Frequently Asked Questions

Click on Hyperlink above and a PDF file should open.

It covers what you need for income, dependents, EIC Qualification, and Proof of Insurance.

Tax Updates

  • Due to the PATH ACT of 2015, ALL refunds containing EIC or Additional Child Tax Credit will be held by the IRS until Feb. 15, 2018 or later if they need further verification.
  • You are encouraged to file your return as usual because IRS will begin processing them when the window opens mid January 2018.   The later you wait, the Feb. 15 deadline will grow later as well.
  • Proof of dependency and Insurance is required.   In order to claim a dependent they must meet the IRS Test of Relationship (must be a blood relative); Residency (lived with you for 6 months or greater); Age Test (under age 19 or 24 if in college)

Business Updates

You must provide your employees/contractors with W2s or 1099-Misc. on or before January 31, 2018,  as well the copies that go to the SSA or IRS by the same date.  Failure to adhere to this new policy will result in a fine of $50 per form per month if late.

 

EIC Requirements

Effective with the 2017 Tax Season, the IRS will requiring all Paid Tax Preparer to do additional Due Diligence for individuals claiming EIC on their tax return due to the PATH Act of 2015.   Furthermore, anyone receiving EIC or Additional Child Tax Credit, their REFUND will be held until FEBRUARY 15, 2017 or longer if they request additional information from the Taxpayer.

Are you Eligible?  You MUST meet the following REQUIREMENTS TO QUALIFY FOR EITC.

Rules for Every Taxpayer:

  • Must have EARNED income such as…wages (W2), tips, or Self-Employed Income.
  • Must have a Social Security Number that is valid for employment for self, spouse, and children.
  • Investment Income is limited to $3,300. If you exceed, you may not qualify for EITC.
  • Filing status used must be Single, Head of Household, Married Filing Jointly, or Qualifying widow/widower. A Tax payer who files Married Filing Separate cannot get the credit.
  • Generally, you must be a U.S. Citizen or Resident Alien
  • You cannot be a qualifying child of another person
  • Cannot file Form 2555 or 2555EZ – Used to claim foreign earned income exclusion

In addition, income must be below certain amounts.  It is based on your Adjusted Gross Income (AGI).

** In Addition, people who claim the credit, based on having one or more qualifying child, must meet the RELATIONSHIP TEST, AGE TEST, RESIDENCY TEST, and JOINT RETURN Test for each child***’

RELATIONSHIP TEST:   The CHILD being claimed MUST be the Taxpayer’s:

  • Son or daughter
    • (Including an adopted child or child placed for adoption) (Proof must be provided)
  • Stepchild or grandchild
    • (Proof must be provided along with statement of why you are claiming this child and not the parents)
  • Foster Child
    • (Proof must be provided from an authorized placement agency or court
  • Brother, Sister, Stepbrother, Stepsister, Half-Brother, Half-Sister,
    • (Proof that they lived with you all year and a statement of why their parents are not claiming them)
  • A descendent of any of them (Blood Relative)

Please note:  Girlfriend or boyfriend’s children that are not blood related does not meet relationship test!

AGE TEST:  At the end of tax year, the child was:

  • Younger than the taxpayer or spouse and younger than 19
  • Younger than the taxpayer or spouse and younger than 24 AND a full-time student (Proof needed)
  • Any age if permanently and totally disabled (Proof is needed)

RESIDENCY TEST:

  • The child lived with the taxpayer or TP’s spouse if fling a joint return in the U.S. for more than half of the tax year.

More than one person CANNOT claim the same qualifying child to claim EITC.  If a child meets the rules to be a qualifying child of more than one person, only one person can use that child to claim the EITC.  Also, if the child qualifies for both a parent and another person, the other person can only get the credit by having a higher AGI than the parent.


Tax Updates

2017 Personal Exemption -- $4,050 per person

Standard Deductions:

  • Single/MFS -- $6,350
  • Head of Household -- $9,350
  • Married Filing Joint -- $12,700

Long Term Capital Gains:

Tax Rate if in... Tax Bracket = % of tax

  • 10%-15% -- 0%
  • 25%-35% -- 15%

Business Updates

You must provide your employees/contractors with W2s or 1099-Misc. on or before January 31, 2017 as well the copies that go to the SSA or IRS by the same date.  Failure to adhere to this new policy will result in a fine of $50 per form per month if late.