Live chat: CPAs answer personal and business tax questions

A panel of certified public accountants from the New York State Society of CPAs answered readers' questions about personal and business taxes from noon to 3 p.m. today.

The certified public accountants assisting in the Tax Help live webchat hosted by Newsday can answer general questions, but the answers are not a substitute for individualized advice and guidance from a professional Tax Advisor who is hired by you and has full knowledge of your specific circumstances or needs. Newsday makes no representations or warranties of any kind as to information given by the Tax Help accountants, and under no circumstances will it or the accountants be liable to any participant or other person for damages of any nature arising in any way from the use of such information.

LIVE CHAT TRANSCRIPT

Moderator: Welcome to our live chat, which begins today at noon. Ask your tax questions ahead of time by submitting them in the box below.

Tuesday March 6, 2012

10:25
Moderator: We're about 90 minutes away from today's live chat. Keep your questions coming and check back later to see what the panel of CPAs has to say.

12:00
Moderator: We're just a few minutes from getting started. We have four CPAs here to answer questions. They are ...

12:01
Hello I'm Leonard Hoffman of Bayer and Hoffman CPAs in NY and Florida

12:02
Hello, I'm Donald Crotty, CPA from Marcum LLP.

12:02
Hi my name is Bob Schaffer from Castellano Korenberg & Co CPAs PC in Hicksville NY

12:02
Hello, my name is Diane Giordano. I am a CPA and a Tax Partner at Marcum LLP in the Melville, NY office.

12:02
Comment From Kevin
I got married in July. what's my filing status? do i need to file 2 returns

12:03
Kevin, you are considered married at the last day of the year and you and your wife have the choice of filing one return jointly or two “married filing separately” returns.

Sophisticated software gives you guidance to decide which is more beneficial.

12:03
Comment From Tiffany
I already filed (personal), but realized I made a mistake. What should I do?

12:03
Bob: You should file amended federal and state returns.

12:05
The certified public accountants assisting in the Tax Help live webchat hosted by Newsday can answer general questions, but the answers are not a substitute for individualized advice and guidance from a professional Tax Advisor who is hired by you and has full knowledge of your specific circumstances or needs. Newsday makes no representations or warranties of any kind as to information given by the Tax Help accountants, and under no circumstances will it or the accountants be liable to any participant or other person for damages of any nature arising in any way from the use of such information.

12:06
Comment From melissa
i submitted my taxes on january 27th my state was accepted on the 31st and i have yet to recieve my refund. when should i expect that?

12:06
Generally, you'll get your refund in six to eight weeks from the date NYS receives your return. You'll get it faster if you e-filed your return and if you choose to have your refund deposited directly into your bank account.

You can check the status at this website: https://www8.tax.ny.gov/PRIS/prisStart

12:09
Comment From Jo
What is the American Opportunity Tax Credit?

12:10
Diane: The American Opportunity Tax Credit is a tuition credit. This credit modified the former Hope Credit. The credit can offset tax up to $2,500 of tax per eligible student depending on filing status and income.

The full credit is available to individuals whose modified adjusted gross income, which is basically total income before deductions, is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels.

The credit is available for the first four years of post secondary education. Depending on your tax, a portion of the credit may be refundable.

12:10
Comment From chris
I was in a graduate program while I was a teacher from 2008-2010.. I paid the college as I took courses and did not take a loan. Can I go back in my tax returns and claim my education expenses?

12:10
Chris
answer from Len Hoffman
If you are a graduate student as a teacher already working as a teacher, you can generally deduct expenses to further enhance your profession. If your graduate coursework is for a different profession, it is not deductible.

12:12
Comment From Debbi
Should a college student with a part-time job still file as my dependent?

12:15
Bob: Yes. A full time college student under 24 is claimed as your dependent.

If it would be more beneficial for your child to claim the education credit then you would not claim a dependency exemption for the child on your return. Your child however cannot claim the dependency exemption either.

12:15
Comment From jeff
i started my own business this year, is there a limit of how much start-up costs i can writeoff

12:16
Answer from Don: "Start up" costs are costs that you've incurred before you officially started doing business. "Organization" costs are costs related to forming the company. Generally if either of these costs are under $5,000, you can deduct them in full. If the costs exceed $5,000, then you may have to spread the amount over $5,000 over 15 years. For example, if you have $4,000 of start up costs and $2,000 of organization costs, then you can deduct all $6,000 since each type of cost is under $5,000.

12:16
Comment From Roz
Is there an age limit on claiming my child as a dependent?

12:16
Diane: Generally, the age limit is 19, or 24 if the child is a full time student at the end of the calendar year. There are additional support and earnings limits that also may apply. Further, the age limits may be extended if the child is disabled.

12:16
Comment From Jessica
I changed my last name this year but what name do I use on my taxes?

12:17
Jessica
Answer from Len Hoffman
If you changed your name with the Social Security administration, that is your name for tax purposes

12:18
Comment From mb
i owe on my fed return, if i pay part of it , do i pay int and penalties on the whole sum or just what i have shorted them?

12:21
Bob: You would only owe interest and a late payment penalty on the balance not paid by April 17th.

12:22
Comment From Jackie
If I Purchased a 2012 car in sept 2011 can I write off the sales tax?

