2013 Income Tax Filing Question and Answers

Hello,

I am posting to answer some questions that have been asked of my small business as of late.

Frequently Asked Income Tax Questions

Question: How much do you charge for individual income tax preparation?

Our fees are based on the number of individuals in the plan. The charge is $0 per individual. Yes, this does include dependents. So a family of four would pay $200.

Question: Can the tax preparation fee be taken out of my return or do I need to pay for the service upfront?

Both. We can either accept payment when filing or can have the payment deducted from your return.

Question: When is the first day that we can file an income tax return in 2013?

It really depends on the forms you will need. The I.R.S. has given dates for some forms and other forms are expected to be out around the same time.

Federal Forms  
Form 1040A  Individual Tax Return01/10/2013
Form 2441  Child & Dependent Care Expenses01/10/2013  
Schedule 8812  Child Tax Credit01/10/2013  
Schedule EIC  Earned Income Credit01/03/2013

So from reading this, it can be said that the 10th of January will be the first day that we will be able to efile your income tax forms.

Question: When will my return be direct deposited or a check mailed to me if I efile?

The I.R.S. hasn't given out much detail about their schedule but we have used prior years I.R.S. Tax Calendar and modified it using the information that we have received from the I.R.S. so far. To view the I.R.S. 2013 Income Tax Payment Schedule, click here.

Question: How much will I get back from my return?

That is entirely dependent on your personal factors including your income and tax payments for 2012. You're personal situation can also affect this great. HR Block created a great tool for getting an estimate of your tax refund. It is simple, so if you have more advanced taxes, it is most likely incorrect. You can calculate your 2012 Income Tax Return by clicking here.

Question: How do I signup or become a client of Hot Springs Tax Services?

We consider your privacy to be our #1 priority, so we only accept new clients via phone call and in person. This way we can very the individual and avoid any chance of fraud. Feel free to contact us via email to set up consultation or give us a call.

If we missed your question, feel free to comment and we will get it posted up!

Thanks for your time.

Have a great day!

-Hot Springs Tax Services Staff

Tax Myths

In written form, the tax code could make an encyclopedia set blush. With so many codes occupying so much shelf space, no wonder we are confused at times trying to determine what is a fact and what is a myth.

With that in mind, here are some commonly held tax beliefs that have no authenticity. Watch out for these; even the IRS does not want you to pay more taxes than what you legally owe.

Myth - I can stop filing once I reach a certain age

While it may be true that a person retiring on Social Security as their sole income likely will not have a filing requirement, there is no age at which one can legally stop filing. Return filing is based on income, not age. Even a person on Social Security may have to file and pay tax if they have other income sources, like a taxable pension, IRA distributions, or investment income. If so, a portion of your Social Security may be taxable as well.

Myth - I'm a student; I don't have to pay taxes

Students are not exempt from filing and taxation, assuming they have earned income. Many students will take up summer jobs and claim "exempt" (from tax withholding) on their W4. This is fine, assuming the amount earned will be under the threshold for taxation.

For example, a single individual under age 65 was required to file a 2011 tax return if their earned income was over $9,500. Even if the amount earned was under that, a return should be filed to claim any tax withheld as a refund.

Myth - My child is over 19; I can't claim him as a dependent

As long as your son or daughter is a full-time student as defined by the IRS, you can still claim them. Your child must be under age 24 and enrolled, in some part, during at least five calendar months, in the number of courses and or hours that the college considers "full-time." If so, they can be claimed as your dependent as long as they meet the other requirements.

Myth - I can't deduct state sales tax

Yes it's a myth. The IRS allows you deduct actual sales tax you paid on food, clothing, medicine and most other purchases. Even the tax on a large purchase, like a vehicle, can be deducted as long as the rate is the same. The one stipulation? You must be able to itemize your deductions to make it worthwhile.

In lieu of sales tax, you can deduct state income tax. Use the amount that will yield a higher deduction. If deducting sales tax in combination with your other Schedule A itemized deductions is higher than your standard deduction, then this is the way to go.

Myth - Now that I'm married, I have to file with my spouse

The IRS doesn't want to get involved in your marriage, so they have left this one up to you. You can choose to file together, or you can opt to use the filing status Married Filing Separate.

The advantage to filing separate? Perhaps you want to make a clear distinction and be responsible only for your tax. This may be true if your spouse has previous tax debts or owes other federal or state agencies. The IRS does have programs however (Injured Spouse and Innocent Spouse) to shield the non-liable party.

At times, a separate filing may also result in less tax owed as a whole. For example, if you plan on itemizing your deductions because you both have deductions to claim on your Schedule A, then those collective deductions are subject to percentage limitations. But if you were to file separately, you likely would be able to get more of those deductions accounted for and overall pay less combined tax.

Another filing status that may be available even if you are married? Head of Household. If your spouse did not live with you during the last six months of the calendar year, and if you kept up a home for yourself and at least one other person for whom you can take an exemption for, then you can file Head of Household and receive a greater Standard Deduction.