tax filing

When an Elderly Parent Might Qualify as Your Dependent

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

It’s not uncommon for adult children to help support their aging parents. If you’re in this position, you might qualify for an adult-dependent exemption to deduct up to $4,050 for each person claimed on your 2017 return.

Basic qualifications

For you to qualify for the adult-dependent exemption, in most cases your parent must have less gross income for the tax year than the exemption amount. (Exceptions may apply if your parent is permanently and totally disabled.) Social Security is generally excluded, but payments from dividends, interest and retirement plans are included.

In addition, you must have contributed more than 50% of your parent’s financial support. If you shared caregiving duties with one or more siblings and your combined support exceeded 50%, the exemption can be claimed even though no one individually provided more than 50%. However, only one of you can claim the exemption in this situation.

Important factors

Although Social Security payments can usually be excluded from the adult dependent’s income, they can still affect your ability to qualify. Why? If your parent is using Social Security money to pay for medicine or other expenses, you may find that you aren’t meeting the 50% test.

Also, if your parent lives with you, the amount of support you claim under the 50% test can include the fair market rental value of part of your residence. If the parent lives elsewhere — in his or her own residence or in an assisted-living facility or nursing home — any amount of financial support you contribute to that housing expense counts toward the 50% test.

Easing the burden

An adult-dependent exemption is just one tax break that you may be able to employ on your 2017 tax return to ease the burden of caring for an elderly parent. Contact us for more information on qualifying for this break or others.

How long does it take to get your tax refund?

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

By Bankrate

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Your annual income tax return may seem quite complex to fill out, but its structure is actually quite simple. On this document you calculate all of your earnings and subtract eligible deductions and credits.

The remaining amount is your taxable income, and you multiply this by the applicable tax rate to determine how much income tax you owe to the government.

However, in most cases, you prepay your income tax through deductions from your regular paycheck. If the amount you paid through these deductions during the year is greater than the amount you owe, you receive a tax refund.

After you file your taxes, you wait for the IRS to review your return and issue a refund. The IRS claims that it approves most tax refunds within 21 days but it can take longer.

Understanding this process can help you move the process along to get your refund.

How the IRS evaluates the return

Once your tax return reaches the IRS, an auditor confirms or questions the information you have provided, starting with the first section of the return. The auditor inspects the amount of money you claimed as income, which should accurately show every source of income you had over the course of the tax year.

If you are employed, you should have a form W-2 from each employer. This document contains the total wages the employer paid you during the preceding year.

If you are an independent contractor, you should have a W-9, which contains the same information. Copy all relevant earning and taxation information from these slips accurately on to your income tax return.

If you make a mistake entering information, the IRS must spend more time looking for the correction figures. Double-check your amounts before sending in your tax return to avoid this problem which extends the length of time you wait for your refund.

Tax deductions and credits

The more tax deductions and credits you claim on your annual tax return, the longer you wait for your refund. This is because the IRS must spend more time verifying the deductions and credits. This does not mean you should refrain from claiming legitimate tax deductions. Instead, just make sure to include clear documentation for each deduction.

For example, if you made a donation to a registered charity, you can deduct the dollar amount of the donation and lower your total taxable income. To make sure that the IRS agent auditing your tax return can confirm this deduction expeditiously, include the receipt. Do so with every deduction, reduce the wait time for your refund.

Conclusion

The IRS claims that it approves most tax refunds within 21 days of receipt of the return. However, the IRS does not issue refunds for anyone claiming earned income credit until after Feb. 15 so it has time to match the income you claim on the return with the amount reported by your employer.

If you request an electronic deposit, you receive your refund within one business week after your approval. Checks take up to four weeks to arrive in the mail.

Waiting for your refund may feel like a long time, but if you double-check your math and properly document each deduction and credit, you improve your odds of receiving your refund within the average 21 day period.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

Filing Taxes as a Same-Sex Married Couple

Westchester NY accountant Paul Herman of Herman & Company CPA’s is here for all your financial needs. Please contact us if you have questions, and to receive your free personal finance consultation!

same sex married couples, tax filing

The good news first: In many cases, if not most, filing taxes as a same-sex married couple in New York state should be as straightforward as it is for straight couples. The bad news: Well, it’s taxes. And taxes can be complicated and tedious.

Some Background First

In 2011, same-sex marriage became legal in New York state. It was already legal in a few other states, and in 2015, it became legal everywhere in the United States. You may have filed as a married same-sex couple on your state taxes since the 2011 tax year and, in 2015/2016, switched to married on your federal taxes as well. (This page breaks down what you were legally required to do.)

If you filed as single until your 2016 return so that you would have the same information on your federal and state returns, it’s possible you could get some money by amending state and federal returns from prior years. To be legally safe, you should amend any state returns from prior years that need changing.

If you transferred property during the past few years or did anything that may have changed due to the recognition of same-sex marriage, it may be a good idea to consult with an accountant.

Now to the Present

Now it’s 2017, and for the most part, same-sex married couples in New York can file taxes just as their heterosexually married counterparts do. A few considerations, though:

  • If you are married and adopt the child your partner gave birth to, you cannot claim the adoption tax credit. On the other hand, if you have yet to marry, you can claim the credit. Of course, the two of you should discuss whether getting married before the child is born is better for your family, both financially and emotionally.

  • Suppose you file taxes as married filing separately. Further suppose that one of you has yet to adopt a child who the other partner gave birth to or is the biological parent of. The legal parent is the one who should claim the dependency deduction.

At Herman and Company, CPAs. P.C., we can help you navigate through gay marriage tax filing and benefits. If you have any questions or are interested in a free consultation, contact us today.

Paul S. Herman CPA, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA’s PC in White Plains, New York.  He provides guidance and strategies to improve clients’ financial well-being.

Any U.S. tax advice contained in the body of this website is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.