Frequently Asked Questions
How do I verify contact from the IRS?
Go to IRS.gov and search on the letter, notice, or form number. Please be aware fraudsters often modify legitimate IRS letters and forms. You can also find information at Understanding Your Notice or Letter or by searching Forms and Instructions. For additional information please see “How to know it’s really the IRS calling or knocking on your door”. If it is legitimate, you’ll find instructions on how to respond. If the completion of a form is required and it’s provided by a questionable contact, you should verify the form is identical to the same form on IRS.gov by searching Forms and Instructions. If you don’t find information on our website or the instructions are different from what you were told to do in the letter, notice or form, please use the appropriate online resources. Once you have determined that it is not legitimate, report the incident to TIGTA and to us at firstname.lastname@example.org.
What if I am unable to file by the deadline?
If you are unable to file before the due dates, you can file an extension. Please contact our office BEFORE the tax deadline to avoid late filing penalties.
I’m not sure where or when to file my tax returns.
At Harper & Co, we do our best to make filing your taxes an easy and painless process. We provide detailed instructions with your returns, mailing labels, and the file deadline. If you’re at all confused about the filing process, stop by our office or call 614-456-7222 and we will happily review your return with you! You can also click here for more details.
When is a Form 1099 required?
You must file a Form 1099 for each person or entity to whom you have paid more than $600 during the year that is not a corporation. Payments that require a Form 1099 include rents, services, prizes and awards, and other income payments. If those entities are not on your payroll and tax is not being withheld, you will be required to file a Form 1099 to record the total payment over the year.
What does Harper & Co. need to prepare my 1099s?
1. The Payee’s full name
2. The Social Security Number or Employee Identification Number
3. The legal address of the individual or business
4. The dollar amount, including labor and materials, paid to the payee
All of this information is required to be sent in to us and can be obtained from a complete Form W-9. Original Form W-9 is not required; a photocopy is acceptable.
How long does it take to receive my refund?
Under normal circumstances, it takes 4-6 weeks from when they receive your return. You can check on the status of your Ohio and Federal refunds using the links below. However, if you do not receive your tax refund(s) within 10 weeks, contact our office. Where’s My IRS Refund? Where’s My Ohio Refund?
What is e-file? Can I still e-file if I owe taxes?
E-file is electronically and securely submitting your tax return via tax software and the internet to the IRS. E-filing enables you to submit your information more quickly and to ensure there are no errors on your tax return. Contact us for more information on how you can e-file your tax return this year. If you owe money, you are still able to e-file your tax returns. You can have them deducted from your banking account, or you can submit a check with a voucher via mail.
How much will Harper & Co’s services cost?
Our services are unique to every client. Not everyone requires the same amount of time and work.
Can I make a payment online?
You can now pay your invoices through the secure online portal.
Is there an age limit for claiming my child as a dependant?
To claim your child as a dependent, your child must meet either the qualifying child test or the qualifying relative test:
▪ To meet the qualifying child test, your child must be younger than you and either younger than 19 years old or be a “student” younger than 24 years old as of the end of the calendar year.
▪ There’s no age limit if your child is “permanently and totally disabled” or meets the qualifying relative test.
▪ In addition to meeting the qualifying child or qualifying relative test, your child must also meet all of the other tests for claiming a dependent:
• Dependent taxpayer test
• Citizen or resident test, and
• Joint return test
Can I receive a tax refund if I am currently making payments under an installment agreement or plan for another federal tax period?
No, one of the conditions of your installment agreement is that any refund due to you, the IRS will automatically apply against taxes you owe. Because your refund toward your regular monthly payment, continue making your installment agreement payments as scheduled. If your refund exceeds your total balance due on all outstanding liabilities including accruals, and you don’t owe certain past due amounts, such as federal tax, state tax, a student loan, or child support, you’ll receive a refund of the amount over and above what you owe.
What should I do if I make a mistake on my federal return that I’ve already filed?
It depends on the type of mistake you made:
▪ Many mathematical errors are caught during the processing of the tax return and corrected by the IRS, so you may not need to correct these mistakes.
▪ If you didn’t claim the correct filing status or you need to change your income, deductions, or credits, you should file an amended or corrected return using Form 1040X, Amended U.S. Individual Income Tax Return.
When filing an amended corrected return:
▪ Include copies of any forms and/or schedules that you’re changing or didn’t include with your original return. To avoid delays, file Form 1040X only after you’ve filed your original return. Generally, for a credit or refund, you must file Form 1040X within 3 years after the date you timely filed your original return or within 2 years after the date you paid the tax, whichever is later.
