*****@gmail.com (Sacramento, CA)
Question: What are standard deductions in next
see this information in page "NEWS"
What expenses qualify for the education credits?
Answer: Expenses that qualify
for an education credit are qualified tuition and related expenses required for
enrollment or attendance at an eligible educational institution.
*****@yahoo.com (Richmond, TX)
Question: What types of educational expenses are
Answer: Deductible educational
spouse and I are filing separate returns. How can we split our itemized
Answer: If you and your spouse
file separate returns and one of you itemizes deductions, the other spouse will
have a standard deduction of zero. In this situation, the other spouse should
also itemize their deductions.
*****@yahoo.com (Richmond, VA)
Question: I am in a disaster area and heard the IRS
could help me. What can the IRS do?
Answer: If you have been
affected by a federally declared disaster, the IRS may help you by:
I donated a used car to a qualified charity for sale by the charity. I
itemize my deductions, and I would like to take a charitable contribution
deduction for the donation. Do I need to attach any special forms to my return?
What records do I need to keep?
Answer: Your recordkeeping and
filing requirements depend on the amount of your claimed deduction.
1) If you claim a deduction of at least $250 but not more than
$500 for the car donation, you will need a written acknowledgment from the
charity. The acknowledgment must be obtained by the earlier of the date you
file your return for the year of the donation, or the due date of the return
with extensions. The acknowledgment must include the following:
• A description of the car.
• A statement as to whether the charity provided any goods or services in
return for the car and, if so, a description and good faith estimate of the
value of the goods and services.
Do not attach the written acknowledgment to your return. Instead retain it with
your records to substantiate your donation.
2) If you claim a deduction of more than $500 but not more
than $5000 for the car donation, you will need to attach to your return the
• Section A of Form 8283,
Noncash Charitable Contributions.
• A written acknowledgment from the charity that includes:
• Your name and taxpayer identification number.
• The vehicle identification number.
• The date of donation.
• A certification that the car was sold in an arm’s length
transaction between unrelated parties.
• The date the car was sold.
• The gross proceeds of the sale.
• A statement that the deductible amount may not exceed the amount
of such gross proceeds.
• A statement as to whether the qualified charitable organization
provided any goods or services in return for the car and, if so, a description
and good faith estimate of the value of the goods or services.
For this acknowledgement to be considered timely, generally it must be received
by you within 30 days of the sale of the car.
• In lieu of a written acknowledgment, the charity may provide you a
completed Form 1098-C,
Contributions of Motor Vehicles, Boats, and Airplanes.
3) If you claim a deduction of more than $5,000 for the car
donation, in addition to the items listed above (with the exception of Section A
of Form 8283), which you must attach to your return, you will need to complete
Form 8283,Section B and attach the form to your return. An appraisal is not
required if your deduction is limited to the gross proceeds of the sale.
Question: Is the mortgage interest and property tax
on a second residence deductible?
Answer: The mortgage interest
on a second home which you use as a residence for some portion of the taxable
year is generally deductible if the interest satisfies the same requirements for
deductibility as interest on a primary residence.
• Real estate taxes paid on your primary and second residence are,
generally, deductible. The limitation for mortgage interest on your primary and
secondary residence is $1,000,000 for acquisition indebtedness and $100,000 for
home equity indebtedness.
• Deductible real estate taxes include any state, local, or foreign taxes
based on the value of the real property levied for the general public welfare.
• Deductible real estate taxes do not include taxes charged for local
benefits and improvements that increase the value of the property, such as
assessments for sidewalks, water mains, sewer lines, parking lots, and similar
How do I know if I have to file quarterly individual estimated tax
Answer: You must
make estimated tax payments for the current tax year if both of the
There are special rules for:
*****@gmail.com (Sacramento, CA)
Question: Do self-employment taxes need to be paid
quarterly or yearly?
Answer: If you are required to
make estimated tax payments, self-employment tax is paid by making quarterly
estimated tax payments which include both income tax and social security tax.
For head of household filing status, do you have to claim a child as a
dependent to qualify?
Answer: In certain
circumstances, you do not have to claim the child as a dependent to qualify for
head of household filing status; for example, a custodial parent may be able to
claim head of household filing status even if he or she released a claim to
exemption for the child.
*****@gmail.com (Cypress, TX)
Question: I sold my principal residence this year.
What form do I need to file?
Answer: Generally, you need
only report the sale of your principal residence if you realized a gain on the
sale. To determine if you may exclude up to $250,000 of gain on the sale of your
principal residence (up to $500,000 for a joint return or a return by a
surviving spouse), refer to
Selling Your Home.
You may be entitled to exclude from income all or a portion of
the gain realized on the sale of your principal residence if during the 5-year
period ending on the date of the sale:
• You owned the property for at least 2 years; the 2- year
period need not be continuous (the ownership test).
• You must have lived in the property as your principal residence for at least 2
years; the 2- year period need not be continuous (the use test).
• During the 2-year period ending on the date of sale, you did not exclude gain
from the sale of another principal residence .
• If you owned and lived in the property as your principal residence for less
than 2 years, you may still be able to claim a reduced exclusion. See
Selling Your Home, for more information.
If you are required to report or choose to report a gain on
the sale of your principal residence, use Form
1040, Schedule D,
Capital Gains and Losses.
NOTE: If you (or your spouse) were on qualified official
extended duty as a member of the U.S. Armed Services or U.S. Foreign Service,
or as an employee of the intelligence community, you may elect to suspend the
five-year test period for up to 10 years. You may use this provision for only
one property at a time. Qualified official extended duty is any extended duty
while serving at a duty station at least 50 miles from the property or while
residing under Government orders in Government quarters. Extended duty is any
period of active duty following a call or order to duty, if the duty lasts for
more than 90 days or for an indefinite period.
Do I need to pay taxes on the additional stock that I received as the
result of a stock split?
Question: What is the basis of property received as a
Answer: To figure the basis of
property you receive as a gift, you must know 3 amounts:
If the FMV of the property at the time of the gift is less than
the donor's adjusted basis, your basis depends on whether you have a
gain or loss when you dispose of the property.
NOTE: If you use the donor's adjusted basis
for figuring a gain and get a loss, and then use the FMV for figuring a loss and
get a gain, you have neither a gain nor loss on the sale or disposition of the
If the FMV is equal to or greater than the
donor's adjusted basis, your basis is the donor's adjusted basis at the time you
received the gift. If you received a gift after 1976, increase your basis by the
part of the gift tax paid on it that is due to the net increase in value of the
gift. To figure the net increase in value or for more information on gifts
received before 1977, see Publication 551, Basis of Assets. Also, for
figuring gain or loss, you must increase or decrease your basis by any required
adjustments to basis while you held the property.
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