Tax Deductions and Credits TurboTax Answers Your Most Common Tax Questions Read the Article Open Share Drawer Share this:Click to share on Facebook (Opens in new window)Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Pinterest (Opens in new window)Click to print (Opens in new window) Written by TurboTaxBlogTeam Published Feb 15, 2012 4 min read Tax season is here and with every tax season comes a lot of great tax questions. Tax Questions Here are some of the most common tax questions from job seekers, parents, baby boomers, and homebuyers this tax season: 1. Job Seekers-With an average unemployment rate of 9.7%, millions of Americans were hunting for a new job in 2011. If you were one of them, your job search, moving expenses, and home office expenses might be tax deductible. Can I deduct the cost of searching for a job? All those resume copies, employment, outplacement agency fees, career seminars, and even business related travel might be deductible if you were looking for a new job. Are moving expenses for my new job tax deductible? Moving expenses related to a new job may be tax deductible if you meet the distance and time test. Are unemployment benefits taxable? Many people are asking if the first $2,400 of unemployment income is tax free, however that tax benefit expired December 31, 2010. I started my own business, can I deduct my home office expenses? Many entrepreneurs are hesitant to write off the business use of their home, however there are many deductions they can take advantage of and shouldn’t miss out on. 2. Parents– Being parents can be hard work and costly. Whether you have new additions to the family, college-bound students or kids in day care, at tax time you might be getting a little extra money back in your pocket. Who qualifies as a dependent? This is one of our most frequently asked questions today, due to the changing dynamics of relationships. Many taxpayers are surprised to find out who qualifies as a dependent. What are qualified education expenses? The U.S. government provides incentives, in the form of education tax credits and deductions, to help decrease the economic impact of pursuing a college education. If you paid eligible education expenses for you, your spouse, or your dependent, you may qualify for one of these tax benefits. Can I deduct the costs of daycare for my children? If you paid for child care, dependent care, or even summer camp so you could work, you may be eligible to deduct 20 to 35 percent of qualifying expenses up to $3,000 for one qualifying individual and up to $6,000 for two our more qualifying individual. How do I claim the adoption credit? If you chose to adopt, you may be eligible to take a Qualified Adoption Tax Credit up to $13,360 for qualified expenses associated with the adoption. 3. Baby Boomers – There are 78 million boomers nearing or already enjoying the benefits of retirement, and with these life changes comes common tax questions: Is my social security income taxable? Social Security income is not always taxable, however all of your income sources need to be taken into consideration when figuring out how much of your social security income will be taxed. How do the new reporting requirements for cost basis impact me? Effective 2011 brokers are now required to include the cost basis of investments sold if they were purchased in 2011 and after. Since this is a new law, you will still be responsible for the cost basis on previous equity purchases that were sold. What are the tax implications of taking money out of a retirement account to pay bills/debt? Taking money out of your retirement account to pay off debt may seem like a good idea at the time, but withdrawing from your retirement can be costly. If you haven’t reached the age of 59-1/2, you not only will pay taxes based on your tax bracket, but also an additional 10% tax. 4. Homebuyers/Homeowners -Whether you were were one of the 302,000 new homeowners in 2011 or long-time homeowners, there may be tax deductions available to help offset some of the financial costs of being a property owner. What can I deduct in a mortgage refinance? If you have taken advantage of lower interest rates and refinanced your home, you may be able to take a tax deduction for the points paid(loan origination fees) to refinance your home loan. What qualified for home energy tax credits in 2011? The Residential Energy Tax Credit was reduced in 2011, however you still may be able to deduct up to $500 for insulation, roofs, and doors. How do I repay the 2008 First-Time Homebuyer Tax Credit? If you were lucky enough to receive First-Time Homebuyer Tax Credit in 2008, you were supposed to start repaying the tax credit in 2010 over 15 years through your tax return. Still have more questions? Don’t worry. TurboTax guides you step-by-step through entering the appropriate information, makes behind the scenes calculations, and puts your tax information on the appropriate tax forms. In addition, TurboTax tax experts are available to provide personalized guidance so that you can be confident you are getting the biggest tax refund and that your taxes are done