12:24
Answer from Don: If the car is used for personal use, then you can deduct the sales tax as an itemized deduction for state SALES taxes. However, you may be better off deducting state INCOME taxes (e.g. state withholding from wages) if those taxes result in a higher deduction. Add up both types of taxes and see which one is higher. You can't deduct both...

12:24
Comment From readerm
I misunderstood the rules for 529 plans and put $5,000 more than the $10,000 limit into my kids' plans in one year. I know I can't deduct the extra $5,000. How should I treat the withdrawal of the extra $5,000.

12:25
Diane:
You can still keep the $5,000 as a deposit in the Plan, but you will not get a deduction. (I assume this is the NYS 529 Plan.) The earnings will continue to grow tax deferred.

If you need to take back the $5,000, I would first suggest that you contact the NYS College Savings Program and inform them that this was an error. The Plan may return the funds as if it was not deposited.

12:25
Comment From Anthony
Hello - I have a zero coupon muni bond that matured in 2011, triple tax free, no gain or loss. Do I have to file Schedule D and Form 8949 with my 1040 and IT 201? I did receive a 1099B.

12:25
Anthony
Answer from Len Hoffman
Whenever you received 1099B proceeds the government expects you to file a return to reconcile the gain or loss. They do not presume to know if there is no gain or loss.

12:27
Comment From Rich
My son is a full-time college student. I pay the tuition. Can I take the tuition as a deduction on my return?

12:32
Bob: Yes as long your child is under 24 and you qualify based on your income level. You may also qualify for the American Opportunity education credit depending on your income level. There is also a NYS credit available.

12:32
Comment From Paul
I short sold my condo in NY & moved to NE. Is there any tax liability on my part for the bank write-off on my mortgage? Tax preparer in NE not sure. Thanks

12:32
Diane:
Income from the discharge, in whole or in part, of qualified principal residence indebtedness that occurred before January 1, 2013 is excluded from gross income.

You should be receiving a form 1099 from the bank. The income should be reported and then backed out of income.

Suggest that your accountant look at IRS Code Section 108 so that the presentation is reported properly.

12:33
Comment From Aaron
My Dad died in July 2010 ,my mom sold the house in April 2011-They were married 60 years and the only home they owned.Whats the rules for Mom selling the house & the Best way 2 report it to IRS ?

12:33
Aaron
Answered by Len Hoffman
The home presumably has appreciated and is qualified for the exclusion of up to $500,000 of gain. Alternatively, as a surviving spouse, the step up in basis for half the home may exceed the benefit from one-half the exclusion so either or one method may your mom’s choice of reporting the gain.

12:34
The certified public accountants assisting in the Tax Help live webchat hosted by Newsday can answer general questions, but the answers are not a substitute for individualized advice and guidance from a professional Tax Advisor who is hired by you and has full knowledge of your specific circumstances or needs. Newsday makes no representations or warranties of any kind as to information given by the Tax Help accountants, and under no circumstances will it or the accountants be liable to any participant or other person for damages of any nature arising in any way from the use of such information.

12:35
Comment From Michelle
I have 2 children in college and claim them as dependents. They also work and received W2's. Do they file even though I claim them??

12:35
Answer from Don: It depends on the amount of income. If its under $9,500 (for each child), then they will not have to file their own return. However, if there was federal or state withholding deducted from their wages, they should probably file a return to get the withholding refunded. You can still claim them as dependents even if they file their own return (assuming they meet all of the other tests to claim a dependent).

12:36
Comment From January
Are legal costs from divorce tax deductible?

12:36 January
Answered by Len Hoffman
Your simple question requires a very long answer which begins it depends..

12:39
Comment From vito
we have a start up mobile food vendor business..how do we depreciate professional equipment, i.e., stove, refrig/freezer. Also we pull a trailer with a pic up truck (we don't own the truck) (the trailer is on a scheduled payment) how do we depreciate them? Also what about perishables I have to throw out everyday

12:43
Bob: You can claim Section 179 expense and deduct it currently if you have net income. IIf not it can be carried over. Or you can take 100% bonus depreciation for 2011 or 50% for 2012. A trailer is depreciated over 5 years. You cannot take depreciation on the truck you do not own but can take any expenses you incur. You can take the perishables you have lost as an expense.

12:43
Comment From Justin
How do I deduct mileage if I used my own car for work?

12:43
Diane: The business standard mileage rate, which many employers use to reimburse employees for business miles driven, is 55.5 cents-per-mile for 2012. (This was recently announced by the IRS.) This reflects no change from 2011.

There are several methods permitted by the IRS for deducting ordinary and necessary expenses incurred while operating an automobile for trade or business purposes.

Depending on their automobile usage, taxpayers may have several options for calculating the deduction. They may use the actual expense method,and include gas, oil, repairs, tires, insurance, registration fees, licenses, and other qualified expenditures.

Alternatively, taxpayers may use the business standard mileage rate set by the IRS and noted above.

The business portion of mileage may be allowed as a deduction.

12:43
Comment From Ramon!
I just bought a single family home. I plan on doing some repairs, like installing a hardwood floors, painting, and I'm thinking about moving the basement stairs. Should I be keeping receipts for all the costs going into these repairs?

