Frequently
Asked Questions
 How Can
I Get Credit for Tax Mistake?
Lopez of Jackson Heights, Queens, recently contacted the three major credit
reporting agencies to dispute a state tax judgment that appears on his reports. But he
said that what's being taxed is his patience: Even though he sent evidence showing the
debt was reported in error, none of the agencies have removed it from his record. "I
don't know where to turn. I know I have the right to have inaccurate information removed
from my file, but who enforces these rules? I feel as though the investigator merely
glanced at my letter and tossed it in his 'circular file,'" he said. Lopez correctly
understands his consumer rights. You're entitled by law to correct any inaccurate
information that appears in your
credit bureau file. But there may be confusion about some
legal terminology. There is a difference between a tax lien filed in error and one that
was "released." Credit bureaus will delete from your credit report tax liens
filed in error. You must provide documentation from the taxing authority stating the lien
was wrongly filed and should be removed from your credit history. But credit bureaus won't
delete a released lien - one that was paid, either at the full or reduced amount - from
your credit report. When you pay the lien, it will be updated on your credit report to
reflect that it was released. The lien will remain on the credit report seven years from
the filing date. The best thing to do in that case is to add a brief statement to your
credit report giving your side of the story. That statement then becomes part of your
credit report.
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How can the child get the refund after his parent dies?
The government has a process for such situations. You file your parent's tax returns
attaching Form 1310, which allows a qualified person to file for the refund. It requires
that a certified death certificate be attached.
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Can
I deduct the payment for baby-sitting?
Baby-sitting expenses cannot be listed as an itemized deduction - but they can qualify for
the child care credit under certain conditions. For example, if the baby-sitting was done
at your home or another home serving fewer than six kids, the expenses qualify. There is
an important caveat: if the total for the year is more than $1,100 and the baby sitter is
older than 18, you are also required to pay payroll taxes. If the baby sitting was done
offsite at a certified dependent care center, the expenses also qualify. Use Form 2441 to
claim the federal credit and Form IT-216 to claim the New York State credit.
Can I deduct anything for my volunteer at a non-profit place?
You are not entitled to a charitable deduction for services for a non-profit organization.
However, you are entitled to a charitable deduction for your unreimbursed out-of-pocket
expenses in serving the non-profit organization. Such expenses would include
transportation or travel expenses (including meals and lodging). In addition, you may
deduct for the use of your automobile either at the standard mileage rate plus parking and
tolls.
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Can I still take the education credit as I am
paying her college expenses even though my college daughter is no longer my dependent?
If you daughter claims herself as a dependent, it is bye-bye
education credit for Mom and Dad. However, your daughter can claim
the credit even if you paid the tuition. If you can claim the daughter as dependent and
your daughter forgoes the exemption, then you can claim the education
credit.
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I
recently received my license for a family day care center. How can I obtain a tax ID number?
Assuming that you are a US resident with Social Security Number, a separate taxpayer ID
number may be not necessary. You can report your income and expenses on Form 1040,
Schedule C. If you choose to report through a separate entity such as a corporation, you
can apply for an Employer Identification Number either by mail or telephone. You can get
that number immediately by calling the service center for your area or you can send a
completed form SS-4 directly to the service center to receive your EIN by mail. To request
a Social Security number file Form SS-5.
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Is
student loan interest tax deductible? If yes, can I add my two
different loans together?
Yes, it is deductible, and it does not matter that there is more than one student loan.
However, the deduction limit is $1,500 in 1999. Also the interest can only be deducted for
the first 60 months that loan payment are required (the date the loan was taken out does
not matter).
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Should I report or pay tax on the payment for my short-term disability?
It depends on who pays the premiums. The disability income must be reported on your taxes
if your employer paid the premiums, which is usually the case (as in the regular NYS
Disability program). If your employer withholds a portion of the premium from your pay,
you can deduct that amount from the amount you report as taxable disability, but this is
usually a very small deduction. However, if you pay for your own private disability
coverage and become disabled, the payments you receive are tax-free.
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Can
I claim and/or deduct the bills that I have been paying for my mother
who was admitted to a nursing home?
The only deduction available would be for medical bills. If the bills are high enough to
exceed 7.5% of your Adjusted Gross Income (AGI), they are deductible only if your mother
qualifies as a "medical dependant." To qualify as a medical dependent, you must
be able to show that you furnish at least half of your mother's support. If you do, then
you can deduct medical bills that you paid for your mother that exceed 7.5% of your AGI,
but you cannot claim her as a dependent, unless her income was under $2,750 for 2000. In
that case, she would be a full-dependent.
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How
to get an extension if not being able to file the tax on time?
All you have to do is file form 4868 for the IRS. For the state, it is form IT370. That is
an automatic extension until August 15. Keep in mind it is an extension to file the
return: it does not give you more time to pay the tax you owe. You will be charged
interest on any tax owed but not paid by April deadline. Estimated your liability for the
year and include that on form 4868. Send that in with the checks as well as form IT370.
you can get these forms at the post office.
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What
should I check before I send in the returns?
Be sure to put your social security number. if you are filing a joint return, be sure that
both spouses sign it, even if only one had income. If you are sending payment in the form
of a check or money order make it payable to US Treasury (not IRS). Checks should include
your social security number, your daytime phone number, the tax year and the type of
form you are filing. If you wish to charge your taxes on a credit card, you can call (888)
2paytax to charge the balance. The 24-hour IRS tax help number is (800) 829-1040. To check
the status of your federal income tax refund, call (800) 829-4477. To check the status of
your New York state tax refund, call (800) 443-3200.
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(Source: Daily News)
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