Category Archives: Tax Return Preparation

Time is Running Short to Claim Your 2009 Refund

If you haven’t filed your 2009 federal tax return, you may still have time to claim your tax refund. The IRS has $917 million in unclaimed refunds from an estimated 984,000 tax returns that people didn’t file for the 2009 tax year. The IRS estimates that half the potential refunds for 2009 are more than $500.

Here are some things the IRS wants you to know about unclaimed refunds:

1. Not required to file. You may not have filed a 2009 tax return because you didn’t earn enough income to have a filing requirement. If you had taxes withheld from your wages or made quarterly estimated payments, you can still file a return and claim your refund.

2. Three-year window. You have three years to claim a refund. If you don’t claim your refund within three years, the money becomes property of the U.S. Treasury. For 2009 returns, the window closes on April 15, 2013. You must properly address, postmark and mail your return by that date. There is no penalty for filing a late return if you are due a refund.

3. Don’t miss the EITC. By not filing a return, you may miss an important credit — the Earned Income Tax Credit. For 2009, the credit is worth as much as $5,657. The EITC can put extra money in the pockets of individuals and families with low and moderate incomes. If you are eligible for the EITC, you must file a federal income tax return to claim the credit. This is true even if you are not otherwise required to file.

4. Some refunds applied. The IRS may hold your refund if you have not filed tax returns for 2010 and 2011. The law allows the use of your federal tax refund to pay any amounts still owed to the IRS or your state tax agency. If you have unpaid debts, such as overdue child support or student loans, your refund may be applied to pay that debt.

Current and prior year tax forms and instructions are available at or by calling 800-TAX-FORM (800-829-3676). If you are missing Forms W-2, 1098, 1099 or 5498, you should request copies from your employer, bank or other payer. If you can’t get these forms, you can get a free transcript from the IRS showing the information you need from those forms.

Order a transcript by filing Form 4506-T, Request for Transcript of Tax Return, with the IRS, or by calling 800-829-1040.


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Five Tax Credits that Can Reduce Your Taxes

A tax credit reduces the amount of tax you must pay. A refundable tax credit not only reduces the federal tax you owe, but also could result in a refund.

Here are five credits the IRS wants you to consider before filing your 2012 federal income tax return:

1. The Earned Income Tax Credit is a refundable credit for people who work and don’t earn a lot of money. The maximum credit for 2012 returns is $5,891 for workers with three or more children. Eligibility is determined based on earnings, filing status and eligible children. Workers without children may be eligible for a smaller credit. If you worked and earned less than $50,270, use the EITC Assistant tool on to see if you qualify. For more information, see Publication 596, Earned Income Credit.

2. The Child and Dependent Care Credit is for expenses you paid for the care of your qualifying children under age 13, or for a disabled spouse or dependent. The care must enable you to work or look for work. For more information, see Publication 503, Child and Dependent Care Expenses.

3. The Child Tax Credit may apply to you if you have a qualifying child under age 17. The credit may help reduce your federal income tax by up to $1,000 for each qualifying child you claim on your return. You may be required to file the new Schedule 8812, Child Tax Credit, with your tax return to claim the credit. See Publication 972, Child Tax Credit, for more information.

4. The Retirement Savings Contributions Credit (Saver’s Credit) helps low-to-moderate income workers save for retirement. You may qualify if your income is below a certain limit and you contribute to an IRA or a retirement plan at work. The credit is in addition to any other tax savings that apply to retirement plans. For more information, see Publication 590, Individual Retirement Arrangements (IRAs).

5. The American Opportunity Tax Credit helps offset some of the costs that you pay for higher education. The AOTC applies to the first four years of post-secondary education. The maximum credit is $2,500 per eligible student. Forty percent of the credit, up to $1,000, is refundable. You must file Form 8863, Education Credits, to claim it if you qualify. For more information, see Publication 970, Tax Benefits for Education.

Make sure you qualify before claiming any tax credit. You can always visit to learn about the rules. The free IRS publications mentioned are also available on or by calling 800-TAX-FORM (800-829-3676).


