FAQ
Q: Can I deduct the cost of classes I need for work?
A: You may be able to deduct the cost of classes you need for work. This deduction, however, would be subject to the 2 percent of AGI floor, along with most other miscellaneous deductions you list on Form 1040, Schedule A, Itemized Deductions.
To be deductible, your expenses must be for education that:
(1) Maintains or improves skills required in your present job, or
(2) Serves a business purpose and is required by your employer, or by law, to keep your present salary, status, or job.
Q: I just bought a home. What can I deduct from the settlement statement?
A: The only settlement or closing costs you can deduct are home mortgage interest, points that represent interest and certain real estate taxes. You may, deduct them in the year you buy your home if you itemize your deductions. Real estate taxes are usually divided so that you and the seller each pay taxes for the part of the property tax year that each owned the home.
Q: Are child support payments considered taxable income?
A: No. Some types of income taxpayers receive are not taxable and child support is one of them. When you total your gross income to see if you are required to file a tax return, do not include your nontaxable income.
Q: I did not pay my corporations estimated quarterly income taxes. What is the penalty amount? Is there any way to reduce the penalty?
A: If the corporation does not pay a required installment of estimated tax by its due date, it may be subject to a penalty. The penalty is figured separately for each installment due date. The corporation may owe a penalty for an earlier due date, even if it paid enough tax later to make up the underpayment. This is true even if the corporation is due a refund when its return is filed.
Q: Can a husband and wife run a business as a sole proprietor or do they need to be a partnership?
A: It is possible for either the husband or the wife to be the owner of the sole proprietor business. The other person could work in the business as an employee. If the spouses intend to carry on the business together and share in the profits and losses, then they have formed a partnership.
Q: Are partners considered employees of a partnership or are they self- employed?
A: Partners are considered to be self-employed. If you are a member of a partnership that carries on a trade or business, your distributive share of its income or loss from that trade or business is net earnings from self-employment. Limited partners are subject to self-employment tax only on guaranteed payments, such as salary and professional fees for services rendered.
