IRS Frequently Asked Questions

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IRS Frequently Asked Questions

IRS FAQ's
1.	What types of educational expenses are deductible?
2.	Why would I need to file an amended return?
3.	Should I notify the IRS of my change of address?
4.	Can I claim the Child Care Credit and/or Dependent Care Credit?
5.	Can the noncustodial parent claim dependency?
6.	Need a copy of last year's income tax return?
7.	What kind of penalties and interest will I be charged for paying and filing my income taxes late?
8.	How can I efile if I don't remember my prior year AGI?
9.	Is my employer supposed to include mileage reimbursement as a part of my gross income on my Form W-2, and do I include it on my return as wages, tips, and salaries?
10.	If the child is born in the last week of December, can the child be a qualifying child for the Earned Income Credit and how do you file a tax return without a social security number?
11.	What should I do if I have a tax problem?
12.	Do I need a tax attorney?
13.	What can I do if I have a Federal Government Tax Lien?
14.	What if I need Tax Help?
15.	Child Tax Credit Questions and Answers
16.	What are Capital Gains and Losses?
17.	Who Must File Schedule SE?

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What types of educational expenses are deductible?	Top
Deductible educational expenses include amounts spent for tuition, books, supplies, laboratory fees, and similar items. They also include the cost of correspondence courses, as well as formal training and research you do as part of an educational program. Transportation and travel expenses to attend qualified educational activities may also be deductible. For more information, refer to Tax Topic 513, Educational Expenses.

Why would I need to file an amended return?	Top
If the errors are in the arithmetic, the service center will usually correct them. If forms or schedules were left out, the service center will request additional information from you and you do not need to file an amended return.However, if you find that you did not report some income, you claimed deductions or credits you should not have claimed, you failed to claim some deductions or credits you are entitled to, or you should have used a different filing status, you should file an amended return.If the IRS has sent you notification of changes to your return and you agree with the changes then you do not need to amend. If you do not agree with the changes the IRS made to your return you will need to amend your return how you think it should look. We have made the program simpler to use and have included state amended returns at no additional charge. Simply answer the questions in the easy to follow online interview and we will complete all of the necessary forms for you to print out and mail in! There is no need to pay the high prices for a CPA to complete your 1040X! I need to file an amended return. Please tell me more!
Should I notify the IRS of my change of address?	Top
If you have moved, or your address has changed, you need to notify the IRS to ensure that you receive any IRS tax refund or correspondence. You may correct the address legibly on the mailing label that came with your tax package, or write the new address on your income tax return when you file. When your tax return is processed, the IRS will update your records.If you change your address after filing your return, you should, of course, notify the post office at your old address so your mail can be forwarded (not all post offices forward government checks). To change your address with the IRS, write to the service center where you filed your last return and provide your new address. (The service center addresses are listed in the instructions to the tax forms.)For the IRS to process a change of address, they need your full name, old and new addresses, and your social security number or employer identification number and signature. If you filed a joint return, you should provide the same information and signatures for both spouses. If you filed a joint return, and then you and your spouse established separate residences, you both should notify the IRS of your new addresses.Form 8822, Change of Address, is available to help you submit an address change, but is optional. The U.S. Post Office will furnish the IRS with change of address updates weekly. Tax forms will be mailed to the last change of address furnished by the Post Office.
Can I claim the Child Care Credit and/or Dependent Care Credit?	Top
Child Care Credit and/or Dependent Care Credit
How much is the credit? For 2023 the child and dependent care tax credit is fully refundable The maximum credit percentage increases to 50% from 30%. You can claim up to $8,000 in expenses per child/disabled person and up to $16,000 for more than 1 person. Also, the full credit amount will be allowed for families making up to $125,000 for year. Families making between $125,000 and $438,000 will receive partial credit. Does the child need a social security number to qualify? Your qualifying child must have a Social Security Number issued by the Social Security Administration before the due date of your tax return (including extensions) to be claimed as a qualifying child for the Child Tax Credit or Additional Child Tax Credit. How much is the credit for other dependents and who qualifies? Dependents who can't be claimed for the Child Tax Credit may still qualify you for the Credit for Other Dependents. This is a non-refundable tax credit of up to $500 per qualifying person. The qualifying dependent must be a U.S. citizen, U.S. national, or U.S. resident alien.