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Most Commonly Asked Tax Questions

Tax season is now fully underway, and with it comes a wide range of tax questions from filers. These questions range from those asked perennially (“can I claim my boyfriend as a dependent?”) to those specific to the events of 2012 (Hurricane Sandy, healthcare reform and the fiscal cliff). To help make the tax filing process as easy as possible, QB-Xpert has answered the most commonly asked tax questions for this tax season.

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.

Does healthcare reform impact my 2012 taxes?

There’s been a lot of confusion about healthcare reform and taxes
. Rest assured, the requirement to purchase healthcare does not impact your 2012 or 2013 taxes. You do not have to purchase health insurance until January 2014 and there may be a few exceptions based on income, religious beliefs, and citizenship. You will not see changes to your taxes related to the purchase of health insurance until your 2014 taxes are filed in 2015 if you buy healthcare coverage at a health insurance exchange.

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.

Can I deduct the cost of searching for a job? Are moving expenses for my new job tax deductible?

Job seekers may be able to deduct many expenses related to their search: printing resumes, fees for employment and outplacement agencies, career seminar costs and business-related travel. Moving expenses relevant to your job search may be deductible if you meet the distance and time test.

What are the tax implications of withdrawing money early from a retirement account to pay bills or debt?

In difficult economic times, many people start eyeing their retirement accounts to pay off bills or debt. While it is your money, you may be unaware of the impacts of withdrawing from your nest egg. Withdrawing money early from a retirement account
comes with a 10 percent tax penalty in addition to the regular income tax on the amount withdrawn. There can be other consequences, too. The retirement money may bump you into a higher tax bracket, which can result in the taxation of other income, such as social security, that you wouldn’t have been taxed on otherwise.

What are qualified education expenses? And when can I file?

College tuition skyrockets every year, but the U.S. government provides incentives with education credits and deductions
. For example, the American Opportunity Credit, which was extended through 2012, benefits full-time and part-time college students with a maximum $2,500 credit per student, provided you meet modified adjusted gross income requirements.

My house foreclosed, how does that impact my taxes?

The Mortgage Forgiveness Debt Relief Act survived the recent ‘fiscal cliff,’ receiving a one-year extension through 2013. This means you don’t have to pay taxes on the loss of your home through foreclosure or short sale, up to $2 million (or $1 million if married filing separately).

I started my own business; can I deduct my home office expenses?

Many entrepreneurs are reluctant to write off the business use of their home for fear of being audited. But home office expenses
are a legitimate tax deduction you shouldn’t miss out on. Keep in mind the space you claim as a home office should be used exclusively and regularly for that purpose.

Will January tax law changes impact my taxes?

On Jan. 1, 2013, Congress kept the U.S. from going over the ‘fiscal cliff’ by passing The American Tax Relief Act of 2012. The act includes a permanent extension of the Alternative Minimum Tax (AMT) patch, the permanent reduction of tax rates and the reinstatement of several tax deductions, including the Educator Expense Deduction, the Tuition and Fees Deduction, and state sales taxes in lieu of state income taxes.

I was impacted by a natural disaster in 2012. What tax breaks are available to me?

Hurricane Sandy and other natural disasters last year left many picking up the pieces, filing insurance claims, and wondering how it will affect their taxes. It’s possible to take a tax deduction for property loss claims not compensated by insurance, or in some special cases, when you’re still waiting for compensation. These are known as casualty losses and include hurricanes, floods, earthquakes, tornadoes, fire—even vandalism and shipwrecks.


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What Income is Taxable and Non-Taxable?

Our tax system is straightforward in the sense that you pay taxes on taxable income. How much you pay will depend entirely on the type of income you receive.

Most income is taxable income but there are some examples of non-taxable income and we’ll look at both.

Taxable Income

There are many types of taxable income. The income you earn from working as an employee is taxable, as is the income you earn when you are self-employed, or the income you receive as a business owner.