12:44
Ramon
Answered by Len Hoffman
You started a new file on a new home. Keep all of your receipts for improvements that enhance the value of the home. (Paint withers and is not an improvement.) In the future, all the costs can increase the basis of your home and reduce a future taxable gain.

12:45
Comment From Brian G
My daughter made $1560 income last year as a high school student. I'm pretty sure she does not need to file especially since she did not have any taxes federal or state income taxes withheld and therefore is not seeking a refund. Is this correct?

12:46
Diane: Yes, Brian, you are correct. As long as no taxes were withdrawn, then she will not be required to file. However, if she has other income, such as interest and dividends in excess of $950, or any reportable capital gains, then there might be a filing requirement.

12:47
Comment From emily
can i write off any health expenses even if i get health insurance through my job? can i write off stuff they don't cover?

12:47
Answer from Don: You can deduct medical expenses as an itemized deduction on your tax return. However, the amount of costs that you can deduct must exceed 7.5% of your income. So let's say you earn $40,000 of wages, only the medical costs that exceed $3,000 are deductible... (continued)...
 

Answer from Don continued: If your employer offers a Flexible Savings Account (FSA), you can reduce your wages by up to $2,500 to cover these types of costs. This is the most efficient way to get a tax benefit for paying for medical costs that won't exceed the 7.5% threshold. Just be aware that if you tell your employer to take out say $1,000 of your wages for the FSA, you must actually incur these costs by the end of the year. Your employer will not be able to refund any unused FSA payments.

12:49
Comment From kerri
can i write off child care?

12:49 Keri
Answered by Len Hoffman
Child care expenses can be deducted and or claimed as a credit depending on your marital status and your income level. The formula is computed on form 2441 (and a New York Credit on NY-249) with maximum amounts available.

12:50
Comment From Guest
I am a mother of 2 (an 11 yr old and 20 yr old college student). I received unemployment of 2600 as my only income last year and my so made 9600 dollars on his job. Can I claim him as my dependent?

12:51
Bob: Yes you would claim him since he is a full time student under 24. He cannot claim himself since you are eligible to claim him.

12:51
Comment From jp
I work from home three days per week and commute to my office in NJ the other two days. Are any work from home related expenses eligible for deductions?

12:52
JP
Answered by Len Hoffman
If you work from home for your convenience your expenses are not deductible.
If it is for your employer’s convenience you can deduct expenses but they are subject to limitations and are invitations to undue scrutiny. So unless they are real, significant and documented they may be better left off your tax return.

12:53
Comment From vito
one more..where do I find a chart to tell me the life of the asset, i.e. cash register, professional flattop/griddle?

12:54
Bob: Go to the IRS website at irs.gov, look for forms and publications, and search for a publication on business expenses which would include depreciation.

12:54
Comment From laurie
I withdrew 19K from 401K and I had $4K in medical expenses for my daughter. I know that i can itemize my medical deductions but is there another area on the tax return that will offset my income from the 401K withdrawal or is there an IRS form that I need to do that. I was told that the tax liability will be less if there is medical or educational expenses.

12:55
Diane:
It looks like you withdrew from your employer's 401K plan as a hardship withdrawal. The amount you withdrew, the $19,000, will be income to you and if you are not at least 59 1/2, subject also to a 10% penalty.

To answer your question, yes, depending on your income, the medical expenses can be deducted provided they exceed 7 1/2 % of your adjusted gross income (AGI). AGI is basically all of your income. Unfortunately, the 401k withdrawal increases AGI and will also limit any deductible benefit from the medical expenses.

12:55
Comment From eileen
I leased a vehicle for personal use in 2011..Can I deduct the interest on my state taxes

12:55
Eileen
Answered by Len Hoffman
No.

12:55
Comment From Aaron C
Do you have to report unrealized gains from the stock market? For example, let's say I hold a tax for the entire calendar year, and it jumps 15 percent. Do I have to report that 15 percent? Or do I not have to until I sell the stocks?

12:56
Answer from Don: No. You only need to report sales of stocks that you sold on your tax return. If you sell the stock in 2012, you will include the gain (or loss) on your 2012 tax return. If you hold the stock longer than 12 months, then the gain on the sale will be taxed at a lower rate. If the stock pays any dividend income while you hold it, then you will need to report the dividend income in the year you receive the dividends.

12:59
Comment From maggie
how do you set up a 529 education fund? are there tax implications?

12:59
Diane:
There are many, many funds available for you to open a 529 plan. NYS has a program, the NYS 529 College Savings Program. This is a very flexible program with easy terms and you can deposit and open the account with minimal amounts. Providing you are a NYS resident, you are entitled to deductions on your NYS returns for annual contributions. See more information on the following website:
https://uii.nysaves.s.upromise.com/

12:59
Comment From Sue
I rolled over an old 401K into an IRA - do I need to show this on my return?

12:59
Bob: You should receive a Form 1099R from the 401K plan showing that the amount was rolled over. You need to show this amount on your return and that the amount is not taxable.

1:00
Moderator: That does it for the first hour of our live chat. We've got a few more panelists joining us. We'll break for a minute and get back to it shortly ...