Can the noncustodial parent claim dependency?	Top
My 7-year-old son lived in my household for seven months of the year, and I provided all of his support. I paid child support to his other parent for the other five months. Can I claim my son as a dependent and for a child tax credit without Form 8332?There is a special rule for children of divorced or separated parents, which usually gives the dependency exemption to the custodial parent. The custodial parent is defined as the parent who has custody of the child for the greater part of the year. If you can claim your son as a dependent and he is under age 17 at the end of the tax year and a citizen or resident of the United States, you may be able to claim the Child Tax Credit.Under the special rule, the parent who had custody of the child for the greater part of the year (the custodial parent) is generally treated as the parent who provided more than half of the child's support. This parent is usually allowed to claim the exemption for the child if the other dependency tests are met. However, the noncustodial parent may be treated as the parent who provided more than half of the child's support if certain conditions are met.
Need a copy of last year's income tax return?	Top
There are two ways to obtain information that you listed on an income tax return that was filed with the IRS: You can request a photocopy of the actual return that you filed with the IRS; The photocopy of the income tax return would include the tax form itself, as well as all schedules that you submitted along with copies of the Forms W-2 that were attached to the return. You can obtain a computer transcript of the information that was listed on the tax return that was filed with the IRS. The computer transcript will give you a line by line listing of the return information from the form that was filed for the tax year requested. If you need an exact copy of a previously filed and processed return, or actual copies of Form W-2, you must complete Form 4506 (PDF), Request for Copy or Transcript of Tax Form. There is a $50.00 fee for copies of your previously filed tax forms and all attachments (including Form(s) W-2) for each tax period requested and you should allow 60 calendar days for a response. There is no charge for tax return transcripts or Forms W-2 information. Tax forms filed 6 or more years ago may not be available for making copies. However, "Tax Account Information" (see below) is generally still available for these periods.Form 4506 can also be used to request W-2 information only. You may receive certain federal tax information that was reported by the employer on the Form W-2 free of charge. Current year W-2 information might not be available in all situations. A "Tax Return Transcript" is available only for returns in the 1040 series (1040, 1040A, 1040EZ, etc.). It shows line item entries from the original income tax return that you filed. In most cases, a transcript will meet the requirements for lending institutions for mortgage verification purposes. These transcripts are also widely accepted for financial aid and student loan purposes. The transcripts can be ordered on a Form 4506. or you may be able to obtain it instantly online at IRS Get Transcript. There is no charge for the transcripts and you should receive them within about 10 business days from the time that we receive your request. If you need the information sooner, the tax return transcript and certain W-2 information can be received by visiting an IRS office (with proper ID) or by calling the IRS at 1-800-829-1040. If you need a "statement" of your tax account that shows changes that you or the IRS made to the original return filed, you must request "Tax Account Information" which shows payments and tax adjustments on your account. You can request the "Tax Account Information" by writing to, or visiting an IRS office or by calling the IRS at 1-800-829-1040. You cannot use Form 4506 to request "Tax Account Information". Form 4506. or a "Tax Return Transcript" can also be used to get proof from the IRS that you did not file an income tax return for a particular tax year. Forms can be downloaded at Forms & Pubs or ordered by calling 1-800-829-1040.