right. Previous Post Expanded Qualified Adoption Tax Credit Rules Next Post Everyday Taxes in Five Major U.S. Cities Written by TurboTaxBlogTeam More from TurboTaxBlogTeam 91 responses to “TurboTax Answers Your Most Common Tax Questions” « Older Comments If I save $77 by contributing to a 401K, but have to file using TurboTax Plus rather than the Free basic, what do I end up getting? Reply I have a tax i.d. number for my small at home T-shirt Business but I have not started yet. I have purchased over fourteen hundreds dollars in equipment can I file taxes on that. What format do I use 1040 individual forms. Please let me know oe. L. Marie White . Reply I all ready filed my taxes and received them, I dedicated $500.00 to my IRA, but haven’t sent it in yet. Need to get my van fixed to get back forth to work. What happens if I don’t send my payment for my IRA in? Reply I received my federal refund check finally and do you know that they forgot to print my full first name from my tax for; they only put the first initial of my first name and then my last name who do I report this to because no one will cash my check the bank won’t even let me deposit it with out the full first name any suggestions? Reply The IRS will issue a tax refund with your name as it wa on your return. However, mistakes do take place and if your name is incorrect you will want to contact an IRS customer service representative by calling 800-829-1040 (toll-free) Monday to Friday, 7 a.m. to 7 p.m., local time (8 a.m. to 8 p.m. in Puerto Rico, local time). If yu are unable to call or would like to speak to a representative in person you can go to your local IRS branch office and speak with someone there to get the process of issuance of a corrected check started. You can go to http://www.irs.gov/uac/Contact-Your-Local-IRS-Office-1 to locate the branch near you. Reply Hi Angela, Your name on any refund check you receive will be spelled the way it appears on your tax return. If you notice that it is correct on your return (as in it has your full name), then the IRS may have had a technical glitch when issuing your check. Regardless, you should contact them toll-free at 1-800-829-1040 to correct your name over the phone and request that they reissue your refund check. Thank you, Nicolle Lesuer Reply My mother in law lives with us. She pays us for caring for her. Do I need to file that extra income on my taxes. And if so how do I do it? Reply Greetings, Sandy All income you and your husband receive needs to be reported on your income tax return. To properly report this income, a question arises as to whether you and your husband provide services to your Mother-in-law as employees or as self-employed independent contractors. IRS Publication 926 helps us answer this question by specifically stating: “You have a household employee if you hired someone to do household work and that worker is your employee. The worker is your employee if you can control not only what work is done, but how it is done” “If only the worker can control how the work is done, the worker is not your employee but is self-employed” from http://www.irs.gov/publications/p926/ar02.html#en_US_2014_publink100086722 Therefore, this comes down to the level of control you and your husband have over what you do for you Mother-in-law and how you do it. If one of these elements is not true in assessing an employer-employee relationship, then you and your husband are self-employed. On the premise of you and your husband are self-employed, you report this income into TurboTax as a business. In TurboTax (Home & Business version), you will generate a business profile and enter your earned income received from your Mother-in-Law as “General Income”. Here is how to do this: Once your business profile is created, please do the following: •Click “Start” next to “Business Income” > •Click “Start” next to “General Income” > •Enter a description and the amount of income you are reporting > •Continue If you and your husband determine you are employees of your Mother-in-Law, a W-2 and W-3 Transmittal needs to be generated to report your W-2 income. Best regards, TurboTaxDougR Reply Hi Sandy, You will need to report any cash income you receive for services provided during the year. From the IRS: The IRS considers all income received in the form of money, property or services to be taxable income unless the law specifically provides an exemption. The amount you were paid can be easily added to your return in Turbotax by clicking the Personal Income Tab, then by clicking “I’ll choose what I work on”. and scrolling down to the LESS COMMON INCOME section, near the bottom of the page, and click START on Miscellaneous Income. Here you can select “Other reportable income” near the bottom of the page, and enter your amount. Reply How do I itemized if my husband, whom I was separated from most of last year but not legally, is filing HOH with qualifying dependents? Turbotax ask me if he is taking the standard deduction and when I say yes, it changes me to the standard deduction. Thank you. Reply How do I itemize? Reply « Older Comments Leave a ReplyCancel reply Browse Related Articles Crypto Understanding Crypto and Capital Gains Work 7 Things You Need to Know About the New Business Report… Work Using Form 8829 to Write-Off Business Use of Your Home Tax Tips Roth 403(b) vs. Roth IRA: Which Should You Invest In? 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If I save $77 by contributing to a 401K, but have to file using TurboTax Plus rather than the Free basic, what do I end up getting? Reply
