Patrick A Falcon PC
Question: Can I deduct a home office? Answer: If you run a business from home, you may be entitled to a home office deduction. Your business space doesn’t have to take up an entire room, but you have to use that space exclusively for business purposes. You must also meet at least one of the…
read moreQuestion: When is my hobby considered a business? Answer: The IRS is suspicious of any business activity that looks like it provides personal enjoyment, such as antiques, photography, horse racing, etc. If you make a profit in any three out of five consecutive years (two out of seven years for horse activities), your activity is…
read moreQuestion: What are health savings accounts? Answer: Health savings accounts (HSAs) are similar to IRAs, except they’re intended for medical expenses rather than for retirement. You can make a tax-deductible contribution to an individual HSA or to a family HSA. If you’re 55 or older, your annual contribution can be larger. If your employer makes…
read moreQuestion: When are gift taxes due and who pays them? Answer: Gift taxes are due on certain transfers of wealth. If and when gift taxes are due, the donor is liable for them. The recipient of the gift is not taxed. (Note that gifts to charity are not subject to gift taxes.) The combined estate…
read moreQuestion: Can I file as head of household? Answer: Head of household status is available for unmarried taxpayers and certain separated taxpayers who provide a home for a qualifying person, such as a child or a parent. If you qualify, you’ll generally pay less tax as a head of household filer than as married filing…
read moreQuestion: Do I need to file a tax return after I retire? Answer: You may need to file a return even after you retire. You’re required to file a return if your income is over certain levels. Generally, you must file a 2014 federal income tax return, even if you don’t owe tax, when your…
read moreQuestion: What if I can’t file my return on time? Answer: April 15* is the tax filing deadline for most individual income tax returns. If you can’t complete your tax return by then, file Form 4868 with the IRS to give yourself up to six additional months to complete your return. Caution: Form 4868 only…
read moreQuestion: What’s a college savings plan or Section 529 plan? Answer: Section 529 plans (named after the IRS Code Section) allow individuals to set up an account on behalf of another individual (typically a child or grandchild) that can be used to pay college expenses. There are two types of plans: Prepaid tuition programs are…
read moreQuestion: What are education tax credits? Answer: There are two education-related tax credits that can be claimed to reduce your income tax liability dollar for dollar. The Hope scholarship credit, temporarily enhanced and renamed the “American Opportunity Tax Credit,” can be claimed for tuition, fees, and course materials during four years of post-secondary education. It’s…
read moreQuestion: What is an education savings account? Answer: Originally named education IRAs, these accounts are now called “Coverdell education savings accounts.” An education savings account is a custodial savings account created to pay for a child’s school expenses at any accredited college, university, or vocational school. The funds can also be used for elementary and…
read more