You are supposed to report income from wages, fees, commissions, tips, stock options and even fringe benefits. The fringe benefits you receive, even if you don’t receive cash, are taxable as income. Realize, too, that even if fringe benefits are given to someone else, or used by someone else, you are considered the recipient.

Investment income is also considered taxable. This includes income from the sale of investments; you pay capital gains on this income. You also pay taxes on income from interest earned on deposits, as well as from dividends paid out. Gains on collectibles sold (which includes physical metals) are also reported as taxable income.

You are also supposed to report and pay taxes on income from royalties. This includes royalties from copyrights, patents, and properties that produce mineral, oil and gas. Realize, too, that you pay taxes on bartering income. You will need to figure your gain for what you received in barter, although you can offset the income with the bartering services or items you provided.

Non-Taxable Income

There are a few income sources that aren’t taxable, here are some of them:
• Some disability insurance payments: While payments from a policy paid for by your employer are taxable, you don’t have to pay taxes on payments when you receive them from a plan that you pay for with after-tax dollars.
• Gift receipt: You don’t have to pay income taxes when you receive a gift. Taxes on gifts are paid by the giver – although the giver doesn’t have to pay taxes until the gift exceeds the exemption amount. Understand, though, that a prize isn’t a gift, and you pay taxes when you win a prize.
• Life insurance payout: You don’t pay taxes when you are the beneficiary of a life insurance policy.
• Municipal bond interest: When you invest in municipal bonds, they are most often tax-free at the federal level – and even usually at the state level (if you live in the state of issuance).


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Do I Really Need to File a Tax Return This Year?

As the tax deadline approaches, you might begin to ask yourself, “Do I really need to submit my tax return this year?”

There are many determining factors that enter into the equation when making the decision about filing a tax return. Such items as filing status, income level, age, and whether or not someone claims you as a dependent play an important role in filing taxes.

Minimums to File

A good rule of thumb to follow when approaching the task of filing taxes is this: When in doubt, go ahead and file.

An important fact to know is that dependents are not always exempt from filing income tax returns. If you happen to be under 65 years old and another person is claiming you as a dependent on their individual tax return, you must also file your own tax return if you have $950 in unearned income or $5,950 of earned income. Unearned income includes taxable interest and dividends. Earned income includes wages, tips, self-employment, taxable scholarship and fellowship grants.

Special Circumstances

The situations that follow require you to submit a tax return no matter what your income happens to be.

If you are receiving distributions from a Health Savings Account or a Medical Savings Account.
If you owe Social Security and Medicare taxes on unreported income from tips.
Alternative Minimum Tax – if this tax is owed, you must submit a return.
Retirement Plan and Health Savings Account – if you owe additional taxes on either of these accounts, you must file a return.
Self-Employment – you have to file if you have earned more than $400 (net).

Not Required, But You Should File to Get a Refund

Yes, there are people who do not meet the minimum requirements, but still find a reason to file. Sound odd? Take a look at some of the circumstances that might give you the rationale to file your tax return…despite not being required to do so.

If federal taxes were taken out of your paycheck, you can only get a tax refund if you file an income tax return.
If you happen to qualify for the Earned Income Tax Credit, you must file a return to get your refund.
You must file a return to receive the Additional Child Tax Credit, if you have children (obviously).
If you adopted a child in the previous year, you need to file a return to receive the Adoption Tax Credit.

Remember, when in doubt, go ahead and file a tax return.


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Tax Tips for New Filers

When you’re preparing to file your first tax return, it’s easy to feel overpowered and a little intimidated. But the fact that you’re reading this article at this very moment shows that you have the desire and the drive to tackle tax time.

To help motivate and educate you on your journey to the reward of filing your taxes, I’ve laid out some strategic tips and tactics that will take you from overwhelmed to empowered.

Never Give Up, Never Surrender
The best advice to offer you is this: Taxes can sound scary, but persevere and give it a shot. Reading this article proves that you want to learn, so great job!

If you fall into the category of a “new tax filer”, chances are good that you have a simple tax situation (1040EZ/A), which just so happens to be easy and free! If you’re not sure which tax form you quality for, you can write to us. Answer a few initial questions and in a few seconds we will tell you if you’re in the right place, or if you need a different product.

