Frequently Asked Questions

 

Peruse our answers to some commonly asked questions. Please contact us with your specific question(s) if you don't find the answer in this list. We're at your service ...

01

How will the ACA affect my taxes if I don't have insurance?

The Affordable Care Act, requires that almost all U.S. citizens and legal residents and their dependents have health insurance for the entire year. The requirement started on January 1, 2014. There is a tax fee for not having health insurance during 2014 and years following. There are some exceptions to this requirement, so you may qualify for a tax payment exemption. Email us to request a list of these exemptions and more information about how the ACA will affaect your tax return.

02

Can I change from deducting mileage to deducting my auto lease payment?

You can generally figure the amount of your deductible car expense by using one of two methods: the standard mileage rate method or the actual expense method. If you qualify to use both methods, you may want to figure your deduction both ways before choosing a method to see which one gives you a larger deduction. To use the standard mileage rate for a car you own, you must choose to use it in the first year the car is available for use in your business. Then, in later years, you can choose to use the standard mileage rate or actual expenses. For a car you lease, you must use the standard mileage rate method for the entire lease period (including renewals) if you choose the standard mileage rate. For more info visit http://www.irs.gov/taxtopics/tc510.html

03

Is there a penalty for getting an extension for filing my taxes?

If you don't pay your personal income taxes by April 15 or your business taxes by March 15, the IRS will most likely assess a late payment penalty and interest charges which accumulate each month that your taxes go unpaid. If your tax is still unpaid ten days after the IRS issues a “Notice of Intent to Levy,” and the late payment penalty increases. If you filed on time and you set up an Installment Agreement with the IRS, the late payment penalty decreases. You may not be subject to a late payment penalty if you filed a tax extension on time by the original deadline of your return and paid at least 90% of your tax liability with your extension.

04

What will I owe taxes on my inheritance?

Whether or not your inheritance will be subject to inheritance taxes, estate taxes and/or income taxes will depend on many factors. Only six states currently collect them - Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania. In addition, in all of these states property passing to a surviving spouse is exempt from inheritance taxes, and only Nebraska and Pennsylvania collect inheritances taxes on property passing to children and grandchildren. For federal estate tax purposes the 2014 estate tax exemption was $5,340,000 and the 2015 estate tax exemption is $5,430,000. If the decedent's estate you are inheriting from is valued at less than the applicable exemption amount for the year of death, then you won't owe any federal estate taxes. With regard to state estate taxes, currently only these jurisdictions collect them - Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New York, Oregon, Rhode Island, Tennessee, Vermont and Washington. Tax laws are subject to change so please contact us for updates.

05

Can I deduct expenses for taking my clients on a Cruise?

​Although there is no limit on the number of foreign conventions and vacations you can attend and deduct on your income tax return, the rules change if you try to deduct cruise ship expenses. The government has a difficult time understanding how serious conventions are held aboard luxury cruise liners—and will not easily grant a deduction—unless the following conditions, among others, are met: The convention or meeting must be directly related to your trade or business; the cruise ship must be U.S. registered; and all ports of call must be located within the United States or possession countries. Even when the above criteria are met, the maximum deduction is $2,000 per year for each taxpayer, and you must attach two written statements along with the above-referred requirements. The first statement, signed by you, must include information such as how many days were devoted to the scheduled business while on the cruise. The second statement, signed by a representative of the sponsoring organization, must include a schedule of the business activities each day and the number of hours you personally were in attendance. Before you book that cruise, you need to make sure that the tax law sanctions the business-related activity you plan to attend. Get more info at https://www.americanbar.org/newsletter/publications/gp_solo_magazine_home/gp_solo_magazine_index/jacknewitz.html