1:00
The certified public accountants assisting in the Tax Help live webchat hosted by Newsday can answer general questions, but the answers are not a substitute for individualized advice and guidance from a professional Tax Advisor who is hired by you and has full knowledge of your specific circumstances or needs. Newsday makes no representations or warranties of any kind as to information given by the Tax Help accountants, and under no circumstances will it or the accountants be liable to any participant or other person for damages of any nature arising in any way from the use of such information.

1:04
Comment From Philippe
We were on COBRA for 10 months. I cashed in a small IRA to pay bills. How/where do I specify that I used the funds to pay COBRA so that I do not get hit with an early withdrawal penalty. We are in our forties, decades away from retirement.

1:04
Diane: All 401k hardship withdrawals are subject to taxes and the ten-percent penalty.

1:05
Hi, I'm Jill Scher, from Marcum LLP in Melville.

1:07
Comment From BRANDON
WHATS MY FILING STATUS IF MY WIFE DIED IN 2011?

1:08
Answer from Don: I am sorry for your loss. For 2011, you can continue filing a joint return. You may be able to still file a joint return in 2012 also if certain other tests are met.

1:09
Comment From Brad
My children go to a private pre-school. The pre-school makes it's tax ID available. Does this mean I can deduct the tuition?

1:09
Diane: The preschool tuition may be used as part of the Child Care Credit (not a deduction). You might be eligible for the credit depending on your income and if you and your spouse need to place your child in preschool so that you both can work.

The school is providing the tax ID so that you can, if eligible, use the tuition for the credit. The credit is reportable on tax form 2441.

I would suggest that you review the IRS publication 503 and the instructions for form 2441. You can find both on IRS.gov.

1:13
Comment From Robert
My wife and I pay union dues, will I be able to write off those dues?

1:13
Answer from Don: Yes, you can deduct these costs as itemized deductions on Schedule A.

1:19
Comment From Aaron C
Do if I report a loss, do I have to pay taxes on the loss?

1:19
Answer from Don: You will not pay taxes on the loss. You may be able to use the loss to offset other sources of income depending on the type of loss. If the loss is from a business activity, from the sale of investments (e.g. stocks, bonds, etc.). Loss on a sale of investments is limited to $3,000 per year. If the losses are from the sale of personal property (e.g. car, house, furniture, etc.) then those losses are not deductible.

1:19
Comment From Jeb
In doing my taxes on turbo tax I was surprised to learn sales tax on a new care is no longer deductible if you itemize

1:20
Diane: Well, not totally the whole story. When determining itemized deductions, the Internal Revenue Service does still allow the state and local sales tax deduction. However, people generally prefer to claim the state and local income tax deduction since it is usually bigger.

However, if you have a large purchase such as a car, your state and local sales taxes may exceed your income taxes, making it more beneficial for you to claim the sales tax deduction. In addition, in order to claim the deduction, you must itemize your deductions.

A few years ago, in order to stimulate auto sales, there was a special deduction for this type of sales tax. It no longer exists and I think that is what you are thinking about.

1:21
Comment From JH
Someone had asked about legal fees from divorce being tax deductible and it was one of only a few questions that wasn't answered! If too complicated for here then please refer to resources to answer question and/or criteria that should be considered

1:22
Answer from Jill: Unfortunately, in general, legal expenses paid by one spouse in resisting the other spouses monetary demands in connection with a divorce, separation or divorce decree are not deductible. There are however, some legal expenses specifically attributable to producing or collecting alimony under divorce decree, separation agreement or support decree that may be deductible as a miscellaneous itemized deduction, subject to the two-percent of AGI floor. This can be very fact specific.

1:23
Hi I am Jack Angel, CPA, from Adelphi University

1:25
Comment From Paula
My daughter is 23 and filed 1040ez is there a nystate form

1:25
Answer from Don: The NYS short form (IT-150), has been discontinued. All full-year New York State residents must use Form IT-201 to file and pay their taxes.

1:26
Comment From Ami
Hello, I sold my share of a joint family property overseas in 2011. The country where the property is situated gives me 2 years to buy a new property with the realized capital gains or pay a 20% cap gains tax. I have until 2013 to eith roll over the capital gains and buy a new property or pay 20% cap gains tax there. US has a treaty in place with India to avoid double taxation. MMy question is what do i show for years 22011 and 2012 on my US tax return

1:27
Bob: You are required to report your worldwide income. Like-kind exchanges are reported when property is transferred to another party. File Form
8824. Check the instructions as to how you should complete the form. I would also file Form 8824 in 2012 even if you do not do anything just to let IRS know that you have no income to report in 2012.

1:28
Comment From Harold
In the 2010 year I paid tax on Social Security earnings. I repaid $4878 to IRS in 2011 year and that was reflected on Form SSA-1099 as a negative number in box 5. How do I claim refund for the taxes I paid in 2010.

1:28
Diane: If you had to repay an amount that was included in an earlier year, you can deduct the amount repaid from your income in the year repaid. The amount repaid should be deducted from the benefits received in 2011.

If you only receive one form SSA-1099 and that amount is negative, you would only need to report the negative amount.

1:29
hi,
My name is Gary M. Goldberg and have a practice in Bellmore and Great Neck

1:29
Comment From Heather
what should i do if i can't afford to pay back what they say i owe?

