Q and A

Frequently Asked Questions & Important Information

Can I rollover money from an IRA to a health savings account?
Individuals may make a one-time transfer from an IRA to a health savings account to pay future medical expenses. This can only be done once during an individuals lifetime.

What advantages do I get going to a tax professional over using tax software programs?
Tax software can help you through the basics of return preparation, but even the most advanced software still benefits from the professional knowledge of changes and different intricacies in tax law that can greatly affect your overall liability and potential refund. Additionally, there have been 5 new major tax law initiatives over the past four years, resulting in between 2,500 and 3,000 tax changes. Each year, Taxing Times employees spend hundreds of hours researching and clarifying these changes to fully understand their ramifications for your return.

I was unemployed during 2008. How will that affect my taxes?
Unemployment compensation is taxable at both the federal and state levels and must be included in the AGI calculation on your tax return. However, if you've had a bad year, you may be eligible for significant tax relief in the form of an earned income credit. To qualify taxpayers must meet the following criteria:

• Income of up to $45,295
• Age between 25 and 65
• Parent of a qualifying child age 19 or younger

Many taxpayers take distributions from retirement plans and later learn that the additional income has disqualified from claiming the EIC. We urge you to contact us to discuss the ramifications, tax liabilities and penalties assessed on premature distributions before you make your decision.

How can I avoid an Audit?
There is no hard formula for determining what returns will be selected and audited by the IRS. The auditing process involves IRS examiners performing a detailed deconstruction of the information reported in your tax return. The purpose of an audit is to reduce incidents of fraud, but all audits are performed with an assumption that fraud is not taking place. The IRS has identified the profiled the following types of filers that will come under greater auditing scrutiny this tax year:

• Offshore credit card users
• High risk income individuals
• High income non-filers
• Unreported income individuals

These profile areas are identified by the IRS as having an increased potential for activities that evade taxes. These include:

• Offshore credit card access to money in foreign countries where the income is hidden
• The abuse of pass-through entities, including partnerships, trusts and corporations to improperly display losses against income
• Claiming of unqualified tax credits, illegal deductions or inflated expenses
• Abuse of tax shelter investments
• Not reporting income

How else can I increase my deductions?
Charitable deductions are often overlooked by many taxpayers. In addition to cash contributions, non-cash items are also deductible. Getting rid of old clothes, furniture, appliances, housewares, sporting equipment? Rather than tossing them out with the trash, take them to a local thrift store or charity. Be sure to get a receipt. The fair market value of those items is tax deductible. In addition, you can deduct 14 cents per mile for driving to and from charitable activities such as volunteering.

In addition to charitable items be sure not to forget these often overlooked deductions:

• Cell phone or computer purchase required to do your job and not paid for by your employer
• Dues to profession societies, unions or chambers of commerce
• Employment related education
• Internet access for business related functions not paid for by your employer
• Job search expenses
• Certain license and regulatory fees
• Passport and visa fees for business trips
• Medical exams required, but not paid for by, your employer
• Home office related deductions (including rent, mortgage and utilities)
• Subscriptions to professional journals and trade magazines for work
• Tools and supplies used for your work
• Safety equipment used for your work
• Work clothes and uniforms
• Union Dues
• Tax preparation fees

Do you accept credit cards?
Along with cash and checks, we accept the following major credit cards: VISA, MasterCard, American Express, Discover, and bank debit cards.