ALLTAX SERVICE CENTER
Your Tax Questions Answered
Q: Do I really need to I hire a professional tax preparer?
A: While the decision is entirely up to you, there are some advantages to hiring a Tax Professional to file your return. A tax professional will ask you the right questions to ensure you are deducting everything you are entitled to deduct and pay the least amount of tax. A true tax professional will also maintain continuing education that enables him or her to stay knowledgeable of all new tax laws; they will also stand behind their work and offer assistance if the IRS comes knocking on your door.
Q: If I can’t pay my taxes, should I file my return anyway?
A: Absolutely. Filing saves you from the possibility of being criminally charged or, more likely, from being hit with a fine for failing to file or for filing late. Interest on any amount owed continues to build up until you pay.
Q: Do I have to have a child to qualify for the Earned Income Tax Credit (EITC)?
A: No. In fact, the IRS estimates low-income workers without qualifying children are the largest segment of eligible taxpayers who fail to claim EITC. Many low-income workers without children who are not required to file a return are not aware of the credit.
Q: Can I deduct the costs of daycare for my children?
A: If you paid for child or dependent care, so you could work, you may be eligible to deduct 20 to 35 percent of qualifying expenses up to $3,000 for one qualifying individual and up to $6,000 for two our more qualifying individuals.
Q: Can I claim my sister's child since she's not working?
A: In order to legally claim a child as a dependent you must meet the following eligibility tests:
1. Relationship. The child must be your son, daughter, stepchild, eligible foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them.
2. Age. The child must be (a) under age 19 at the end of the year, (b) under age 24 at the end of the year and a full-time student minimum for during any 5 months in the tax year, or (c) any age if permanently and totally disabled.
3. Residency Test. The child must have lived with you for more than half of the year (183 days) except for temporary absences.
4. Support Test. The child must not have provided more than half of his or her own support for the year. A scholarship received by a child who is full time student is not considered.
Q: Do I have to report all my self-employed income?
A: A self-employed individual is required to report all business income and deduct all allowable business expenses. They do not have the option of only reporting what is most beneficial.
Q: I didn't make very much last year, do I still have to file a return?
A: The chart below may help you determine if you need to file or not.
Please keep in mind that even if you are claimed as a dependent on another person's tax return, you may still be required to file an income tax return of your own, special other conditions apply, and sometimes regardless of your income it may be to your benefit to go ahead and file. Still not sure? Call us at 281-931-5599.
Q: Do I have to pay taxes on Social Security disability benefits?
A: In most cases, yes. According to the Social Security Administration website, you must claim your Social Security benefits as income if you are filing a federal tax return as an individual and your total income is over $25,000. For joint filers, the combined income must total more than $32,000.
Q: Can I deduct the cost of searching for a job?
A: Some of the expense of searching for a job may be deductible. Resume copies, employment, outplacement agency fees, career seminars, and even business related travel might be deductible.
Q: Will I be taxed for taking money out of a retirement account to pay bills/debt?
A: Yes. If you haven’t reached the age of 59-1/2, you not only will pay taxes based on your tax bracket, but also an additional 10% tax.