Frequently Asked Questions
If you are unable to gather all the necessary information to complete your tax return by the original deadline, or if you are unable to complete your return by the original deadline, then it may make sense for you to file for a tax extension.
In addition, if you expect income from a pass-through entity such as an S-corporation or LLC, you may not have your K-1 prior to tax day. In that case, you may need to file an extension.
This extension gives you an additional six months to file your return.
What Is the Deadline for Filing a Tax Extension?
The deadline to file for a tax extension is Tax Day.
What Should I Know About Filing an Extension?
While filing for a tax extension can provide you with additional time to file your return, it is important to be aware of the following:
- Filing for a tax extension does not extend the deadline for paying any taxes owed.
- If you owe taxes and do not pay them by the original deadline, you may be subject to
additional interest and penalties.
- If you do not file a return or an extension by the original deadline, you may also be subject to
No. Once you have gathered all your tax documents, you can bring them in along with a completed tax questionnaire (which is available on our website) and drop them off during normal business hours. We will contact you once they are completed or if we have any questions.
How to Choose Your Tax Filing Status
Remember, your filing status will significantly impact your tax bill and the forms you’ll need to complete. Here’s a quick overview of each of the five statuses.
Head of Household
Who it’s for: Unmarried taxpayers who are supporting others and paying more than 50% of the costs to keep up a home. There must be a “qualifying person” involved such as a child 19 or younger (or under 24 if the child is a student living at home for more than half the year). A mother, father, sibling, or in-law may also meet the “qualifying person” requirement so long as you provide at least half of their support.
What it gets you: If eligible, filing head of household will give you larger tax deductions and better tax brackets than if you just filed single. The standard deduction for single status is $12,950 in 2022 but $19,400 for head of household.
Qualified Widow or Widower
Who it’s for: This status is for taxpayers who recently lost a spouse and are supporting a child at home. It’s important to note if you could have filed jointly before your spouse’s death, you may file jointly in the year your spouse died. Then, you can use the qualified widow or widower status for the next year (if you have a dependent child living at home).
What it gets you: This status lets you file as if you were married filing jointly. Filers will get a much higher standard deduction and better tax bracket.
Married Filing Jointly
Who it’s for: Most married couples file using this status. Like it sounds, you and your spouse
combine your income and deduct your total allowable deductions and credits on the same forms.
A note about divorce: If you were legally divorced by the last day of the year, the IRS considers you unmarried for the whole year. That means you can’t file jointly that year.
What it gets you: Most couples will see a lower tax bill than if they filed separately; their standard deduction — if they don’t itemize — may be higher, and they’ll be able to take deductions and credits that aren’t available if they file separately.
Married Filing Separately
Who it’s for: This status is for high-income earners who are married, people who wonder if their spouses are hiding income, or taxpayers whose spouses have tax liability issues. If you're considering or are in the process of getting a divorce, this option may be right for you. On the other hand, if you've recently married someone with lingering tax problems, filing separately might be worth considering.
What it gets you: Think carefully before filing with this status. Why? It usually only gets you a larger tax bill because, depending on your situation, you may not be able to file for tax deductions like student loan interest, child and dependent care expenses, earned income credit, and others.
Who it’s for: This status is for unmarried people who don’t qualify for another filing status. Remember, if you’re legally divorced by the last day of the year, the IRS considers you unmarried for the whole year. This can vary on a state-by-state basis.
What it gets you: If you’re a high-income earner, filing single can lower your tax responsibility and avoid the “marriage penalty.”
Determining who can claim a college-aged student as a dependent on a tax return can sometimes be a complex matter. Here are a few key points to consider for your college student:
- Relationship: In most cases, you are eligible to claim your college-aged child as a dependent if the child is your biological child, adopted child, stepchild, foster child, or a descendant of any of these individuals.
- Age and Residency: To be claimed as a dependent, your child must typically be under the age of 24 if they are a full-time student. However, if your student is permanently and totally disabled, there is no age limit. Your student must also have lived with you for more than half of the year, unless they meet specific exceptions for temporary absences. Note that absences to attend school do not count as absences.
