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

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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

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.

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.

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.

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.

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.

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.

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.

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.

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

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.

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

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

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

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

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.

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.

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

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

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.

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.

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.

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.

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.

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.

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.

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

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.