How long should I keep my individual tax returns?
Generally, all taxes must be assessed within a 3 year period from the date the return was filed or the return's due date (with extensions) which ever is later. If the return has an understatement of more than 25% of the Adjusted Gross Income, the IRS gets an additional 3 years and a 6 year statute of limitations applies. For individual returns with partnership or S corporation flow-thru, I would recommend keeping them 6 years. If no tax return is filed or the return if fraudulent, the government can asses tax at any time without regard to the statute of limitations.
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How far back can the IRS audit my returns?
Generally 3 years, if there is underreporting of gross income exceeding 25% the statute of limitations is extended to 6 years. If no return is filed or the return is fraudulent the statute NEVER runs out!
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I inherited some stocks and property. How do I determine my tax basis?
Your tax basis is the Fair Market Value (FMV) of the property at date of death or if the estate elects 180 days after the date of death
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I received a large gift last year from my parents. Do I have to report is as taxable income?
The parents may want to check to see if they need to file a Gift Tax Return but there are no income tax consequences to you from the gift. However, any taxable income made off the gifted property is subject to income tax.
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What do I need to bring when I am having my taxes prepared?
Following is a list of the more common items you should bring if you have them.
- Wage statements (Form W-2)
- Pension, or retirement income (Forms 1099-R)
- Dependents' Social Security numbers and dates of birth
- Last year's tax return
- Information on education expenses
- Information on the sales of stocks and/or bonds, including cost basis
- Self-employed business income and expenses
- Lottery and/or gambling winnings and losses
- State refund amount
- Social Security and/or unemployment income
- Income and expenses from rentals
- Record of purchase or sale of real estate
- Medical and dental expenses
- Real estate and personal property taxes
- Estimated taxes or foreign taxes paid
- Cash and non-cash charitable donations
- Mortgage or home equity loan interest paid (Form 1098)
- Unreimbursed employment-related expenses
- Job-related educational expenses
- Child care expenses and provider information
And any other items that you think may be necessary for us to accurately prepare your taxes.
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What do I do if I receive a notice from the IRS about my taxes?
Don't panic! The first thing to do is carefully read the notice - to determine why it was sent, what the IRS is requesting, and what they want you to do. It may be nothing of importance; it may even be a notice in your favor. After reading it you should bring it to our attention.
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How do I find out about my refund?
The best way is to use the "Check Your Refund" link from our Web Links page of our website! To look up the status of your federal or state refund, you will need your social security number, filing status, and exact amount you're expecting back.
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What are the tax consequences of selling a home?
If you sell your personal residence you can totally exclude from income up to $250,000 of gain if you are single, or $500,000 if married, regardless of your age at the time of the saleif during the 5 years before the sale you owned the home and lived in it for a total of any 24 months. The exclusion is not a one-time election; instead it is available once every 2 years. Recent tax law has adversely changed the handling of gains on the sale of a home if you rented the property before you made it your personal residence. Please contact our office if you believe this situation will affect you.
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I received tax statements from my employer or bank after I filed my tax return. What should I do?
Contact us to let us know what type of document you received after filing your tax return. We will determine if it is necessary for you to file an amended return.
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I did not earn very much, do I still have to file tax forms?
There are many different items that could figure into answering this questionsuch as your filing status, your sources of income, whether you had any tax withheld, etc. This is a link to the IRS instructions for filing requirements: www.irs.gov/individuals/article/0,,id=96623,00.html or you can contact us for help.
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Is my Social Security taxable?
Usually if your income including social security benefits is less than $25,000 if single or $32,000 if married, your benefits are not taxable. If your income is higher than those limits, there are formulas to determine what percentage of your social security is taxable. Currently up to 85% of your social security may be taxable
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My employer tells me I will receive a 1099. What does this mean for my taxes?
When you receive a 1099, it means you are considered an independent contractor. You will not have any withholding or payroll taxes deducted from your pay. You should keep track of all business expenses and a journal of your mileage driven for work. If the amount you expect to receive is substantial, you should probably be making estimated tax payments. Please contact us if you have any questions about this.
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What is depreciation?
For tax purposes, depreciation is the expensing of the cost of an item over its estimated useful life. If property you acquire to use in your business is expected to last more than one year, you generally cannot deduct the entire cost as a business expense in the year you acquire it. You must spread the cost over more than one tax year and deduct part of it each year. This method of deducting the cost of business property is called depreciation. There are many different methods of depreciation and other rules that allow you to claim the expense in one year.
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Stine Heiser Buss & Assoc.