- Financial Support: You must provide more than half of your student's financial support during the tax year. Support includes expenses related to housing, education, medical care, food, and other living expenses. If your student receives scholarships, grants, or other forms of financial aid, these amounts are generally not considered support provided by you.
Are there any tax credits for college tuition? There are two federal credits available to (help) offset the cost of college tuition–the American Opportunity Credit (AOC) and the Lifetime Learning Credit (LLC).
The AOC offers a maximum credit of $2,500 per eligible student for the first four years of post- secondary education, while the LLC provides a credit of up to $2,000 per tax return per year for any level of higher education.
To claim education tax credits, your child must be enrolled at an eligible educational institution AND PROVIDE FORM 1098-T.
In addition to the AOC and LLC, if you or your child are paying interest on qualified student loans, you may be eligible to deduct up to $2,500 of the interest paid. Again, this is subject to income qualifications.
Are distributions from 529 plans taxed? If you've been using a tax-advantaged education savings account, such as a 529 plan or a Coverdell ESA, to save for your child's college expenses, it's crucial to understand the tax implications.
Qualified withdrawals from these accounts are generally tax-free, while non-qualified withdrawals may be subject to taxes and penalties. Withdrawals for tuition, room and board, and related educational expenses are generally considered qualified.
Does my college student need to file a return? Your college student needs to file a tax return if they meet certain income thresholds or if they have specific types of income that require reporting. Here are some general guidelines to consider:
- Income Thresholds: For the tax year 2023, college students are required to file a tax return if their earned income (such as wages from a job) exceeds $13,850. If your student has unearned income (such as interest, dividends, or capital gains), they are required to file a return if that income exceeds $1,100. These income thresholds change each year. The tax filing threshold for Indiana is $1000.
- Self-Employment Income: If your child is self-employed and nets $400 or more, they are required to file a tax return. Self-employment income includes income from freelance work, gig jobs, or any other form of self-employment.
- Other Tax Obligations: Even if your child's income falls below the filing thresholds mentioned above, they may still want to file a tax return if they qualify for certain refundable tax credits or if they had federal income tax withheld from their pay and are eligible for a refund.
Charitable contributions can offer significant tax benefits. Some opportunities you may want to consider include:
- Donate appreciated assets - Contributing long-term appreciated securities, such as stocks, mutual funds, bonds, real estate, or private company stock, can be a highly tax-efficient method of giving. For example, by donating stock that has appreciated for more than a year, you effectively give 20 percent more than if you sold the stock and made a cash donation.
- Donor-advised funds (DAFs) - A DAF is a charitable investment account exclusively created to support philanthropic organizations you care about. This could offer an immediate tax deduction upon deposit of your contribution. The funds can be further invested for tax- free growth and later distributed to any IRS-qualified public charity.
- Early contributions - Consider front-loading your charitable giving by making large contributions during your high-income earning years (big bonuses or sales of investments). By contributing to a donor-advised fund during your high-earning years, you will not only reap extra tax benefits when you need them most but also prepare for charitable donations during your retirement, when your income is likely to be reduced.
- Qualified Charitable Distributions (QCDs) - If you are 70½ years or older, up to $100,000 from your traditional IRA can be directed to qualifying charities tax-free as QCDs in 2023. This tax-free withdrawal is exclusive of your other IRA distributions and is beneficial whether you take the standard deduction or itemized deductions.
While it’s important to consider different strategies for charitable giving, I also wanted to share some best practices to know when starting your giving journey:
- Donate to IRS-acknowledged charities - To claim a deduction for charitable donations, your contribution should be made to an IRS-recognized charity, and you must receive nothing in return for your gift.
- Know deduction limits - Although you can generally deduct up to 60% of your adjusted gross income through charitable donations, some limitations may apply depending on the type of contribution and the organization.
