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Questions and Answers

Questions and Answers

Following is a list of answers to most common questions. However if your question is not listed here you can send us your question and we'll add it to this page as soon as possible.

To ask a question please click here.

Q:1. My marriage was annulled; and my ex-husband and I filed tax returns as a joint tax return, what must we do?
A: If you had children by a previous marriage other then the one that was annulled, you should file amended tax returns to claim "Head of Household" filing status; or "Single", for all years pertaining to the annulled marriage.

Q:2. I have two jobs, can I deduct any kind of expenses?
A: Yes, the expense of your second job would be the milage driven from your first job to your second job is deductable, including any un-reimbursed expenses. You should keep a log, these expenses would be entered on Schedule A.

Q:3. My Mother is in a Convalescent Home, and her retirement income is not enough to pay for all the medical attention, so I pay the rest. Would there be a deduction for me?
A: Yes, any medical expenses that you pay for your Mother would be deductible to you as medical expenses on your tax return, subject to the 7.5% exclusion.

Q:4. I am a single parient and have two children living in my home; my earned income is less then $10,100.00 would I have to file a tax return.
A: Yes, if you first had any federal taxes withheld you would need to file for the refund. And second, if you would like to receive earned income tax credit, this credit is about $4,008.00 for two children.

Q:5. My girlfriend lives with me, we are not married and we have one child, can I claim her on my tax return.
A: Yes, first you would qualify as Head of Houshold filing status because of your child. And you can claim your girl friend as a member of your household, provided she does not have any income for the entire year, and has a social security number. Don't forget to get a social security number for the baby!

Q:6. My son, James lives with me and is in college! He does have a job and files his own tax return. Am I allowed to claim Head of Household Filing Status?
A: Yes! As long as your son lives in your household, you can claim this status for taxpurpose.

Q:7. I received the additional $400.00 in child tax credit for 2002! Do I have to claim this as income on my 2003 tax return?
A: The $400.00 was an advance of the child credit for 2003. The credit was raised from $600 to $1000 per child. You will have to advise your tax preparer that you received the additional $400.00 and they will adjust your credit on your 2003 tax return.

Q:8. I baught some unimproved land upon which I may build a house someday. May I deduct the interest on the money I borrowed?
A: You can't claim a mortgage interest deduction because you have no second residence on the land and no current plans to build one. But you can treat the land as investment property and deduct the interest under the normal rules that apply to investment interest. You will remain free to later convert the land to residential use.

Q:9. I'm over age 59-1/2 and want to take tax-free distributions from my Roth IRA. I know it must have been set up for five years to do so. I set one up for the first year possible, 1998, but did so just before filing my return on April 15, 1999. So does my five-year period end at the end of 2003 or on April 15, 2004?
A: The good news for you is that your five-year waiting period has already ended. The five-year period runs from the beginning of the tax year for which the Roth IRA was created. That was January 1, 1998, for you, even though you actually opened the IRA in 1999. Thus, your five-year period ended on january 1, 2003 --- and you can take fully tax-free distributions right now.

Q:10. Because my new husband had an unpaid tax bill from a past year, the IRS kept our joint return refund for this year -- most of which was of taxes I overpaid. That doesn't seem fair. Is there any way I can get my refund back?
A: Yes. When one spouse owes a tax bill separately, the other can protect his/her portion of a refund on a joint return by invoking the Injured Spouse Rule. You can invoke the rule either after a refund has been taken by the IRS or beforehand to prevent the IRS from taking a refund in the first place. Do so by filing IRS Form 8379 (Injured Spouse Claim and Allocation). Get a copy from the IRS or your tax preparer.

Q:11. I run a food shop as a Schedule C business. If I donate food from it to a charity, may I get an extra deduction for a charitable contribution?
A: You can certainly make a charitable contribution of food and deduct your basis in it (its cost to you) on Schedule A on your tax return (assuming that you have enough deductions to itemize). But it won't be an extra deduction, because you cannot deduct the cost of your food inventory as "cost of goods sold" on your Schedule C.

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