Tax Tips: Experts answer frequently asked questions
The April 15 tax deadline is closing in. Get organized now, or you may be caught in a last-minute scramble that results in mistakes and missed opportunities.
To help you begin, here are highlights from Newsday's recent Tax Help webchats, during which six hours of taxpayer questions were fielded by members of the Nassau County and Suffolk County chapters of the New York State Society of CPAs.
Remember, these answers can't substitute for an adviser who knows your individual situation.
Question: Who must file a 2013 tax return?
The answer depends on your filing status and age as well as on your gross income. (For details, see http://www.irs.gov/publications/p554/ch01.html). But you may want to file a return even if you don't have to -- to claim a refund or an earned income credit, for example.
-- Jill S. Scher, Gettry Marcus CPA, PC
Question: I haven't received a W-2 form and my former employer is out of business. How can I get the information I need to file my return?
Use your last pay stub to estimate your wages and taxes withheld, and file Form 4852 with your return.
-- Alex Resnick, Wild, Maney & Resnick LLP
Question: Must my husband and I file jointly?
Married couples can file jointly or as "married filing separately." A joint return usually results in a lower tax, but there are exceptions. For example, filing separately can sometimes reduce a couple's tax bill by letting them claim a big deduction against one salary.
-- Dov Zaidman, ZBS Group LLP
Question: We've been married but separated in the same house for many years. I live upstairs and she lives downstairs. She finally moved out last summer. Can I file as single?
Only if you have a divorce decree or a formal decree of legal separation.
-- Elliott Lavietes, Sanders Thaler Viola & Katz LLP
Question: We're married filing separately. Can we both claim the mortgage interest?
Real estate taxes and mortgage interest can be deducted only by the person or persons who a) own the house and are liable for the mortgage, and b) made the payments. If you own the house jointly and paid these amounts from a joint account, you can split the deduction.
-- Gary M. Goldberg
IS IT TAXABLE?
Question: I moved stocks from one brokerage to another. They gave me a $600 "bonus" for the transfer and reimbursed the $80 fee charged by the old brokerage. Is either amount taxable?
Nice going, but you must report both as taxable income.
-- Jack Angel, Adelphi University
Question: Must I report tax refunds?
Federal refunds aren't taxable. But if you took an itemized deduction for state income taxes on your 2012 federal return, this year you must report your 2013 state refund as income on line 10 of Form 1040.
-- John P. Spinelli
Question: I worked in Ohio for a month and received an Ohio W-2. Must I pay Ohio and New York taxes?
You must file a nonresident Ohio tax return, but you'll receive a credit on your New York return for taxes you paid on income earned in Ohio.
TAXES AND CHILDREN
Question: I had my first child in 2013. What should I know when filing my tax return?
Start by getting your child a Social Security number, which you must report on your return to claim tax benefits. You'll get another exemption and a child tax credit, and a child and dependent care credit too if you paid for day care. You may also qualify for the earned income credit. And if you're single, you can file as a head of household, which lowers your overall tax bill.
-- Donald R. Crotty, Marcum LLP
Question: I'm single and adopted my daughter in November 2013. Can I file as head of household even though she didn't live with me for half the year?
Yes. That rule is waived for children born or adopted in the prior year. You could file as head of household if you gave birth to (or adopted) a child on Dec. 31 at 11:59 p.m.
Question: My 25-year-old son made less than $4,000 and lived in my house all year. Can I claim him as a dependent?
Not as a dependent child. But if he earned less than $3,900, you can claim him as a qualifying dependent relative.
-- Scott Sanders, Sanders Thaler Viola & Katz LLP
Question: Can we deduct animal foster care expenses? We've cared for a senior diabetic cat for 20 months. With little hope of an adoption, we decided to bring him into our family officially at the end of last year.
That's lovely -- and you may deduct unreimbursed expenses as charitable contributions if you fostered him for a registered nonprofit organization. But they're deductible only up until you decided to make him your pet!
-- Cari Mantiega, Sheehan & Co.
Question: I bought a house I'm turning into a rental property. Can I deduct expenses -- like $10,000 for a new roof?
You can usually deduct minor repairs to a rental property in the year you pay for them, but more significant repairs must be "capitalized" -- i.e., you take a portion of the expense each year through depreciation. A new roof is capitalized over 27.5 years, so you'd get an expense deduction of $364 ($10,000 / 27.5 years) per year.
Question: I had no health insurance part of the year and paid many medical bills for myself and my child. Can I claim them, as well as my health insurance premium?
You can take an itemized deduction for both health care expenses and premiums for yourself and your dependent child, but only to the extent that they exceed 10 percent (7.5 percent if you were 65 or older last year) of your adjusted gross income.
-- Robert J. Schaffer, Castellano Korenberg & Co.
Question: Can I claim anything for college loans I pay for my 27-year-old daughter? She already takes the maximum deduction for the loans she's paying.
If the loans are in your name and she was your dependent when they were taken out and you meet income eligibility requirements, you can take an interest expense deduction. If the loans are in her name, your payments are considered a gift to her -- and there's no deduction for that.
-- Pamela Diamond
Question: Do I get a tax deduction for contributions to my granddaughter's 529 plan?
529 contributions aren't deductible on your federal return. But if the 529 is a New York State plan, you can deduct up to $5,000 of contributions on your state tax return.
-- Ruth A. Sattig Betz
Question: In 2013 I spent over $60,000 to replace a car, major appliances and other items destroyed by superstorm Sandy. I have receipts. Can I deduct the sales taxes?
Yes. If you itemize, you can take a deduction for the sales taxes you paid last year instead of deducting your 2013 state and local income taxes. (You can't deduct both.) You can calculate the sales tax deduction by using either your receipts or the IRS tables and work sheet.
-- Jacquelyn Paccione, Sheehan & Co.