Your Tax Question - 080

Dear John,  When we were talking the other day about some of the things that are changing with the tax code, you had mentioned something about the Medical Expenses going away.  When does this happen?  Thanks, Hank
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Hi Hank,


No, the medical deduction is not going away, it is just being increased from 7.5% of your AGI to 10% of your AGI.  This is a deduction which is taken on your Schedule A deductions if your qualifying medical expenses presently exceed 7.5% of your Adjusted Gross Income but beginning in 2012 this deduction will not be allowed until your AGI reaches 10%.  In other words you have to spend more on medical expenses to be allowed this deduction.  So it is only going away for those who usually spend a little more than 7.5% to a little less than 10% of their AGI.  


Hope this clarifies things for you.


Thanks,
John


PS.  One of the things that is new this year for 2011 is the allowed medical expenses for breast pumps and lactation expenses.  It's about time in my opinion since sexual reassignment surgery has been allowed for years.

Your Tax Question - 079

Dear John, How much do I have to earn before I have to file a tax return.  I am a single college student who works at a restaurant, and I live with my parents.  Thanks, Jim T.
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Hi Jim,


Basically if you earn more than $3,650 you are required to file a tax return.  There are nuances in the code (there is always nuances in the code) but that is the general income requirement.  You can refer to IRS Publication 501 to help you further or you may email me and I can help - it's kinda what I do.  http://www.irs.gov/publications/p501/ar02.html#en_US_2010_publink1000220708


Thank you,
John

Your Tax Question - 078

Dear John, I was wondering if there is an age limit for claiming my child on my taxes.  Thank you, Jennifer
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Hi Jennifer,


Yes, Your child must be under age 19 (or under age 24 if a full-time student).  However, you may still be able to claim your child as a dependent relative as long as he/she meets some other IRS criteria as well.


Thanks,
John


PS.  Shoot me an email and I will be happy to help you with the Dependent Exemption tests.

Your Tax Question - 077

Dear John, My son just moved out on his own last year and he assured me that he had "everything covered" where his taxes were concerned.  Now, he found out that his friend who was "helping him out" actually boogered up a few other buddie's taxes.  Now he wants to check his out but he can't seem to find them.  Does the IRS keep copies and can we get them if they do?  Thanks, Melvin
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Hi Melvin,


Don't fret this situation too much - yours would not be the first son who had inadvertently misplaced his tax files.  Think of it this way, he'll be more apt to keep a hold of them going forward.


The IRS has 3 ways that you may get your tax records from them.  You can order a copy online, you can call them at 1-800-908-9946, or you can fill out form 4506-T to request a copy by mail.  I prefer the online method as sitting on the phone with the IRS is only slightly longer than doing things by snail-mail.  Whatever option you choose it should not be too difficult.


Good Luck,
John


PS.  If your son needs someone who is a little better than a buddy who is "doing him a favor" with his upcoming taxes suggest that he email me.

Your Tax Question - 076

Dear John, I received a letter from the IRS that tells me that I owe them a decent amount of money that I don't have.  Can I set up a payment plan with them?  Thank you, Joan
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Hi Joan,


My question is "Are you sure that the IRS is correct - that you owe them what they say you owe them?"  Unless you know for sure you should not just take their word for it, you should check with your tax person to verify the IRS figures.


If, however, you are sure of their numbers then you should consider taking out a small loan to pay the IRS off in full (it is usually beneficial to you to be rid of them all together).  If you cannot do this then you might be able to get more time to pay (if you can pay in full).  I say all of this to now say "Yes" to your initial question - you may request a payment option.  This is done by filing out a Form 9465 and submitting it to the IRS where they will determine if you are granted the payment option, or not, with-in 30 days.


If you need help with any of this please send me an email and I'll get it all figured out for you.


Regards,
John