1:36
Hi Heather,
The IRS is a terrible entity to owe money to. The best course of action is to pay as much as you can with the filing of your return. If you can not pay the full amount due on your return when you file, but will be able to pay the full amount within 120 days you may ask the IRS for a short term extension by calling 1-800-829-1040 or by applying on line at www.irs.gov.

If you need more than 120 days, you can request an installment agreement on form 9465.

If you less than $10,000 and agree to pay the full amount within 3 years, your request for an installment agreement cannot be turned down, provided you have paid all your taxes for the last 5 years.

Jack

1:36
Comment From Nicole
I didn't file my taxes last year. What should I do?

1:36
Nicole,
You should file your tax return for 2010 as soon as possible. If you owe money, you will be subject to interest on the amount you owe, a penalty for late filing and a penalty for late payment.

If you are due a refund, it must be claimed by filing your return prior to April 15, 2014.

1:37
The certified public accountants assisting in the Tax Help live webchat hosted by Newsday can answer general questions, but the answers are not a substitute for individualized advice and guidance from a professional Tax Advisor who is hired by you and has full knowledge of your specific circumstances or needs. Newsday makes no representations or warranties of any kind as to information given by the Tax Help accountants, and under no circumstances will it or the accountants be liable to any participant or other person for damages of any nature arising in any way from the use of such information.

1:37
Comment From Dan
Can public transportation costs for commuting to work be deducted?

1:37
Answer from Jill: Dan, in general public transportation expenses for commuting to work is not a tax deductible expense for Federal income tax purposes. However, you may be eligible for certain employer provided incentives for utilizing public transportation in the form of transit checks or other programs. Please check with your employer to see what you may have available to you.

1:39
Comment From jake
Do you have a better chance of getting audited if you take a large casuality loss? We had a large loss as a result of hurricane Irene and received no insurance money.

1:39
Bob: If it is a large loss there may be a greater chance of being audited. However I would not let that prevent you from claiming a loss that you are entitled to. Just have the appropriate backup ready if necessary.

1:40
Comment From Chrissy
do i have to pay taxes on child support??

1:41
Diane: Child support is not taxable income. Alimony is.

1:41
Comment From jeff
What is the capital gains tax rate if your adjusted gross income was $10,000?

1:41
Answer from Don: If the capial gain is a long term capital gain - meaning you held the stock more than 12 months - then the capital gain rate is zero.

1:42
Comment From Cindy
I sent the question of inheritance - what I meant to say is do I have to pay taxes on the amount of money received as inheritance?

1:42
Bob: No. Money or property received as an inheritance is not taxable.

1:47
Comment From zach
What's the difference between ordinary dividends and qualified dividends

1:49

Hi Zach,
There is a big difference; qualified dividends are taxed at a maximum of 15%, while ordinary dividends are taxed at your marginal bracket which can go as high as 35%.
Jack

1:50
Comment From Philippe
We were on COBRA for 10 months. I cashed in a small regular IRA (** NOT a 401K **) to pay bills. How/where do I specify that I used the IRA funds to pay COBRA so that I do not get hit with an early withdrawal penalty. We are in our forties, decades away from retirement.

1:50
DIANE: If you were unemployed for at least 12 weeks and received unemployment benefits, you may make penalty free withdrawals from your IRA to the extent of the medical insurance premiums paid during the year. The withdrawals may be made during the year the 12 week unemployment test is met or the following year. The penalty free exception may not apply if you returned to the workforce.

The IRA withdrawal is reportable on form 5329 and there is a line on the form to report the exception to the penalty.

1:52
Comment From melissa
i freelanced last year for a while but never did before this year. should i hire someone to do my taxes? if i do it myself what kind of things can i write off?

1:58
Answered by Jack
Hi Melissa,
By freelance, I assume you mean self-employed. The tax rules for self-employed are more complicated a and seeking the advise of a tax pro is suggested.
There are many expenses deductible for a self-employed such as auto, office, travel, supplies and many other ordinary and necessary business expenses.

1:59
Comment From mb
i opened a ugma acct for my daughter 10 yrs ago with about 500.00, i just cashed it in in 2011 for around 1300 , my daughter is 18 and in college and we used that money for her benefit, do i need to file any return for her? she had no other income.

1:59
Bob: Since the income earned is $800, your child would not be required to file a return. A return would be required if the unearned income was over $950.

2:00
Hello, I’m George Moffa from WeiserMazars LLP.

2:01
We're done with the second session of our tax chat and have a few more panelists coming in for the final hour. Back to the questions ...

2:01
The certified public accountants assisting in the Tax Help live webchat hosted by Newsday can answer general questions, but the answers are not a substitute for individualized advice and guidance from a professional Tax Advisor who is hired by you and has full knowledge of your specific circumstances or needs. Newsday makes no representations or warranties of any kind as to information given by the Tax Help accountants, and under no circumstances will it or the accountants be liable to any participant or other person for damages of any nature arising in any way from the use of such information.

2:01
Comment From steve k
My wife and I work full time and file jointly. Can I write off day care costs?

2:01
Answer from Jill Scher: Steve, there is a child and dependent care credit available to you and your wife if you are both gainfully employed. The maximum amount of employment related expenses to which the credit may be applied is $3,000 for one qualifying individual or $6,000 for two or more. The credit is determined by a formula determined relative to your AGI.
There may also be a flexible spending arrangement (“FSA”) available with either of your employers. These arrangements allow employees to make pre-tax contributions to FSA accounts for reimbursement of dependent care expenses. There are limitations on both options and they are subject to specific regulations that must be adhered to in order to get the benefits.

