Find answers to complicated tax questions
Tax laws change frequently. Poeman’s Tax Prep and Accounting wants to make sure you have answers you need to feel confident about your taxes. Check out our FAQs below and schedule an appointment with us.
What happens to my taxes if I withdraw money from a retirement account early?
Withdrawing money early from certain retirement accounts comes with a 10% tax penalty. Not only does it come with a penalty, but also the amount withdrawn is counted as income that a taxpayer has to pay regular income tax on. This could potentially move you into the next tax bracket, which could affect Social Security taxes and other considerations.
How do I determine the value of non-cash charitable contributions?
Non-cash contributions can only be deducted at the fair market value or “the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts.”
What information do I need to keep?
Your accountant will need certain paperwork and receipts to fill out your tax information and make sure that you receive all of the deductions you qualify for.
What direct business expenses can I deduct?
Knowing how many of your expenses you can deduct will help you plan for filing taxes during the year. More often than not, you can deduct the money that your business directly spends on services, rental space, equipment, and other items. As long as there is no gray area, such as in the case of home businesses, an expense will usually qualify as deductible.
Is there anything I should do to increase my savings?
Sometimes, you will get a bigger deduction for buying certain items, such as an energy-efficient air conditioner as opposed to a standard one for your office. Knowing these answers will help you plan for filing taxes when you are deciding on a purchase.
How much of my home office is deductible?
If you work from home, this will be an important question. You can deduct utility and mortgage or rent amounts that you spend on your home office, but there are certain guidelines you must follow. Your accountant will know the exact answers that pertain to your situation.
How much of my car is deductible?
If you have a car that is used for business purposes, you may be able to deduct part of your payment, insurance, and maintenance costs at tax time. This guideline is especially true if you use the car only for those purposes.
Who can I claim as a dependent?
Your significant other is probably many things to you—but is he or she also a tax deduction? The question of who you can claim as a dependent has confused taxpayers for years.
The short answer: You can claim a “qualifying child” or “qualifying relative” if they meet specific requirements related to residence, relationship to you, age, financial support provided, and income. And yes, you may be able to claim a girlfriend, boyfriend, domestic partner, or friend as a qualifying relative in some cases. Claiming dependents can give you a tax deduction worth up to $3,800 per dependent and also make you eligible for many other tax deductions like the Earned Income Tax Credit.
What is the Earned Income Tax Credit, and how do I claim it?
The Earned Income Tax Credit is a tax credit for low to middle-income wage earners that has lifted nearly 7 million people out of poverty; however, many people still miss it. Why do so many people miss it? Many think they don’t make enough to file their taxes, so they don’t claim it. You have to file your taxes to get this valuable tax credit, which may help a family with three dependents receive a credit worth up to $5,891.
Are unemployment benefits taxable?
The unemployment rate has dipped to 7.9 percent vs. 8.3 percent in January 2013. But that’s little comfort to the jobless who find out their unemployment income is taxable income. The good news is that job search and moving expenses may be tax-deductible. See the next question for more details.
In case of an IRS or state audit, a letter response and audit coverage is included in the price of our tax preparation services.