Answers For Your Tax Questions

NEWSCHANNEL 3) - It's tax season, and April 15 is just around the corner. Many people have yet to file their tax return and have a lot of questions about everything from filing for dependents to stimulus rebate checks, so Newschannel 3 decided to help answer some of those questions. Below is a list of questions viewers sent in to Newschannel 3 to be answered by Deborah Pellerito of Yeo Yeo CPA Business and Consultants:

Q. We just moved to Kalamazoo, March 16, 2008 from St. Petersburg Florida. We earned all of our 2007 income there in Florida . I have two questions: #1. Where were we supposed to mail our returns now that we are living full time in Michigan? #2. How do we contact the I.R.S.,to inform them of our address change, so that their data base will reflect the Michigan address and not the Florida address when it comes time for the stimulus checks are mailed out?

A. Michigan residents mail their tax returns to:

With payment: IRS Kansas City, MS 64999-0102

Without payment: IRS Kansas City, MS 64999-0002

If you have not mailed your federal tax return, be sure to use your new address. This will automatically update the IRS's record for your new address. If you have already filed your tax return with your old address, the stimulus check should be forwarded to you by your old post office if they have a forwarding address on file. However, to change your address with the IRS you can file Form 8822 which can be found under "forms and publications" in the IRS's website - www.irs.gov <http://www.irs.gov/>. If you supplied the IRS with direct deposit bank account information, your stimulus check will be direct deposited into the same account.

Q. When you are filling out the state tax with your property tax information, which amount goes where it says "levi" and what amount goes on second line. There is four different amounts on the form they send.

A. The first line (which is line 6 on the form) is for the "Taxable Value" of your property. You can find this amount on your property tax statement (which also lists the Assessed Value and the SEV). On the next line you report the total amount of property taxes levied from your 2007 summer and 2007 winter tax bills. Be sure not to include special assessments that are not calculated on tax mills.

Q. I e-filed in the middle of February. I received my federal return about 10 days later by direct deposit. My state return has not been deposited yet. Who would I contact about this?

A. You can check the status of your state refund on the State of Michigan website - www.mi.gov/treasury <outbind://141/www.mi.gov/treasury>. When you get on this website you will need to click on "Income Tax" and then you will see where you can check you individual income tax return status. I wouldn't be alarmed, though. The State tends to be a little slower than the IRS to issue refunds.

Q. I received a 1099 form after I filed my 2007 taxes. I'm trying to fill out the amendment form 1040X, and I need to know how much of the form needs to be filled out. Do I fill out the whole thing again or just the part that pertains to adding income? ALSO - Besides the copy of the 1099 form; is there anything else I need to copy and send? (such as a copy of my original tax return.)

A. You will need to complete Form 1040X in it's entirety. On page 2 of Form 1040X, you will need to explain why you are amending your return. You should attach an correct Form 1040 and any other Federal Schedules that have changed. On the amended forms you should write "AS AMENDED" at the top of each form. You should also attach a copy of your original Form 1040 you filed and any Federal Schedules that have changed. On the top of those forms you should write "AS ORIGINALLY FILED."

Q. Can lodging expenses be tax deducted as part of moving expenses and if so how much and for how many days?

A. Moving costs are deductible provided you meet the following two tests: 1. a 50-mile distance test; 2. a 39-week or 78-week test for remaining in the new location. Assuming you meet these tests, lodging cost for yourself and household members while traveling to your new residence is deductible. Lodging before departure for one day after the old residence is unusable and lodging for the day of arrival at the new locality are also included.

Q. My question concerns my elderly mother. She does not have enough income to file a federal return. Does she qualify for a state refund based on the rent she pays? Her rent is based on her income which is $11,274 in social security and $1,405 from a small pension.

A. To answer you question about the rent, yes she can apply for a Michigan Homestead Property Tax credit based on the rent she pays. I am not certain without actually completing the form whether or not she would qualify for a credit . On an additional note, even though your mother does not have to file a federal tax return, I suggest she file one anyways in order to trigger the IRS system to issue her a tax stimulus rebate check. She should qualify for a $300 stimulus payment.