I have a tax i.d. number for my small at home T-shirt Business but I have not started yet. I have purchased over fourteen hundreds dollars in equipment can I file taxes on that. What format do I use 1040 individual forms. Please let me know oe. L. Marie White . Reply
I all ready filed my taxes and received them, I dedicated $500.00 to my IRA, but haven’t sent it in yet. Need to get my van fixed to get back forth to work. What happens if I don’t send my payment for my IRA in? Reply
I received my federal refund check finally and do you know that they forgot to print my full first name from my tax for; they only put the first initial of my first name and then my last name who do I report this to because no one will cash my check the bank won’t even let me deposit it with out the full first name any suggestions? Reply
The IRS will issue a tax refund with your name as it wa on your return. However, mistakes do take place and if your name is incorrect you will want to contact an IRS customer service representative by calling 800-829-1040 (toll-free) Monday to Friday, 7 a.m. to 7 p.m., local time (8 a.m. to 8 p.m. in Puerto Rico, local time). If yu are unable to call or would like to speak to a representative in person you can go to your local IRS branch office and speak with someone there to get the process of issuance of a corrected check started. You can go to http://www.irs.gov/uac/Contact-Your-Local-IRS-Office-1 to locate the branch near you. Reply
Hi Angela, Your name on any refund check you receive will be spelled the way it appears on your tax return. If you notice that it is correct on your return (as in it has your full name), then the IRS may have had a technical glitch when issuing your check. Regardless, you should contact them toll-free at 1-800-829-1040 to correct your name over the phone and request that they reissue your refund check. Thank you, Nicolle Lesuer Reply
My mother in law lives with us. She pays us for caring for her. Do I need to file that extra income on my taxes. And if so how do I do it? Reply
Greetings, Sandy All income you and your husband receive needs to be reported on your income tax return. To properly report this income, a question arises as to whether you and your husband provide services to your Mother-in-law as employees or as self-employed independent contractors. IRS Publication 926 helps us answer this question by specifically stating: “You have a household employee if you hired someone to do household work and that worker is your employee. The worker is your employee if you can control not only what work is done, but how it is done” “If only the worker can control how the work is done, the worker is not your employee but is self-employed” from http://www.irs.gov/publications/p926/ar02.html#en_US_2014_publink100086722 Therefore, this comes down to the level of control you and your husband have over what you do for you Mother-in-law and how you do it. If one of these elements is not true in assessing an employer-employee relationship, then you and your husband are self-employed. On the premise of you and your husband are self-employed, you report this income into TurboTax as a business. In TurboTax (Home & Business version), you will generate a business profile and enter your earned income received from your Mother-in-Law as “General Income”. Here is how to do this: Once your business profile is created, please do the following: •Click “Start” next to “Business Income” > •Click “Start” next to “General Income” > •Enter a description and the amount of income you are reporting > •Continue If you and your husband determine you are employees of your Mother-in-Law, a W-2 and W-3 Transmittal needs to be generated to report your W-2 income. Best regards, TurboTaxDougR Reply
Hi Sandy, You will need to report any cash income you receive for services provided during the year. From the IRS: The IRS considers all income received in the form of money, property or services to be taxable income unless the law specifically provides an exemption. The amount you were paid can be easily added to your return in Turbotax by clicking the Personal Income Tab, then by clicking “I’ll choose what I work on”. and scrolling down to the LESS COMMON INCOME section, near the bottom of the page, and click START on Miscellaneous Income. Here you can select “Other reportable income” near the bottom of the page, and enter your amount. Reply
How do I itemized if my husband, whom I was separated from most of last year but not legally, is filing HOH with qualifying dependents? Turbotax ask me if he is taking the standard deduction and when I say yes, it changes me to the standard deduction. Thank you. Reply