Ronald L. Briggs
FREQUENTLY ASKED QUESTIONS
We have put together several general questions that we are frequently asked. The information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. For more information on anything on ronaldlbriggscpa.com, or for assistance with any of your tax, business, or financial strategy concerns, contact our offices.
Q) Why do I need a CPA?
A) Your CPA will keep your taxes at a minimum, satisfy record keeping and report filing requirements, use financial and audit reports to make smart business decisions, achieve maximum success and profitability in your business, build your net worth through sound investing and financial planning, communicate effectively with bankers, lawyers, government agencies, and others connected with your financial life, plan for comfortable retirement, and last but not least, preserve your estate for your intended heirs.
Q) Can I receive a tax credit for the purchase of new energy-efficient products for my home?
A) If you purchase an energy-efficient product or renewable energy system for your home, you may be eligible for a federal tax credit. There are many products and materials that may be eligible. There are also tax credits available for the purchase of Plug-In Electric Vehicles. The eligibility requirements of the products, materials and vehicles vary by item. Also, the availability of these tax credits varies from year to year. Learn more at the U.S. Department of Energy's Tax Credits for Energy Efficiency webpage.
Q) Are there other incentives available that promote renewable energy and energy efficiency?
A) There are numerous incentives and policies throughout the United States that promote renewable energy and energy efficiency These are offered through state and local governments as well as various utility companies. Database of State Incentives for Renewables and Efficiency (DSIRE) is an ongoing project of the N.C. Solar Center and the Interstate Renewable Energy Council and is funded by the U.S. Department of Energy. Visit DSIRE at dsireusa.org to search the database and learn more.
Q) How can I get a free copy of my credit report?
A) Law requires the major nationwide consumer credit reporting companies - TransUnion, Experian and Equifax - to give you a free copy of your credit report each year if you ask for it. Visit www.AnnualCreditReport.com or call 1-877-322-8228, a service created by these three companies, to order your free credit report.
Q) What should I know to protect myself from identity theft?
A) Identity theft is a serious crime that can cost you time, money, destroy your credit and ruin your good name. It happens when your personal information is stolen and used without your knowledge to commit fraud or other crimes. To learn how you can deter, detect and defend against identity theft, please visit the Federal Trade Commission's ID Theft webpage. You can also use the FTC's site to report a case of identity theft.
Q) Do I have to file a tax return?
A) For each tax year, a return must be made by a U.S. citizen or a resident alien who has at least a specified minimum amount of gross income. In most cases if your gross income is below these amounts, you do not have to file a return, the gross income requirements vary by age and marital status. Consult your tax advisor to determine if you must file.
Q) Are there situations when you should file even if you are not required to file?
A) Yes. Even if your gross income falls below the levels in which you are required to file, you may have federal income tax withheld on wages received from your employer that qualify for a refund. You may also want to file a return if you meet the requirements of any of the many refundable tax credits that are available. These refundable credits include the Earned Income Tax Credit, Additional Child Tax Credit, American Opportunity Credit, Adoption Credit and Health Coverage Tax Credit. Consult your tax advisor to determine if you qualify for any of these refundable tax credits.
Q) Can I file my individual income tax return for free?
A) Those taxpayers who meet the filing and income guidelines may use the Internal Revenue Service's FreeFile program. The IRS website can direct you to online tax service providers that can help you file your return at no cost. In addition to filing your federal income tax return, many of the providers can also file your state income tax return as well. Visit the IRS FreeFile page to learn more and to find the online tax service provider that is right for you. The state of Ohio also offers options to file your individual income tax return electronically.
Q) Is the gain from the sale of my home taxable income?
A) The sale of your principal residence generally is not reported on a taxpayer's return. However, if a portion of the home was used for business, such as office in the home or a rental, this may trigger a taxable gain. The taxpayer must have lived in the residence for at least two of the last five years, and can only claim this exclusion for one sale every two years. There is a maximum exclusion amount and other criteria that need to be checked.
Q) As a business owner, what amount of equipment costs can I expense?
A) Instead of depreciating the cost of business property over a period of years a business owner may choose to expense these costs. Generally, for the 2010 and 2011 tax years a business owner may chose to expense up to $500,000.00 ($139,000.00 for 2012) of equipment, but is limited by the owner's earned income. The equipment must be placed in service during the tax year and be used in the active conduct of a trade or business to be eligible. Whether the equipment is purchased through a financing agreement or not has no effect on the amount that may be expensed.
Q) Does the financing of a business asset purchased change how the asset is depreciated or expensed?
Q) Can I deduct the medical expenses incurred by my family and me during the year?
A) An itemized deduction is allowed for non-reimbursed medical expenses paid during the year for the medical care of the taxpayer, the taxpayer's spouse and the taxpayer's dependents to the extent that such expenses exceed 7.5% of the taxpayer's adjusted gross income. These expenses are reported on Schedule A, Itemized Deductions, Form 1040. Those taxpayers claiming the standard deduction cannot deduct non-reimbursed medical expenses on their form 1040.
Q) As a business owner, what vehicle expenses can I deduct for the use of my vehicle in my business?
A) Expenses for gasoline, oil, tires, repairs, insurance, depreciation, parking, and licenses involved for vehicles used in a trade or business are deductible. However, the standard mileage rate method is a simplified method which can be used to compute the deduction for vehicle expense in lieu of calculating these various actual expenses. Under this method, the taxpayer determines the allowable deduction by multiplying his business miles by the standard mileage rate as determined by the Internal Revenue Service each year. In either case, a deduction is allowed only for the part of the expenses that are attributable to business use.