Q. My son doesn't normally file income tax returns. He is currently receiving SSI, supplemental social security, of around $255.00/mo. He is married and has a step-child. Can he file a return to get that supplemental tax rebate that the government will be mailing out in May???

A. Yes, he should file a return even though he does not have a tax liability. Filing a return will trigger the IRS system to issue him a stimulus check.

Q. I hold Power of Attorney rights for my mother. Since her retirement some 12 years back she has not filed a return. Her fixed income is derived from Social Security and one pension source. Her combined income has been below the minimum for filing a return so she hasn't. I've been handling her finances since a stroke placed her in a nursing facility. She's aware of the economic stimulus check available and now wants to file a return to get it. I've seen all her mail and have yet to see W-2 forms sent to her. Is this normal or do I need to get them from Social Security and her pension provider?

A. She would not be receiving W-2 forms. A W-2 form is for earned income. She should have received a statement from the Social Security Administration with her annual social security and a 1099-R for her pension. If you have not received these, I would call the local SSA office and the pension company and ask for a copy.

Q. When can I expect one of these notices (notice for Stimulus rebate checks)?

A. I received my notice last week. The notice just informs individuals that filed 2006 tax returns the basics of the Stimulus program. If you file(d) a 2007 tax return and you qualify for the Stimulus rebate, the IRS will start sending these payments in May.

Q. Can I claim either of my 2 sons as dependents. One is 19, D.O.B 10/14/1988, works full time in a factory since 7/2007. The other is 20, D.O.B 9/5/1987, works 25 - 30 hours per week at a restaurant since 9/2006. Neither are in school. They live with me in my home and I pay all bills.

A. It depends on how much your sons have earned. Since they are both over 18 years of age and are not full-time students, their earned income would have to be less than $3,400 for you to claim them as dependents. From the sounds of it, they have earned more income than this and will need to claim themselves.

Q. My mother passed last year and had an annuity to pay for her funeral expenses, which it covered all of it. I received a 1099 form, I think, but cannot find it. I was the beneficiary so I could take care of the funeral expenses.. My questions is: Do I need to claim this on income taxes since it went for my mom's funeral expenses?

A. Yes, if you were the beneficiary the 1099 probably reported your social security number on it. Any taxable income from the annuity would be reported on your tax return.

Q. We got our taxes done by a CPA this year and they just do not seem right. What should we do? We owe money on federal but we are getting around $800 back from the state, does that seem right?

A. With out knowing your entire tax picture, I really can not say if that seems right. If you are not comfortable with the taxes that have been prepared, you should take it to another tax provider. A lot of tax preparers will look over already prepared returns for little or no cost and let you know if they see any glaring mistakes.

Q. Our income is derived from rental properties. We have 3 dependents, 2 adults and 1 minor grandchild. We usually break even. Occasionally we pay $100.00 or $200.00. Do we qualify for the new tax credit? If so can you tell us about how much?

A. I'm assuming you are refering to the Economic Tax Stimulus. You will qualify for rebate. I'm not certain of the dollar amount off the top of my head but the IRS has a calculator on their website - www.irs.gov <http://www.irs.gov/>. If you filed a 2007 tax return, the stimulus payment will be triggered automatically and sent to you sometime in May or after.

Q. Can you tell what makes you eligible for Homestead Tax break, what forms to file?

A. The Homestead Property Tax Credit is based on total household income and the amount of property taxes you pay. The credit can be calculated and filed for by using Form MI 1040CR. You can find this form under "Individual Tax" on the Michigan website - www.mi.gov/treasury <http://www.mi.gov/treasury>.

Q. I have an 88-year-old mother and I want her to get a stimulus check. I'm having trouble filling out the Form 1040A. She receives social security $11,610 a year and also a pension from the air force for my deceased father $6,804 a year. What parts of the 1040A do I need to fill out as far as the income. It looks like the social security if not taxable. $6804 of the $6804 is taxable and $75.24 was taken out. My mother has no speakable assets other than her home. Please help. Also, would her filing status be single?

A. Assuming she is not married, her filing status would be single. Her pension would be reported on line 12a and line 12b. The social security will be reported on line 14a but nothing on line 14b. She would qualify for the standard deduction and one exemption which would take care of the $6,804 taxable pension leaving $0 taxable income. The withholding (assuming it is federal tax withholding) would be reported on line 38 and she will receive that amount back as a refund. You can find complete instructions for Form 1040A on the IRS website under "Forms and Publications" @ www.irs.gov <http://www.irs.gov/>.