2:02
Comment From Guest
If my wife and I are living separately, can we still file a joint tax return?

2:02
Comment from Gary M Goldberg, CPA

If you are legally married and living apart without a legal separation agreement, you can file a joint return with your husband.

2:03
Comment From Guest
If i purchased a house in 2011 for 320,000 and pay 1100 a month in taxes,, and have been paying a mortgage from october-december for 2011 how much should I receieve back from the govt

2:03
Answer from Don: I'm not sure if the $1100 per month are actual tax payments, or if they are payments to an escrow account to pay the taxes when they're due. The mortgage company should have sent you a statement (form 1098) showing the mortgage interest, principal mortgage insurance insurance payments (PMI), and the real estate taxes paid during the year. You can claim all of these deductions on Schedule A on your tax return. If you paid real estate taxes or points on the mortgage at the closing, you can also claim those as deductions as well.

2:04
Comment From Tanya
i got divorced. who gets to claim our kids on taxes, they spend half the time with me half with my exhusband?

2:05
My name is Arnold Haskell, CPA, I am a partner at Holtz Rubenstein Reminick, LLP a 200 person regional firm with offices in Melville, NY and New York City.

Hi Tanya,

Generally, in the event of divorce, the custodial spouse is entitled to the dependency exemption unless they waive the exemption to the non-custodial spouse. If equal time spent with each parent, the parent with the higher adjusted gross income is considered the custodial spouse. The custodial spouse waives the exemption by executing Form 8322. This waiver is done either on an annual or multiple year basis. The divorce decree does not determine who is entitled to the deduction.

2:08
Comment From Jim E.
Is there a significant penalty for missing the April 15 deadline?

2:08
Answered by Jack

Hi Jim,
File your return by the due date; for form 1040 it is 4/17/12.
You can extend the due date by filing form 4868 by 4/17. However, the extended due date does not extend the payment date which continues to be 4/17. Generally there is a delinquency penalty of 5% per month for a return filed after the due date.

2:10
Comment From Lord Patrick
Can RMD's from either your own IRA or a beneficiary IRA eligible for the $20K pension exclusion? (They were done privately, not through an employer) Thanks!

2:11
Comment from Gary M Goldberg, CPA

Lord Patrick,

The $20,000 pension exclusion you are asking about is available only to New York State. In order to claim the $20,000 exclusion, you must be 59 ½ when you take the distribution. If it is an inherited IRA, the exclusion is available if the deceased IRA owner would have been 59 ½ when you took the distribution.

The exclusion amount is equal to the lesser of 20,000 or the amount actually taken. For example, if you took out $30,000, you get a $20,000 exclusion. If you took out $5,000, your NYS pension deduction would be $5,000.

THERE IS NO PENSION EXCLUSION ON THE FEDERAL

2:13
Comment From chris
I recently purchased a home in 2011 and paid my mortgage October-December. Should I receive a substantial amount of money more than I did last year? SHould I itemize?

2:13
Answer from George: It’s not possible to make a comparison without knowing how your prior year return looks. With that said, you should compare your itemized deductions (including the mortgage interest from the 1098 you have, as well as real estate taxes paid and other Schedule A deductions) to the standard deduction. Use whichever deduction is higher.

2:14
I am Ruth A. Sattig Betz, CPA.

2:15
Comment From Guest
My mother lives in my home and receives only social security benefits. May I claim her as a dependant?

2:15
Answered by Jack
Hi Guest,
Yes you can claim your mother as a dependent on your return, provided her taxable income is below $3,700 and you provide more than 50% of her support

2:21
Comment From Mike
If I purchase a bathroom vanity from a Habitat for Humanity Restore, can I deduct it as a charitable contribution?

2:21
Answer from George: Just purchasing an item from a charity doesn’t make it a charitable donation - you actually received goods for what you paid. If you paid $1,000 for a bathroom vanity that cost $100, then yes, you’d be looking at a charitable deduction (the amount of your payment in excess of the value received).

2:21
Comment From kyle
do I file taxes for someone in my family who died this year???

2:22
Comment from Gary M Goldberg, CPA

Kyle,

Generally when a person dies, a tax return is due for that person in the year of the death. Will Rogers said, “Two things are certain – death and taxes – in that order”

The return for the decedent must be filed by his administrator, executor, or any other person charged with responsibility for the decedent’s financial affairs. However, the surviving spouse should file the decedent’s final return if there is no administrator or executor. The surviving spouse may file jointly or separately for the decedent’s final year

2:22
Comment From Ruth
My 20 year old son is a full time college student, but he had $9600 dollars of income fromhis job. Can I claim him as my dependent?

2:23
Answer from Jill Scher:

Ruth, in order to claim your son as a dependent he must be a qualifying child. A qualifying child is one who meets six tests:

1- Relationship- (yes, he’s your son)
2- Age- Under 19 or under 24 and full-time student (yes)
3- Residency-same principle residence as you for more than half the tax year (education absence is ignored- so yes)
4- No joint return test- (yes, so long as your son is not married and filing joint return)
5- Support test- child cannot provide over half of his own support (the $9,600 is factored in here but so long as it is not half you are ok. Note that the living quarters you provide are factored in at FMV so thus you are probably fine here too)
6- There are tie-breaker tests if your son may qualify as a dependent to more than one person, but I will assume that is not the case for you.

