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FAQ’s ON TAXES AND TAX PREPARATION

QUESTION: When should I get my W-2?

ANSWER: Employers are required to provide your 2012 W-2 by January 31. If you don’t receive your
W-2 form by early February, call your employer or you can call the IRS at 800-829-1040.

QUESTION: When is income taxable or non taxable?

ANSWER: As a starting point you have to include in your gross income everything you receive that is payment for your services. For example, wages, salaries, commissions, fees, and tips.

But there is more. Other items that are considered taxable income are things such as fringe benefits, stock options, unemployment compensation, unemployment benefits paid by the state. Additionally, most cancelled debts are income. Also, many people are surprised to find out that payments they receive in the form of bartering are supposed to be included in your income.

QUESTION: What items are not taxable income?

ANSWER: 1) One of the biggies is child support payments.
2) Gifts, 3) Bequests and inheritances, 4) Worker’s Compensation benefits, 5) Public Assistance benefits such as food stamps and Medicare which are based on need, 6) Compensatory damages awarded as the result of injury or illness, 7) Welfare benefits and cash rebates, 8) Disaster relief payments, 9) Work training programs.

QUESTION: If I inherited money, is it taxable?

ANSWER: Family property you receive as a gift or inheritance is not taxable. Understand that once you put that money to work, any income you earn from the money is then taxable down the road. Also, if you inherited a pension or an IRA, you may have to include part of that inherited amount in your income.

QUESTION: I heard home office deductions were recently made a little bit easier.

ANSWER: There’s a new rule that will take effect for 2013 that does make the home office deduction a little bit easier. Taxpayers will be able to deduct $5 per square foot for up to 300 square feet of a home office. The new rule will allow a taxpayer to make a simple calculation to claim up to “$1,500 in home office deductions. Under the current rule, the IRS requires you to file and fill out a 43-line form which is very complicated. So beginning in 2013 the process will be simpler.