Topics of Interest

IRS e-file

IRS e-file is the electronic transmission of your tax return to the IRS. USTaxes Inc provides free electronic filing of federal and state returns for all customers who pay for tax preparation. For a fee, we can also e-file a tax return that you prepared yourself, or that was not prepared by USTaxes Inc . This is called a Transmit-Only Return. Fees for Transmit-Only Returns are set locally by each USTaxes Inc office.

Real Estate Taxes

You may deduct real estate taxes in the year paid. They are generally reported on Form 1098, Mortgage Interest Statement , the annual statement from the financial institution holding your mortgage, or on your county real estate tax assessment statement. You should also deduct any prorated taxes collected from you at closing. These amounts are not always included on Form 1098, but may be itemized on your real estate closing statement.

Rental Property

If you own rental real estate, you should know how it impacts your personal tax return.  Rental income must be reported on your tax return, and generally, associated expenses can be deducted from your rental income.

Filing Status

The five IRS tax filing status categories are:

  • Single
  • Married Filing Jointly
  • Married Filing Separately
  • Head of Household
  • Qualifying Widow(er) with dependent child

When considering which tax filing status you can use, you should also consider: 

  • Your marital status on December 31 determines your  marital status for the entire year.
  • You cannot change your tax filing status from Married Filing Jointly to Married Filing Separately after the due date of the return.
  • If you and your spouse choose to file a joint return and there are state or federal taxes due, you will both be responsible for the debt.
  • A joint return requires both signatures. If your spouse is away from home, you should either sign the completed return and send it to your spouse to sign and mail, or obtain a power of attorney to allow you to sign for your spouse.

If more than one tax filing status applies to you, you should choose the one that gives you the lowest tax. Married Filing Jointly and Qualifying Widow(er) with Dependent Child usually give you the lowest tax and highest standard deduction, followed by Head of Household, Single, and Married Filing Separately, respectively.

Your marital status helps determine which tax filing status you qualify to use. You are considered unmarried for tax filing status purposes if you have never been married, or if your marriage has been annulled. You are also considered unmarried for the entire tax year if you are divorced or legally separated under a separate maintenance decree on the last day of the year.

Audits

If you receive an audit notice from the IRS, you need to acknowledge it and respond promptly. If you had your taxes prepared at USTaxes Inc, then you should contact your local office before sending information or additional money to the IRS in response to an audit notice. The IRS may have made an error in the amount they state you owe and the audit item may require the knowledge that only your tax professional can provide.

Returns that are examined are chosen either by computerized screening, by random sample or by an income document matching program. There are circumstances that may cause the IRS to examine your return more closely. For example, the IRS may request more information if your itemized deductions are very high or if you claim tax shelter losses. Your tax return may also be selected for examination on the basis of information received from third-party documentation, such as a Form 1099 or a Form W-2, that does not match the information reported on your return. You may also be selected to address the questionable treatment of an item on your tax return. If your business expenses or charitable contributions of cash are substantial in relation to your income, you may receive an audit notice. Many examinations result in a refund or acceptance of the tax return without change, but some may result in a change in tax liability.

Dependents

Claiming someone as your dependent may significantly reduce the tax liability on your federal tax return. You may be entitled to a $3,650 exemption per dependent and a Child Tax Credit of up to $1,000 per qualifying child under age 17. Claiming someone as a dependent may also affect your filing status. It may qualify you for the Head of Household filing status or the Qualifying Widow(er) filing status. Additionally, if you pay educational expenses for this person, claiming the person as a dependent may allow you take advantage of education credits, the tuition and fees deduction, or the student loan interest deduction. A dependent does not have to be your child. Dependents can include others who are either related to you, such as a parent, or who have lived with you during the entire year as a member of your household.

To claim a dependent you must not be able to be claimed as a dependent by any other taxpayer. In addition, you generally cannot claim an exemption on a dependent who is married if they file a joint return. You cannot claim a person as a dependent unless that person is a U.S. citizen, a U.S. resident, U.S. national, or a resident of Canada or Mexico for some part of the year. To be a dependent, the person must be your qualifying child or qualifying relative.

IRAs

An Individual Retirement Arrangement (IRA) is a tax-deferred savings plan for retirement. Earnings on a traditional IRA are not subject to tax until they are withdrawn. Contributions are limited to a combined total of $5,000 per year per taxpayer ($6,000 if at least age 50). IRAs are available to all taxpayers with earned income during the year.

Education Credits and Deductions

The education of your children, or even of yourself and your spouse, can be a major investment. Knowing if your college-age child is still a dependent, what scholarships are taxable, and which tax credits are available can be confusing. You need to consider your situation to determine which options are best for you. Tax planning is essential to make the most of these benefits. You should determine whether your adjusted gross income disqualifies you from using one of the options or whether your education expenses qualify for the benefit you are considering. The definition of qualified educational expenses differs between the different tax saving options. You should also consider issues other than tax, for example, the student’s eligibility for financial aid and who has control over the money used for college. In certain circumstances, it might be better to have the child pay the education expenses rather than the parent; in other circumstances, it might be better to have the parent pay the education expenses for the student.