- Tax-smart investments - It’s always important to evaluate all potential donations to identify the most tax-efficient and high-impact contributions available. To do this, I recommend first seeking expert tax and financial counsel to help you identify non-cash assets you own that may have appreciated, as well as to assess any potential tax liability you may face if you were to sell these assets.
- Document your contributions - Always ensure you document all charitable contributions to itemize them on your tax return. To do this, make sure you maintain copies of your W-2 or pay stubs showing the amount and date of your donation if the contribution is an automatic deduction from your paycheck.
- Know the deduction deadline - Your donation must be made by the end of the corresponding tax year to be considered tax-deductible. For example, any charitable contributions you’d like to add to your 2023 tax returns must be made before January 1, 2024.
Social Security benefits can be taxed by the federal government–and that should factor into your planning so you know you have enough money to support the retirement of your dreams. Some states do have their own taxes on Social Security income, but we can focus on potential federal taxes.
The first step in figuring out how much you might pay in federal taxes on your Social Security income is to determine your “combined income,” or how much money you’ll get each year in retirement from all sources. Your combined income is your monthly Social Security benefits multiplied by 12 to give you an annual amount, and divide that number in half. Then, add in your anticipated annual income from your pensions, ordinary dividends, interest, capital gains distributions, and wages.
So let’s say you are going to receive the typical annual Social Security benefit of $16,000 per year, and you also have $20,000 annually in a pension and dividends. You would divide your Social Security benefits in half and add all of your other income together to get $28,000 in combined income.
Once you have your combined income, you can check to see how much of your benefits might be subject to federal income tax.
If you file an individual tax return:
- You don’t owe federal income tax on your Social Security if your combined income is $25,000 or less.
- You may owe federal income tax on up to 50% of your benefits if your combined income is between $25,000 and $34,000.
- If your combined income is more than $34,000, you may owe federal income tax on up to 85% of your benefits.
If you file a joint tax return:
- If your combined income together is between $32,000 and $44,000, you may owe federal income tax on up to 50% of your benefits.
- If you have more than $44,000 of combined income together, you may owe federal income tax on up to 85% of your benefits.
The IRS has a helpful one-page worksheet to help you see if your Social Security benefits are taxable.
**Indiana does not tax Social Security benefits.
A 529 account is a special kind of investment account that you can use to pay for a wide range of education expenses. Your savings in the plan will grow tax-deferred, and withdrawals are tax-free as long as they go to qualified expenses.
There are two types of 529 plans:
- Savings plans are similar to Roth IRAs or Roth 401(k)s; you invest your after-tax contributions in investments like mutual funds, and then use that plan account to pay for qualified expenses for colleges and universities, as well as private, public or religious elementary or secondary tuition expenses for K-12 students. They’re the most common kind of 529 plan.
- Prepaid tuition plans allow you to prepay for an in-state public school so you can lock in tuition rates for a student who might not actually attend the school for a few years.
529 plans can be also used to pay for qualified educational expenses like tuition and fees, books, computers, room and board, and special needs equipment for students attending a college or university. The IRS has also expanded qualified expenses to include K-12 tuition and student loan repayments too.
Note that you can also open a 529 plan for a family member–your children, grandchildren, or another relative. And you can transfer the plan to a different beneficiary if you want, as long as they’re related to you.
Every state offers at least one 529 plan option. You don’t have to invest in your state’s 529 plan, but it might offer extra tax savings if you do. There’s no limit to how much you can invest in a 529 plan every year, but many states cap the total amount you can contribute over a lifetime from $235,000 to $525,000.
**Indiana gives a 20% tax credit for contributions up to $7500.
Tax records should be kept three years from the date the return was due or two years from the date you filed your return (whichever is later). If you are claiming any losses on your tax return (whether it’s business losses, capital losses, or bad debts), you should keep your documents for seven years.
There are several records you should keep:
- Purchase documents for your home
- Investment documents for any investments you still own
- Prior year’s tax returns (we keep them too, but you should also keep a copy!)