Q. We have to pay over $600.00 to the State of Michigan this year. The question that I have is, Can we make payments on this? If so, how do we go about doing this?

A. If you do not pay the full amount of taxes owed by April 15th, the State of Michigan will charge you penalties and interest on the remaining amount owed. You may be able to set-up a payment plan but you will still be charged penalties and interest.

Q. I have a question about Stimulus check rebate, I am on disability and receive social security (Do I Have to file Federal tax to receive Stimulus Rebate check?)

A. Yes, you should file a tax return even though you do not have a tax liability. This will trigger the IRS's system to issue you a Stimulus check. I believe you should be eligible for $300.

Q. My wife's parents live with us, age 85 and because of very limited income I have claimed them on my income tax for several years. Can you tell me are they eligible for the governments upcoming refunds, even if they haven't paid taxes for years and I claim them as dependents?

A. No, if they do not file a return claiming themselves, they will not receive the stimulus payment.

Q. I am doing taxes for my 91-year-old aunt who lives in an assisted living facility in Portage. She is a retired Federal Employee earning $42,000 per year in benefits. Every month we are billed for two line items, one titles Basic Service Rate and includes rent and meals and one titled Personal Service Plan which includes her medical and personal care needs.

Totals for 2007 are: Basic Service Rate $28,992.00

Personal Service Plan $12,985.00

She is not living there for medical reasons but by choice although she is in a memory care unit behind locked doors because of dementia. I assume I can claim a medical deduction for her over 7.5% of her adjusted gross but can I deduct the total of both items?

A. If obtaining medical care is not the main reason for admission, but you can show the part of the cost covering actual medical and nursing care, that amount is

deductible, but not the cost of meals and lodging. She may have enter the facility by choice but if a doctor suggested she enter the facility, you could still deduct the cost of rent and meals. By the sounds of your Aunt's condition, it would appear to me that both amounts would be included as medical expenses.

Q. What do I need to do if I can't find my 1099?

A. I would contact the insurance company that administered the annuity and ask them to send you a copy.

Q. My wife and I own a home in Washington state which we have been renting for the past year. On Federal schedule E our losses on that home were $8525. In preparing our Michigan return Schedule 1 line 4 is for "Losses attributable to other states". The way I read the instructions, our loss on that property gets added back in to our Michigan state income there. Am I correct?

A. Yes, that is correct. Since the loss is included in your Federal Adjusted Gross income which is what you start your Michigan return with, you will need to add that loss back for state tax purposes.

Q. I am self-employed with my own small construction business. Currently, I am buying health insurance from BC/BS that is a group conversion from when I was previously employed at a factory. It is under my personal name. What can I do to make my premiums a deduction for my business? I have currently only been able to deduct a portion of the premiums if my costs exceed the %7.5 over my adjusted gross income on schedule A. But I see that on page 1 of form 1040 there is a place for "self employed health insurance deduction". What is that and do I currently qualify for it? If not what must I do to be able to qualify for it?

Also, I employ my wife as my office manager and she receives a monthly salary for her work. Is buying health insurance for her instead the only way to make the insurance a legal deduction?

A. Your insurance premiums can be deducted to the extent you have taxable self-employment income. If your business operated at a loss, you will not be able to deduct the premiums as self employed health insurance. If your business was profitable, you can deduct on line 29 of Form 1040 the lesser of your self employed health insurance premiums or self employment income.

Q. Can my wife and I receive a tax credit for our purchase of a 2007 Honda Hybrid?

A. There are credits available for the purchase of hybrid vehicles. However, I am not very familiar with all the requirements. I suggest you visit the IRS website @ www.irs.gov <http://www.irs.gov/>. On the website, click on Forms and Publications. From there you will be able to download the form and instructions for Form 8910. This is the form you complete for the credit. You should be able to determine from the instruction if you qualify for the credit and how much.

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(All questions answered by Deborah Pellerito of Yeo Yeo CPA Business and Consultants. Newschannel 3 is not responsible for any advice given out in this article).