▪ Allow the IRS up to 16 weeks to process the amended return.
How do I know if I have to file quarterly individual estimated tax payments?
You must make estimated tax payments for the current tax year if both of the following apply:
▪ You owe at least $1,000 in tax for the current tax year after subtraction your withholding and refundable credits.
▪ You expect your withholding and refundable credits to be less than the smaller of:
• 90% of the tax to be shown on your current year’s tax return, or
• 100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)
▪ There are special rules for:
• Farmers and Fishermen
• Certain household employers
• Certain higher-income taxpayers
• Nonresident aliens
I retired last year and started receiving social security payments. Do I have to pay taxes on my social security benefits?
Social security benefits include monthly retirement, survivor and disability benefits. They don’t include supplemental security income (SSI) payments, which aren’t taxable. The net amount of social security benefits that you receive from the Social Security Administration is reported in Box 5 of Form SSA-1099, Social Security Benefit Statement, and you report that amount on your income tax return (Form 1040, line 20a or Form 1040A, Line 14a). The taxable portion of the benefits that’s included in your income and used to calculate your income tax liability depends on the total amount of your income and benefits for the taxable year. You report the taxable portion of your social security benefits on Form 1040, line 20b or Form 1040A, line 14b. To find out whether any of your benefits may be taxable, compare the base amount for your filing status with the total of:
▪ One-half of your benefits; plus
▪ All of your income, including tax-exempt interest.
The base amount for your filing status is:
▪ $25,000 if you’re single, head of household, or qualifying widow(er)
▪ $25,000 if you’re married filing separately and lived apart from your spouse for the entire year,
▪ $32,000 if you’re married filing jointly,
▪ $0 if you’re married filing separately and lived with your spouse at any time during the tax year.
If you’re married and file a joint return, you and your spouse must combine your incomes and social security benefits when figuring the taxable portion of your benefits. Even if your spouse didn’t receive any benefits, you must add your spouse’s income to yours when figuring on a joint return if any of your benefits are taxable.
Is interest on a home equity line of credit deductible as a second mortgage?
Yes, you may deduct home equity debt interest as an itemized deduction if all the following conditions apply:
▪ You pay the interest in the tax year
▪ The debt is secured with your home
▪ The home equity debt is limited to the fair market value of the home reduced by home acquisition debt, up to a total of $100,000 ($50,000 if filing as married filing separately).
Must I file quarterly forms to report income as an independent contractor?
You may need to make quarterly estimated tax payments. For information on estimated tax payments, refer to Form 1040-ES, Estimated Tax for Individuals. NOTE: You may also have state and local requirements for estimated tax payments. See your state’s individual website for additional information. To access information for your state, refer to State Government Websites.
▪ Contact our offices for the best practices of an independent contractor.
My spouse and I both work and are eligible for the child and dependent care credit. Can I include my 5 year-old son's private kindergarten tuition as a qualified expense on Form 2441, Child and Dependent Care Expenses?
No, tuition for kindergarten isn’t a qualifying expense for the child and dependent care credit because expenses to attend kindergarten or a higher grade aren’t expenses for the child’s care. However, the expense for a before- or after-school care program of a child in kindergarten or a higher grade may qualify, even though the expense of school tuition doesn’t qualify.
If both parents who were never married want to claim the earned income credit, which parent is entitled to claim the credit as an eligible individual with a qualifying child?
If they otherwise meet all of the requirements to claim the earned income tax credit (EITC), unmarried parents with a qualifying child may choose which parent will claim the credit.
▪ If there are two qualifying children, each parent may claim the credit based on one child.
▪ One parent may claim the credit based on both children.
▪ If both parents claim the same qualifying child for the EITC, but don’t file a joint return together, the IRS will apply tie-breaker rules and treat the child as the qualifying child of the parent with whom the child lives for the longer amount of time in the tax year. If the child lives with each parent for the same amount of time, the IRS will treat the child as the qualifying child of the parent who has the higher adjusted gross income (AGI) for the tax year.
▪ If no parent can claim the child as a qualifying child, the child is treated as the qualifying child of the person who has the highest AGI for the tax year.
▪ If a parent can claim the child as a qualifying child but neither parent claims the child, the child is treated as the qualifying child of the person who has the highest AGI, but only if that person’s AGI is higher than the AGI of any of the child’s parents who can claim the child as a qualifying child.
If I sell my home and use the money I receive to pay off the mortgage, do I have to pay taxes on that money?
