Kindergarten Tuition and Child Care Credit
Q: My spouse and I both work and are eligible for the child and dependent care credit. Can I include the expense of my 5 year-old-son's private kindergarten tuition as a qualified expense on Form 2441, Child and Dependent Care Expenses?
A: The expense of tuition for kindergarten does not qualify for the child and dependent care credit because kindergarten is primarily educational in nature. However, the expense of your child's care at school may qualify for the credit, if it can be separated from the expense of your child's education.
Deemed Depreciation for Standard Mileage Rate
Q: How much depreciation is included in IRS standard mileage rate?
A: The standard mileage rate for 2016 is 54.0 cents and the deemed depreciation per business mile is 24 cents. In computing the business automobile's adjusted basis when the standard mileage rate has been used, the historical depreciation portion is listed here:
| 2016 | $0.24 per business mile |
| 2015 | $0.24 per business mile |
| 2014 | $0.22 per business mile |
| 2012 and 2013 | $0.23 per business mile |
| 2011 | $0.22 per business mile |
| 2010 | $0.23 per business mile |
| 2008 and 2009 | $0.21 per business mile |
| 2007 | $0.19 per business mile |
| 2005 and 2006 | $0.17 per business mile |
| 2003 and 2004 | $0.16 per business mile |
| 2001 and 2002 | $0.15 per business mile |
| 2000 | $0.14 per business mile |
| 1994 through 1999 | $0.12 per business mile |
American Opportunity Credit
Q: I heard that Hope Credit is now called American Opportunity Credit. What changed, except the name?
A: This credit is the enhanced version of Hope Credit extended and permanently extened by PATH Act of 2015.
| Credit amount | 100% of the first $2,000 spent and 25% of the next $2,000 spent per student; Full credit is $2,500 |
| Income limit for full credit | $80,000 (single) $160,000 (joint) |
| Refundable portion | 40% of credit is refundable |
| College years | Any of the first 4 years |
| Qualified expense | Tuition, related fees, books, and other required course materials |
Used Car Donation
Q: I donated my car to a qualified charity. What the rule of tax deduction?
A: What you need for deduction depends on the amount of deduction you claim. Please see below.
| Deduction amount | Up to $500 |
| Document needed | Acknowledgment from charity |
| Information includes | Name of charity; Date and location of contribution; Description of vehicle donated; Whether any goods or services rendered by the charity and those value if any |
| Deduction amount | More than $500 |
| Document needed | Acknowledgment from charity |
| Information includes | Form 1098-C from the charity; This form shows all the required information the charity to complete |
Self-Rental Rule
Q: What is "self-rental" rule?
A: Net rental income received by the taxpayer for use of property in a business in which the taxpayer materially participates is treated as income not from a passive activity. This is often called the “self-rental” rule. Because the taxpayer materially participated in the business and the business rented the property for such use, the self-rental rule applied.
How to Request an SSA-1099 for Replacement
Q: I lost my Social Security Benefit Statement (Form SSA-1099). How do I request a copy?A: You can request a copy of your most recent Form SSA-1099 online at Social Security Administration web site and follow the instructions.
A copy of your SSA-1099 will be mailed to the address on file at Social Security. It takes about 10 days.
A Newborn Baby's Social Security Number
Q: My daughter was born at the end of the year. We are still waiting for a social security number. Can I file my tax return and later supply the social security number for her?
A: If you file your return claiming your daughter as a dependent and do not provide her social security number on the return, the dependency exemption will be disallowed. You have two options. You could file your income tax return without claiming your daughter as a dependent. After you receive her social security number, you could then amend your return. You have three years from the later of the due date of the return or from the date the return was filed to amend the return.
The other way is to file an extension to file your tax return. This would give you an additional six months to file your return; by then you should have your daughter's social security number.
Paying Tax by Extension Due Date
Q: Do I still have to send in any money at filing for an extension, or can I pay taxes by the extension due date?
A: If you need an extension of time to file your tax return, you need to estimate how much tax you'll owe, and include that payment with your Form 4868 (Application for Automatic Extension of Time to File for U.S. Individual Income Tax Returns). The extension does not give you more time to pay the tax you owe; it is only an extension of time to file your return. If you owe an additional amount of tax when you file your return, you will be charged interest on the unpaid balance from the original due date of the return. You will also be charged a late payment penalty if the amount you owe is more than 10% of your actual tax liability.e homowners buying a replacement pricipal residence.
Home Office and Its Depreciation
Q: Can I deduct Home Office Expenses without deducting depreciation so that when I sell my house, the basis won't be affected?
A: If you have qualified business use of your home, you are required to reduce your basis in the home by the amount of depreciation allowed or allowable. Therefore, you should take depreciation deduction.
[New starting 2013] You may choose Simplified Method for home office deduction. No depreciation deduction is allowed with this method; therefore, you don't reduce the building basis for that year.
Early Withdrawal from a Qualified Plan and Rollover within 60 Days
Q: I made an early withdrawal from my qualified retirement plan and rolled over the fund within 60 days. What should be careful with it?
A: When a taxpayer does a trustee-to-trustee rollover, it is so indicated on the Form 1099-R with a code “G” in box 7. However, when the taxpayer takes a distribution and does the 60-day rollover, Form 1099-R box 7 has a code “7” in it, indicating a normal distribution (or worse, a code “1” indicating an early distribution subject to the 10% additional tax). Therefore, the IRS has no way of knowing whether the distribution was properly rolled over and 18 to 24 months later, the IRS sends taxpayer a CP 2000 making a proposed adjustment for under-reported income. To deal this, you should document everything n your file; for example, statements from the accounts the money came out of and the accounts where the money went. By having the documentation in your file, you’ll be prepared to respond to the IRS.
Contributions You Cannot Deduct
Q: Can I deduct my time and services devorted without compensation to a qualified charitable organization?
A: No. You cannot deduct the value of your time and services. Also this is not a loss of your income.
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