Question:

I made a mistake on my federal return. How do I correct a return that has already been filed?

Answer:

What you do depends on the type of mistake that you made:

• Many mathematical errors are caught in the processing of the tax return itself, so they will notify you
• If you did not attach a required schedule, the IRS will contact you and ask for the missing information.
• If you did not report all your income or did not claim a credit, you should file an amended or corrected return using Form 1040X (PDF), Amended U.S. Individual Income Tax Return.

Question:

How do I know if I have to file quarterly individual estimated tax payments?

Answer:

You must make estimated tax payments for the current tax year if both of the following apply:

• You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits.
• You expect your withholding and credits to be less than the smaller of:
  • 90% of the tax to be shown on your current year's tax return, or
  • 100% of the tax shown on your prior year's tax return. (Your prior year tax return must cover all 12 months.)

Special rules may apply and it is important that you talk to a tax expert.

Question:

I sold my principal residence this year. What form do I need to file?

Answer:

Generally, you need only report the sale of your principal residence if you realized a gain on the sale. To determine if you may exclude up to $250,000 of gain on the sale of your principal residence (up to $500,000 for a joint return or a return by a surviving spouse), refer to Publication 523, Selling Your Home.
There are certain instances where you may be entitled to exclude from income all or a portion of the gain realized on the sale of your principal residence.

Question:

I received a 1099-DIV showing a capital gain. Why do I have to report capital gains from my mutual funds if I never sold any shares?

Answer:

A mutual fund is a regulated investment company that pools funds of investors allowing them to take advantage of a diversity of investments and professional asset management.
Essentially this is how it works. You own shares in the fund, but the fund owns assets such as shares of stock, corporate bonds, government obligations, etc. To make money for you assets are sold at a gain. If the asset was held by the mutual fund for more than one year, the nature of the income is capital gain, which gets passed on to you. These are called capital gain distributions, which are distinguished from other types of income such as ordinary dividends.
Capital gains distribution are taxed as long term capital gains regardless of how long you have owned the shares in the mutual fund. If your capital gains distribution is automatically reinvested, the reinvested amount is the basis of the additional shares purchased.

Question:

I purchased stock from my employer under an employee stock purchase plan. Now I have received a Form 1099-B from selling it. How do I report this?

Answer:

IRS Tax Form 1099-B reports all sales and/or exchanges of mutual fund shares. If you realized capital gains or losses from the, you must report them on your tax return.
Form 1099-B reports the gross proceeds of sales of mutual fund shares, excluding retirement accounts. In addition, 1099-B reports exchanges between funds and transfers from non-retirement accounts to retirement accounts. The form includes the name of the fund sold, a description of the sale date of the sale, share price, number of shares sold, gross proceeds and any federal income taxes withheld. We can help you calculate the cost basis to determine gain or loss.

Question:

Is my estate going to have to pay federal taxes when I die?

Answer:

The chances are good that your estate will not have to pay estate taxes. According to some sources, only about 1% of all estates in the United States have estate taxes imposed on them. The federal government only imposes estate taxes if your estate is worth more than a certain amount. This cutoff amount depends on the year of your death.
All property that is left to your spouse at your death is exempted from the federal estate tax, but only if your spouse is a citizen of the United States. In addition, the estate tax is generally not imposed on property that is left to a tax-exempt charity.

Question:

What is included in the Estate?

Answer:

The Gross Estate of the decedent consists of an accounting of everything you own or have certain interests in at the date of death). The fair market value of these items is used, not what you paid for them or what their values were when you acquired them. The total of all of these items is your "Gross Estate." The property may consist of cash and securities, real estate, insurance, trusts, annuities, business interests and other assets. It is possible the Gross Estate will include non-probate as well as probate property.

Question:

What is excluded from the Estate?

Answer:

Generally, the Gross Estate does not include property owned solely by the decedent's spouse or other individuals. Lifetime gifts that are complete (no powers or other control over the gifts are retained) are not included in the Gross Estate (but taxable gifts are used in the computation of the estate tax). Life estates given to the decedent by others in which the decedent has no further control or power at the date of death are not included.

Question:

What deductions are available to reduce the Estate Tax?

Answer:

One of the primary deductions for married decedents is the Marital Deduction. All property that is included in the gross estate and passes to the surviving spouse is eligible for the marital deduction. The property must pass "outright." In some cases, certain life estates also qualify for the marital deduction.
Also available is the Charitable Deduction. If the decedent leaves property to a qualifying charity, it is deductible from the gross estate.
Also deductible are:

• Mortgages and Debt.
• Administration expenses of the estate.
• Losses during estate administration.

Question:

What are the benefits of participating in a 403(b) plan?

Answer:

There are significant tax advantages for participants in a 403(b), including pre-tax contributions to a 403(b) plan and earnings on these amounts are not taxed until they are distributed from the plan.