Help Along the Way
If you hit a speed bump along the tax highway, don’t pull over and give up on your trek. One of the benefits to using us is the abundance of assistance offered to each and every customer. If you do happen to get stuck, you can talk to an experienced tax expert on the phone, free. All tax experts are CPAs, Enrolled Agents and Tax Attorneys, so you know you are getting quality answers.

Stay Organized
Although you should be very careful to organize all of the tax information and documentation you receive leading up to April 15, good organization starts early, even at the beginning of the new year.

Make sure you keep all of your important documents related to income and expenses.

Keep them in a safe and secure place. Once you begin filing your taxes, continue to keep everything tax-related and income-related together for safe and easy access.

How Much of My Income Gets Taxed?
Now that you’ve found about your tax situation, you need to know what and how much of your income is taxable.

Here’s just a sampling of what the IRS can tax:

Pay from your job, whether you earn a salary or hourly rate, including any tips you receive.
Sick pay from your job, company bonuses, or severance pay.
Unemployment benefits.
Interest from bank accounts and dividends from investments.
Gambling and lottery winnings.
Withdrawals from IRAs and annuities.

Deductions: Should You Itemize or Take the Standard Deduction
When you start filing your taxes, you’ll soon come to realize that your new best friend is the deduction. A deduction is basically an expense that you’ve had in the past year to which the IRS has given permission to be subtracted from your overall income total.

In other words, the cost of something you had to pay for can be subtracted (or deducted) from your taxable income. Since the expense was subtracted from your income, you’ll likely owe a little less. See, I told you – new best friend.

There are two basic categories of deductions: standard and itemized.

The standard deduction is exactly that – its standard, the same for everyone across the board, depending of course on your marital status and how you’re filing.

And guess what, we walks you through this entire process with simple questions to answer and will tell which one will help you keep more of your money.

US tax law is exhaustive. But you don’t necessarily have to be a tax professional to file your own taxes. Follow these tips, continue to educate yourself, and you’ll soon be on your way to tax filing success.


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Save Money with the Child Tax Credit

If you have a child under age 17, the Child Tax Credit may save you money at tax-time. Here are some facts the IRS wants you to know about the credit.

Amount. The non-refundable Child Tax Credit may help reduce your federal income tax by up to $1,000 for each qualifying child you claim on your return.
Qualifications. For this credit, a qualifying child must pass seven tests:

1. Age test. The child must have been under age 17 at the end of 2012.

2. Relationship test. The child must be your son, daughter, stepchild, foster child, brother, sister, stepbrother, or stepsister. A child may also be a descendant of any of these individuals, including your grandchild, niece or nephew. You would always treat an adopted child as your own child. An adopted child includes a child lawfully placed with you for legal adoption.

3. Support test. The child must not have provided more than half of their own support for the year.

4. Dependent test. You must claim the child as a dependent on your federal tax return.

5. Joint return test. The child cannot file a joint return for the year, unless the only reason they are filing is to claim a refund.

6. Citizenship test. The child must be a U.S. citizen, U.S. national or U.S. resident alien.

7. Residence test. In most cases, the child must have lived with you for more than half of 2012.

Limitations. The Child Tax Credit is subject to income limitations, and may be reduced or eliminated depending on your filing status and income.
Additional Child Tax Credit. If you qualify and get less than the full Child Tax Credit, you could receive a refund even if you owe no tax with the refundable Additional Child Tax Credit.
Schedule 8812. If you qualify to claim the Child Tax Credit make sure to check whether you must complete and attach the new Schedule 8812, Child Tax Credit, with your return. If you qualify to claim the Additional Child Tax Credit, you must complete and attach Schedule 8812.

IRS Publication 972, Child Tax Credit, can provide you with more details. View it online at or request it by calling 800-TAX-FORM (800-829-3676). You can also use the Interactive Tax Assistant tool on the IRS website to check if you can claim the credit. The ITA is a resource that can help answer tax law questions.


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