SERVICES - FAQ

Question: “I’ve lived in my house for about a year. Do I have to pay taxes on the money I make on the house?”

Answer: Maybe not. This question comes up quite a bit, as taxpayers are generally familiar with the rules on excluding from tax the capital gains generated from the sale of a personal residence. Although, individual circumstances can be unique, and thereby require the guidance of a tax professional, there are certain instances where a prorated portion of the gain can be excluded. Those are: health reasons, change in place of employment, and unforeseen circumstances. There are specific guidelines for each of these exceptions, but, if the circumstances of the sale meet these criteria, then the gain can be prorated over a 730 day period, and a portion of the gain be excluded from taxation.

Question: “I just became self-employed. How do I pay my taxes?”

Answer: Self employed individuals are required to make estimated tax payments to the Federal Government, and to the State on the due date of their personal return in April (most often April 15), June 15, September 15 and January 15 of the following year. The estimates are based on the amount of net profit generated from their self employment activity. A tax professional should be consulted to help the taxpayer calculate the amount of net profit, and the tax associated with it.

Question: “I don’t have a receipt for my deductions. Can I just estimate the amount, and deduct that?”

Answer: Most likely, no. The IRS allows estimates to be made of deductions when there is no reasonable method to get documentation of the deduction. Estimates can be used if records where somehow destroyed, such as in a fire. The instances where estimates are allowed are very few. So, it’s best to follow the motto: No receipt, no deduction.

Question: “Can I deduct the cost of dry cleaning?”

Answer: If what you’re cleaning is a uniform, required by your employer for you to wear at work, then, yes. If it’s just a suit that you where to the office, and is not a uniform required, then, no. An example of a uniform is: a policeman’s clothing, a fireman’s clothing, etc.

Question: “I have expenses for my job that my company won’t reimburse me for. Can I deduct those?”

Answer: Yes. These are known as Un-reimbursed Employment expenses, and are deductible subject to a 2% of Adjusted Gross Income threshold. They then contribute to the total itemized deductions on the schedule A. Note: the higher the AGI, the higher the 2% threshold that needs to be achieved.

Question: “Can you save me more money on my taxes than if I do them myself?”

Answer: Most likely. If you don’t study the tax laws, and don’t stay current with all the changes each year, like we do, then, you might miss an important deduction. You might also consider the amount of time that you spend compiling all the information to do your return, plus the time it takes you to complete it, and our fees become a bargain. Why spend evenings or your Saturday at your kitchen table trying to do your taxes when you can be enjoying your personal time and let us do the preparation for you.