Thus, it does sound like your son will qualify as a dependent.

2:27
Comment From Cindy
I received a monetary inheritance from a cousin's death, it that money tax deductible

2:27
Answer from Ruth:
A monetary inheritance is not tax deductible. You may have intended to ask if the monetary inheritance is taxable. An inheritance is generally not taxable to the beneficiary (you). However, if the estate earned any income on investments, pensions, etc., a portion of that income may be included your inheritance. If that is so, part of the money you received will be taxable. You should ask the executor of the estate if you will be receiving a K-1.

2:29
The certified public accountants assisting in the Tax Help live webchat hosted by Newsday can answer general questions, but the answers are not a substitute for individualized advice and guidance from a professional Tax Advisor who is hired by you and has full knowledge of your specific circumstances or needs. Newsday makes no representations or warranties of any kind as to information given by the Tax Help accountants, and under no circumstances will it or the accountants be liable to any participant or other person for damages of any nature arising in any way from the use of such information.

2:30
Comment From JACKIE
I AM GOING THRU A DIVORCE, IT IS IN THE COURT. I TRIED TO CONTACT MY HUSBAND AND DISCUSS OUR TAXES, HE REFUSES TO COOPERATE. I OWN MY HOUSE, I HAVE TWO COLLEGE CHILDREN, WHICH I SUPPORT, PAY THEIR COLLEGE TUITION AND OTHER EXPENSES. THEIR FATHER PAYS NOTHING. CAN I FILE AS THE HEAD OF THE HOUSEHOLD SINCE MY HUSBAND REFUSES TO FILE JOINTLY?

2:30
Answered by Jack
Hi Jackie,
You are considered unmarried for head of household purposes if your spouse was not a member of your household during the last six months of 2011, you file a separate return and you maintain a household for more than half the year for a dependent child. You are not considered to be “living apart” if you and your spouse lived under the same roof during the last six months of the year. You must be able to claim your child as a dependent, which is generally the right of the custodial parent

2:36
Comment From Pete
I received $100,000 check from my stepfather last year. And im finding it surprising that TurboTax help forums is saying i do not owe anything additional in taxes on this money. Is this true?

2:36
Answered by Jack
Hi Pete,
If the amount you received is a gift or an inheritance, it is free of taxation on your return.

2:36
Comment From Jeb
In doing my taxes on turbo tax I was surprized to learn that sales tax on a new car is no longer deductible if you itemize

2:37
Comment from Gary M Goldberg, CPA

Jeb,

The answer to your question, like many others is “It depends”

If you itemize your deductions on Schedule A, you may be able to deduct the sales tax on the car.

If you elect to deduct sales taxes in lieu of income taxes you can add the sales tax paid on the car to the deduction. Usually, for NYS residents the income tax deduction is larger than the sales tax deduction.

2:39
Comment From Diane A
i am using H&R free tax on line - i have a school loan but i have not made any payments. the amount of "payment received for qualified tuition and related expences $6,150.00" can i calim this amount on my taxes?

2:39
Answer from George: This sounds like two different items being combined in this question. It seems like you haven’t made payments against your loan, so there is no student loan interest deduction yet (but be aware that this is an above-the-line deduction when you do start paying). However, the wording that you’re using suggests you’ve received a 1098-T Tuition Statement for tuition paid. You should consider the education credits (the Hope scholarship credit, the American Opportunity credit, and the Lifetime Learning credit). There is also a deduction allowable in lieu of the credits. There are specific factors that determine which credit your tuition payment would qualify. Irs.gov should have the specifics.

2:40
Comment From Anthony
I have a zero coupon muni bond that matured in 2011, triple tax free, no gan or loss. Do I have to file a Schedule D and Form 8949 with the 1040 and IT 201? I did receive a 1099B.

2:40
Answered by Jack.
Hi Anthony,
You must file schedule D and report the transaction as recorded on form 1099B, but there may not be a gain or loss on this transaction

2:40
Comment From daisy
i work in new jersey but live on long island. my employer withholds new jersey taxes in addition to ny taxes. at tax time, i'm typically refunded the NJ taxes paid. is there a form i can file or some way to avoid having the jersey payroll tax deducted in the first place since i'm not a resident?

2:40
Hi Daisy,

Your New Jersey withholding is based upon the amount of exemptions you claim on the New Jersey withholding form you provide to your employer. If you consistently have excess withholding in New Jersey you may want to consider adjusting the number of exemptions or amount of withholding you claim. Any reduced withholding would have to be done by through your employer. If all your earnings are from NJ sources I am a bit surprised at the result but without seeing the full picture it is hard to ascertain why.

2:40
Comment From jeff
follow up on the capital gains tax question: my mom has an asset with a very large capital 5mm or 6mm gain...She has an adjusted gross income of only $10,000 due to large health care bills. If she sold that asset would her capital gains tax still be 0? thanks

2:40
An answer from Ruth:
The zero percent tax rate for capital gains applies to single individuals with a taxable income up to $35,350. If your Mom’s taxable income of $10,000 includes the very large capital gain, the capital tax rate is zero.

