Tax Guide 2014
Q&A with a CPA: Advice on what to do this tax season By JAMES STITT jstitt@lecenter.com With the start of tax season around the corner, there can be many questions about getting the most out of your tax returns. We compiled a list of questions from followers on Facebook, and let certified public accountant Terry Hoehn, of Johnson & Hoehn, in St. Peter, answer those questions and give advice to taxpayers. How do you know if you should itemize or not? You should itemize your deductions if you own a home with mortgage interest and property taxes, have high unreimbursed medical bills, high charitable contributions or have high unreimbursed employee expenses, (such as a salesman or a truck driver). When should you hire someone to help you with your taxes? You should get help with your tax return if you are involved in or own a business, own rental property, have investments of stocks, bonds or mutual funds or
just are unsure how the tax law applies to your situation. What is the criteria for when you can claim Hoehn someone as a dependent? Generally is your child and they have lived with you for most of the year, are under age 24 and in school. Some of the rules can get involved depending on the various situations. What education expenses are deductible? You need to be more specific as there are three main types of education deductions or credits. Generally college costs for you or your dependents are eligible for a credit against your tax provided you do not exceed the income limits. A different set of education expenses can be deducted on the Minnesota return for your kids in grades K-12 (unless income is low enough to qualify for tax credits). Finally, education expenses
Tax season is among the most stressful for Americans. Getting answers from a CPA should help relieve some of those pressures. (Metro Creative Images)
can be deducted if they relate to your continuing development in your career or field of work. These are deducted on Schedule A as an itemized deduction subject to some limitations. Is it worth it to save all your receipts through the year to write off the sales tax you pay on everything? Probably not. You can deduct either your sales tax expense or your state income tax expense, whichever is greater. Most people in Minnesota will have higher
state income taxes versus sales tax so the sales tax is generally not going to do any good as a deduction. Also, it usually does not pay to keep receipts as the IRS will compute a standard amount based on your income level, so it just is not worth the time and effort to track sales tax. What happens to an individual if both they and their former spouse claims their child as a dependent? Will one of the parents be penalized? This questions may need to
have more information supplied in order to give a complete answer, but generally the IRS will award the dependency exemption to the “custodial parent” (who ever lived with the child the longest during the year). If according to court documents the “noncustodial parent” is entitled to the exemption in a year, then IRS form 8332 needs to be completed and signed by the custodial parent and then given to the noncustodial parent to be attached to their tax return. There
are some different rules that apply to as to went the court document was signed (pre-1985 or Post 1984 to 2009,and after 2008). The parent who was not supposed to claim the child will have to pay any tax back that may have been refunded as a result of incorrectly claiming the dependent. Reporter James Stitt can be reached at 931-8572 or follow him on Twitter @LCL_j_stitt.