- The documents used to prepare your tax returns (including W-2s, 1099s, K-1s, etc.)
Though we wish we could hurry along your return, we all have to wait for the IRS to process returns and issue refunds. If you want an update, you can visit Where’s My Refund? You’ll need to have your Social Security number, marital status, and the exact amount of your refund.
4 Signs It’s Not the IRS Calling
- The IRS will not contact you via email or text message. Legitimate communications from the IRS are primarily through traditional mail. If you receive an email or text message claiming to be from the IRS, it is most likely a scam.
- The IRS will generally communicate via snail mail. These communications will include the IRS seal, a notice or letter number, and contact information if you need to reach them.
- The IRS will never ask over the phone for personal information, such as Social Security numbers or credit card details. If someone claiming to be from the IRS requests this information, it strongly indicates fraudulent activity.
- The IRS will not ask for immediate payment. You will always have an opportunity to question or appeal the amount owed. If someone claims to be from the IRS demands instant payment, exercise caution and verify their authenticity.
Should you receive a suspicious text message or phone call, report it to the IRS. By doing so, you aid in their efforts to take action against scammers and protect others from falling victim to fraudulent schemes.
- Contributions to a traditional IRA are made with pre-tax dollars, reducing your taxable income for the year.
- Investment earnings grow tax-deferred, meaning you do not pay taxes on them until you withdraw funds from the account.
- Withdrawals from a traditional IRA are taxed as income at your ordinary income tax rate in retirement.
- Currently, Required Minimum Distributions (RMDs) must be taken starting at age 72, although the rules for starting RMDs will be changing over the next few years as new tax rules are rolled out.
- Income is generally lower in retirement, so you may benefit from a lower tax rate on your distributions.
- The RMDs may result in you having to withdraw more than you want to each year during retirement.
- Contributions to a Roth IRA are made with after-tax dollars, so they are not tax-deductible.
- Investment earnings grow tax-free, meaning you do not pay taxes on them when you withdraw funds from the account.
- There are no RMDs for Roth IRAs.
- If you end up in a lower tax bracket during retirement, your initial contributions may have been taxed at a higher rate.
- Ensure your name is correct: The name on your return must match the name on your social security card. If your name changed after the divorce and you don’t yet have your new documents, the IRS will likely reject your return or delay your refund.
- Agree on filing status and child tax credits. Your marital status on Dec. 31 determines your tax filing status for the entire year. Unless the divorce is finalized by then, you need to know if you’re filing jointly or separately with your spouse. Don’t guess — consult an attorney or tax professional. Additionally, the IRS only allows one parent to claim the child tax credit, so you and your spouse will need to discuss and be in agreement if you have dependents.
- Remember that alimony is no longer deductible. The 2017 Tax Cuts and Jobs Act did away with many well-established deductions—alimony being one of them. As of Jan. 1, 2019, alimony is no longer a deductible expense.
- Take tax breaks associated with a home sale. If you and your spouse sold a home as part of your divorce, and that home was your primary residence for two of the last five years, you might be able to exclude up to $500,000 of the profits from the capital gains tax.
- Divide retirement funds with a QDRO. While you can’t simply divide shared retirement funds 50-50 without early withdrawal penalties, you can avoid fees by applying for a qualified domestic relations order (QDRO) first. It’s a special court order, so make sure you have it in place before attempting to transfer money from a retirement account.
Forensic accounting is the art & science of investigating people and money. Forensic accountants are experienced auditors, accountants, and investigators of legal and financial documents that are hired to look into possible suspicions of fraudulent activity within a company; or are hired by a company that may just want to prevent fraudulent activities from occurring. They also provide services in areas such as accounting, antitrust, damages, analysis, valuation, and general consulting. Forensic accountants have also been used in divorces, bankruptcy, insurance claims, personal injury claims, fraudulent claims, construction, royalty audits, and tracking terrorism by investigating financial records. Many forensic accountants work closely with law enforcement personnel and lawyers during investigations and often appear as expert witnesses during trials.
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