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Riley Holmes of H&R Block talks to the Tom Joyner Morning Show about tax season and why you shouldn’t play with the IRS. As everyone knows, the IRS expects you to file your taxes by April 15th. Of course, some folks seeking refunds file earlier and some folks, if they complete an extension form can file by October 15th.

Holmes says playing with the IRS is like playing with fire. As Wesley Snipes, Lauryn Hill, and Ron Isley could tell you, the IRS is not here for your lying, scheming and willfully avoiding paying your taxes.

“Once you sign your tax return, you are approving that your return is correct so if the tax return is done incorrectly, you will be responsible.”

As far as deductions, everyone wants to come up with as many as possible. And there are many, especially if you are self-employed, that you can come up with. But you have to know what you can deduct and what you can’t. Everyone knows you can claim a dependent child, but sorry, you cannot claim a pet, even if you provide 100% of its care.

“The IRS allows itemized deductions. You get two options – a standard deduction and an itemized deduction. One out of three American itemize, which means millions of people should itemize, especially homeowners. You can deduct mortgage interest, real estate taxes, job expenses, medical expenses. They are all subject to limitations, however all those things are deductible. [If you have a small business] depending on the type of business, you can deduct advertising, business supplies, office supples, your office space.”

As far as do’s and don’ts, aside from lying being an obvious don’t’, Holmes says that the most important thing is to keep good records so that you can get all the deductions that you are eligible for.

If you do choose H&R Block to do your taxes, Holmes says that they are now offering a “Half Off” deal from February 15 to March 15th. But you must bring in a receipt of what you paid last year and if you do, H&R Block will give you half off their rate.

Click the link above to hear the entire interview and see Riley Holmes, H&R Block Tax Professional in Chicago’s answers to the listeners questions below!

Can you make itemized deductions using H&R Block online?

Yes, taxpayers who use H&R Block online can itemize their deductions.

Can you deduct the rent for housing your college student child?

No, rent for student housing generally is not a deductible expense. However, you may be able to claim the American Opportunity Credit for tuition and fees if the student is in their first four years of college and is taking at least a half-time workload or, if not, the Lifetime Learning Credit. If ineligible for both of those, you may be able to deduct up to $4,000 in tuition and fees.

What do I need to complete a 990?

Form 990 is the annual information return required of all non-profits that have tax-exempt status (such as 501(c)(3) status for charitable organizations) approved by the IRS. Note that the Form 990 is only for large organizations – those with receipts of $200,000 or more and assets of $500,000 or more. If your organization has income and assets under those amounts, you can use the short form, 990-EZ. And if your organization normally has gross receipts of less than $50,000, you do not have to file either form. However, you do need to submit an “e-postcard” 990-N verifying your organization’s data. For more information, see the instructions to Form 990: http://www.irs.gov/pub/irs-pdf/i990.pdf.

How do you address the death of a parent you claimed on your tax return?

In general, you can still claim a dependent exemption in the year that the dependent dies if all requirements are met for the time the dependent was alive. If your parent’s taxable gross income was less than $3,950 (for 2014) and you provided more than half of your parent’s support for the time your parent was alive, you may claim the exemption.

Can you deduct your child’s after-school activities?

You may be able to claim the child and dependent care expense credit if the program is for the after-school care of a child under 13. This credit is worth up to 35 percent of qualifying child care expenses for working and job-searching parents. Expenses are capped at $3,000 (maximum credit $1,050) for one child or $6,000 (maximum credit $2,100) for more than one. Alternatively, you may save more in taxes by participating in your employer’s dependent care benefit plan if it is offered. This allows you to save up to $5,000 pre-tax for the care of any number of children.

I haven’t filed taxes the last two years and I have since gotten married. If we file together, will my back taxes be deducted from our joint return?

Yes, if you file your return jointly with your spouse, you are both liable, individually and together as a couple, for the entire tax liability on the tax return. If your spouse does not want to be liable for your tax bill, you should use the “married filing separately” status. However, the married filing separately status subjects a couple to the least favorable tax brackets and leaves them ineligible for many valuable tax credits, such as education credits, the Earned Income Credit and the new Premium Tax Credit that helps taxpayers with the cost of health insurance. Another possibility is to submit Form 8379, Injured Spouse Allocation, with the tax return. This form permits you to allocate your respective income and expenses and can protect your spouse’s share of any refund due.

If my child makes money acting should I file taxes in her name listing all expenses (i.e. mileage, supplies, etc.)?

You need to consider how much money your child made and whether you are still able to claim her as a dependent. In general, unless she provided more than half of her own support, she is still your dependent and so the dependent filing requirements apply. She must file a return (for 2014) if:

  • Her unearned income was over $1,000, or
  • Her earned income was over $6,200
  • Her total gross income was over the larger of $1,000 or earned income (up to $5,850) + $350.

If your daughter was paid wages (i.e. she received a W-2), , she may want to file a tax return even if she is not required to in order to get a refund of the taxes withheld. Otherwise, if she received self-employment income of $400 or more, she will have to file a return to pay self-employment tax.

If she is filing a return, all ordinary and necessary business expenses are deductible on Schedule C (if she is self-employed) or Schedule A if she is an employee or the acting is a hobby rather than a business). If this is considered a hobby, expenses are deductible only up to income.

Is there a $1500 or $1000 child tax credit per child?

The child tax credit is worth up to $1,000 for each qualifying child under 17, but is reduced if your income is above $75,000 if you file as single or head of household or $110,000 if married filing jointly. If your tax liability is not sufficient to cover the credit, you may be able to get the balance as a refundable credit, meaning the amount is paid to you, if you have earned income of at least $3,000.

 

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