Top ten tax questions
If you are like most people, you probably have a lot of questions about how to maximize your tax refund and how to qualify for certain tax credits. To shed some light on this topic, here is a list of the top ten most common tax questions:
1. What is a split refund?
A split refund allows you to divide your refund, in any proportion, and direct deposit the funds in up to three different accounts with U.S. financial institutions.
2. What is the Earned Income Tax Credit (EITC)?
The United States federal Earned Income Tax Credit (EITC or EIC) is a refundable tax credit that helps working people with limited income. With the EITC, you pay less in income taxes. To qualify, you and your spouse and/or dependents must have a valid Social Security Number.
3. If parents claim their full-time college students as dependents, can their children still claim own personal exemption when they file their return?
If parents claim their full-time college students as dependents on their income tax return, their children cannot claim themselves.
4. Can I still get a tax refund this year if I owe money on my income taxes from last year?
The Internal Revenue Service (IRS) will most likely automatically apply your refund to any past due amounts. If you owe any federal tax, state tax, student loans, or child support, your refund may be withheld.
5. Does paying child support affect my taxes in any way?
No, child support payments are not deductible by the payer and they are not considered taxable income by the parent who receives them.
6. Can I claim the Homebuyer Tax Credit if I I purchased a home in 2011?
In General, The first-time homebuyer credit is no longer available. Homebuyers who purchased their first home in 2008, 2009 or 2010 (where the purchase contract was signed by May 1, 2010 and the purchased closed by October 1, 2010) were eligible to take advantage of the first-time homebuyer credit. However, you can deduct interest paid on your mortgage loan and real estate taxes you paid for your home. For qualifying active duty service members, the credit was extended for purchase contracts signed by May 1, 2011 and the home purchase closed by July 1, 2011
7. To qualify for head of household filing status, do I have to claim a child as a dependent?
In certain circumstances, you do not have to claim the child as a dependent to qualify for head of household filing status. For example, a custodial parent may be able to claim head of household filing status even if he or she released a claim to exemption for the child.
8. What is the American Recovery and Reinvestment Act (ARRA) of 2009?
The American Recovery and Reinvestment Act (ARRA) of 2009 is intended to provide a stimulus to the U.S. economy in the wake of the economic downturn. The bill includes federal tax cuts, expansion of unemployment benefits and other social provisions; including domestic spending in education, health care, and infrastructure, including the energy sector. ARRA, most of the provisions of which expired at the end of 2010, provided for $787 billion of stimulus which included increased government spending and tax credit benifits for taxpayers including the homebuyer credit, home energy cridt, sales tax deduction ext.
9. What is a Lifetime Learning Credit?
The Lifetime Learning Credit is a nonrefundable tax credit up to 20% of the first $10,000 of qualified tuition and related expenses per family.
10. When is the deadline to file taxes?
The deadline to file your taxes is Tuesday, April 17, 2012.
For more information about tax credits or general tax help with preparing your refund visit the IRS website or schedule an appointment with one of our certified public accountants by calling 815-459-4300.
