the property, ...
Tax Exemption- income7/28/2007
  Q: I am writing this because I filed for a tax exemption from state and federal taxes with the human ...
  A: Kathy, For 2007, you wouldn't pay any Federal income tax on the first $5,350. I don't know what ...
family trust tax7/28/2007
  Q: my dad died this past march after having set up a family trust. the house just recently sold for ...
  A: Catherine, This a little difficult to answer because it really depends on when the house was ...
Trust accounts and taxes7/27/2007
  Q: I have a hypothetical question. If the rent for a dwelling is paid out of a trust account and the ...
  A: Lon, In many ways this more of a legal question than a tax question. Here's what I do know about ...
How are unpaid loans taxed back?7/27/2007
  Q: Neil - I used to be a minority shareholder (1%) of a small sub-S corp. I took small loans from the ...
  A: Chris, You shouldn't receive amended W-2 forms for 2005 or 2006. If reported correctly, you would ...
Stipend Tax Question7/26/2007
  Q: I am a fellow and receive a stipend. At the end of the year I receive a 1099MISC tax form. I am not ...
  A: Sherri, Under these circumstances, yes you would be considered self-employed. First, you would ...
Capital Gains Tax on Sale of Rental Property7/26/2007
  Q: I purchased a property in late 2006--used it as a rental property and then after holding it for less ...
  A: Michael, It depends on a couple things. First it will depend on how much your gain is and much the ...
Joint Tenancy w/Rights of Survivorship7/25/2007
  Q: My wife's dad passed away on 1/31/07 and she was the only joint owner on his home (his wife passed ...
  A: Fran, If your father-in-law didn't report the non deductible loss on his 1997 tax return, he should ...
Joint Tenancy w/Rights of Survivorship7/25/2007
  Q: My wife's dad passed away on 1/31/07 and she was the only joint owner on his home (his wife passed ...
  A: Fran, On 7/15/97 your father-in-law's cost basis on the PA home would be one-half of the original ...
Capitol Gains Tax on primary residence.7/25/2007
  Q: We are selling our home that we lived in for just over a year in a rent-to-own situation, and have ...
  A: Kimberly, If you have lived in your residence over one year the capital gains tax rate is 15% for ...
LLC Withholding7/24/2007
  Q: I am starting an LLC with a partner. We are going to file as a partnership; my understanding of ...
  A: Emily, A simple question without a simple answer. Each member (LLC term for partner) will need to ...

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