2:42
Comment From warren
if married filing separately on your federal return and itemizing your deductions on both federal returns, are you then allowed to claim the standard deduction of $7,500 each on your new york state returns or must you itemize on both new york state returns as well?

2:42
Comment from Gary M Goldberg, CPA

Warren,

If you file “married filing separately” both spouses must use the same method of deduction – itemized or standard. If you both itemize deductions on Schedule A for the Federal return, there if no prohibition for BOTH of you to take the standard deduction on the NYS return.

2:44
Comment From Philippe
I got paid as a part-time referee for the town recreation dept. No taxes withheld on checks. Received 1099. I am not a business nor a consultant. How/where do I report the income as an individual, not a business?

2:45
Answer from Jill Scher:

Philippe, the income you received as a part-time referee in your town recreation department was most likely reported to you on a Form 1099-MISC. If you have no deductions related to this income, you may simply report the income on the Other Income Line of your 1040. If however, you do have business expenses related to this income, you should file Schedule C within your 1040 and this income is reported on Line 1- Gross Receipts or Sales. Below, you may deduct the expenses associated with this income. Wherever you do report it, this income will be subject to Self- Employment tax if your net income is above $400.

2:46
Comment From Aaron
My Dad passed in 2010,he left rights of survivor ship to Mom- Dads Stocks & Bonds are still under his name and SS # a year after passing-How do we report to The IRS all the DIV income on Moms 1040? Do we just use her SS #?

2:46
Answered by Jack.
Hi Aaron,
Yes you should report the income on mom’s return. When you get some time you should change the name with the financial institutions that still have dad’s name.

2:46
Comment From randy
Do I have to pay taxess on severance pay??????

2:46
Answer from George: Yes, it is considered compensation.

2:48
Comment From Pete
I received $100,000 from my stepfather last year. I researches i read that this does not need to get reported, but then other sources says anything over $13,000 needs to be reported....Which is right?

2:48
Hi Pete,

An annual gift tax return is required for gifts by any individual in excess of $13,000 per year. There is no actual gift tax to be paid until the donors cumulative lifetime gifts reach the lifetime gift tax exclusion which for 2012 is $5,000,000. Please note that the gift tax filing and payment requirement are the responsibility of the donor not the recipient of the gift.

Arnold Haskell, CPA

2:48
Comment From Jackie
I purchased a 2012 car in Sept 2011 can I write off the sales tax?

2:48
Answer from Ruth:
Maybe. The larger of either sales tax or state income tax is deductible if you can itemize your tax deductions. If you are a New York resident, the state income tax withheld from your salary may exceed your sales tax.

2:50
Moderator: Ten minutes remaining in our live chat. We'll answer a handful more ...

2:50
Comment From Pamela
My father's house is in my name with him holding a life estate. Who should list ownership of the house on tax forms? Should we both list ownership with only one claiming property taxes as a deductible?

2:50
Comment from Gary M Goldberg, CPA

Pamela,

This question has two possible answers. The real estate tax deduction can be taken by either the owner or life tenant.

Who is responsible for the payment of the real estate taxes as per the life tenancy agreement?

Who is actually paying the real estate taxes?

The deduction is available only to the person who is RESPONSIBLE for the payment and actually PAYS the real estate taxes.

2:52
Comment From thom
i read in forbes today that you can write off your job hunt like traveling to interviews and networking events, is this true

2:52
Answered by Jack.
Hi Tom,
Yes you can claim a miscellaneous itemized deduction for job seeking expenses, provided it is not your first job in this line of work.

2:54
Comment From janet
I am the homeowner, caretaker of my daughter and make the most, my new husband owes money to the IRS. Can I just claim Head of Household instead of Married filing seperate

2:54
Comment from Gary M Goldberg, CPA

Janet,

If you are married and live with your husband anytime in the last 6 months of 2011, you have two choices----Married filing jointly or Married filing separately.

Head of Household is not available for married people

2:57
Comment From Guest
my mother just entered a senior living facility-her gross income is approximately 12,500 per year-does she have to file a tax rturn this year or any furture year?

2:57
Answer from Jill Scher:

The income level for which an individual of age 65 or older must file income tax returns for 2011 if their income is $10,950 or above.

2:58
Comment From Alan
We had a central air conditioning system installed to replace a less energy efficient system. How do we claim a federal deduction.

2:59
Answer from Ruth:
You cannot deduct the installation of a central air conditioning system. However, there is an energy credit available if the system was installed in 2011. Currently, the credit is not available for installations after December 31, 2011.

2:59
Moderator: Thanks to the readers -- and the Tax Help panelists -- for participating in today's live chat.

CPAs scheduled to participate include: Robert Schaffer, of Castellano, Korenberg & Co.; Len Hoffman, of Bayer & Hoffman; Diane Giordano, Donald Crotty and Jill Scher, of Marcum; Robert Barnett of Capell Barnett Matalon & Schoenfeld; Ruth Sattig Betz of Ruth A. Sattig Betz; Jack Angel; Arnold Haskell of Holtz Rubenstein Reminick; and Gary Goldberg.