The amount of the proceeds from the sale of your home that you use to pay off the mortgage isn’t a factor in figuring your taxable amount for the sale. Instead, the amount you realize on the sale of your home and the adjusted basis of your home are important in determining whether you’re subject to tax on the sale. If the amount you realize, which generally includes any cash or other property you receive plus any of your indebtedness the buyer assumes or is otherwise paid off as part of the sale, less your selling expenses, is more than your adjusted basis in your home, you have a capital gain on the sale. Your adjusted basis is generally your cost in acquiring your home plus the cost of any capital improvements you made, less casualty loss amounts and other decreases. For more information on basis and adjusted basis, refer to Publication 523, Selling Your Home. If you financed the purchase of the house by obtaining a mortgage, include the mortgage proceeds in determining your adjusted cost basis in your residence. You may be able to exclude from income all or a portion of the gain on your home sale. If you can exclude all of the gain, you don’t need to report the sale on your tax return, unless you received a Form 1099-S, Proceeds From Real Estate Transactions. To determine the amount of the gain you may exclude from income or for additional information on the tax rules that apply when you sell your home, refer to Publication 523. You must report on your return as taxable income the capital gain that you can’t exclude.
Can a married couple operate a business as a sole proprietorship or do they need to be a partnership?
Unless a business meets the requirements listed below to be a qualified joint venture, a sole proprietorship must be solely owned by one spouse, and the other spouse can work in the business as an employee. A business jointly owned and operated by a married couple is a partnership (and should file Form 1065, U.S. Return of Partnership Income) unless the spouses qualify and elect to have the business be treated as a qualified joint venture, or they operate their business in one of the nine community property states. A married couple who jointly own and operate a trade or business may choose for each spouse to be treated as a sole proprietor by electing to file as a qualified joint venture. Requirements for a qualified joint venture:
▪ The only members in the joint venture are a married couple who file a joint tax return,
▪ The spouses own and operate the trade or business, or maintain a farm as a rental business without materially participating (for self-employment purposes) in the operation or management of the farm, and
▪ Both spouses must elect qualified joint venture status on Form 1040, U.S. Individual Income Tax Return, by dividing the items of income, gain, loss, deduction, credit, and expenses in accordance with their respective interests in such venture. Each spouse files with the Form 1040 a separate Schedule C (Form 1040), Profit or Loss From Business (Sole Proprietorship), Schedule C-EZ (Form 1040), Net Profit From Business (Sole proprietorship), Schedule F (Form 1040), Profit of Loss From Farming, or Form 4835, Farm Rental Income and Expenses, accordingly, and if required, a separate Schedule SE (Form 1040), Self-Employment Tax, to pay self-employment tax.
What's the difference between a Form W-2 and a Form 1099-MISC?
Although both of these forms are called information returns, they serve different functions
▪ Employers use Form W-2, Wage and Tax Statement, to:
• Report wages, tips, and other compensation paid to an employee.
• Report the employee’s income and social security taxes withheld and other information.
• Report wage and withholding information to the employee and the Social Security Administration. The Social Security Administration shares the information with the Internal Revenue Service.
▪ Payers use Form 1099-MISC, Miscellaneous Income, to:
• Report payments made in the course of a trade or business to a person who’s not an employee or to an unincorporated business.
• Report payments of $10 or more in gross royalties or $600 or more in rents or compensation. Report payment information to the IRS and the person or business that received the payment.
Does a company that operates as a sole proprietorship need a tax ID number?
A sole proprietor without employees and who doesn’t file any excise or pension plan tax returns doesn’t need an employer identification number (EIN) (but can get one if he or she wants to). In this instance, the sole proprietor uses his or her social security number (instead of an EIN) as the taxpayer identification number. However, at any time the sole proprietor hires an employee or has to file an excise or pension plan tax return, the sole proprietor will need an EIN for the business and can’t use his or her social security number. If you have an existing EIN as a sole proprietor and become a sole owner of an LLC (Limited Liability Company) that has employees, you need to get a separate EIN for the LLC to file employment taxes.
I exercised my rights to receive life insurance distributions before death. Are these proceeds taxable?
If you surrender a life insurance policy for cash, you must include in income any proceeds that are more than the cost of the life insurance policy. In general, your cost (or investment in the contract) is the total of premiums that you paid for the life insurance policy less any refunded premiums, rebates, dividends, or loans that you neither repaid nor previously included in your income. You should receive a Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., showing the gross proceeds and the taxable part. Report these amounts on lines 16a and 16b of Form 1040, U.S. Individual Income Tax Return, or on lines 12a and 12b of Form 1040A, U.S. Individual Income Tax Return.
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