What kind of penalties and interest will I be charged for paying and filing my income taxes late?	Top
Interest Interest, compounded daily, is charged on any unpaid tax from the due date of the return until the date of payment. The interest rate is the federal short-term rate plus 3%. That rate is determined every three months. Late Payment Penalty In addition, if you filed on time but didn't pay on time, you'll generally have to pay a late payment penalty of 1/2 of 1% of the tax owed for each month, or part of a month, that the tax remains unpaid after the due date, not exceeding 25%. However, you will not have to pay the penalty if you can show reasonable cause for the failure. The one-half of one percent rate increases to one percent if the tax remains unpaid after several bills have been sent to you and the IRS issues a notice of intent to levy.Beginning January 1, 2000, if you filed a timely income tax return and are paying your tax pursuant to an installment agreement, the penalty is 1/4 of 1% for each month, or part of a month, that the installment agreement is in effect. Late Filing If you did not file on time (including extensions) and owe tax, you may owe an additional penalty for failure to file unless you can show reasonable cause. The combined penalty is 5% (4.5% late filing, 0.5% late payment) for each month, or part of a month, that your income tax return was late, up to 25%. The late filing penalty applies to the net amount due, which is the tax shown on your income tax return and any additional tax found to be due, as reduced by any credits for withholding and estimated tax and any timely payments made with the income tax return. The penalty is 15% per month, up to a maximum 75%, if the failure to file is fraudulent. Also, if your income tax return was over 60 days late, the minimum failure-to-file penalty is the smaller of $100 or 100% of the tax required to be shown on the income tax return. Frivolous Returns In addition to any other penalties, the law imposes a $500 penalty for filing a frivolous return. A frivolous return is one that does not contain the information needed to figure the correct tax or shows a substantially incorrect tax because you take a frivolous position or desire to delay or interfere with tax laws. This includes altering or striking out the preprinted language above the space where you sign. Other Penalties Other penalties may be imposed for negligence, substantial understatement of tax, reportable transaction understatements, and fraud. Criminal penalties may be imposed for willful failure to file, tax evasion, or making a false statement.
How can I efile if I don't remember my prior year AGI?	Top
When self-preparing your taxes and filing electronically, you must sign and validate your electronic tax return by entering your prior-year Adjusted Gross Income (AGI) or your prior- year Self-Select PIN. Using an electronic filing PIN is no longer an option. Generally, tax software automatically enters the information for returning customers. If you are using a software product for the first time, you may have to enter the information yourself. IRS transcript information You will be requested to provide the following information: Your SSN (Or Individual Taxpayer Identification Number) Your first and last name Your date of birth Your filing status Your complete mailing address
Is my employer supposed to include mileage reimbursement as a part of my gross income on my Form W-2, and do I include it on my return as wages, tips, and salaries?	Top
That depends on whether you were reimbursed under an accountable plan or under a nonaccountable plan. Generally, an employer will have an accountable plan if it pays business expenses that would otherwise be deductible by the employee, requires the employee to substantiate the expense, and does not permit the employee to keep any reimbursements that exceed expenses. If the employer does not use an accountable plan, mileage reimbursement would be included in your wages on Form W-2. For more information on reimbursements and accountable plans, refer to Chapter 6 of Publication 463 (PDF), Travel, Entertainment, Gift, and Car Expenses.If your mileage reimbursement is included in box 1 on Form W-2, you need to enter that amount on the "wages, salaries, and tips" line of your tax return. If you itemize your deductions on Form 1040, Schedule A (PDF), Itemized Deductions, you may deduct the business transportation expense as an employee business expense, subject to the 2% limitation of adjusted gross income. You may usually deduct either your actual business automobile expenses or use the standard mileage rate. For more information on when you may use the standard mileage rate, refer to Chapter 4 of Publication 463 (PDF), Travel, Entertainment, Gift, and Car Expenses.
If the child is born in the last week of December, can the child be a qualifying child for the Earned Income Credit and how do you file a tax return without a social security number?	Top
Normally, to be your qualifying child, your child must have lived with you for more than half of the tax year. However, if the child fails the residency test because the child was born or died during the year, the child is considered to meet the test if the child lived with you for the entire time he or she was alive during the tax year.If your child does not have a social security number, apply for one by filling out Form SS-5 with the Social Security Administration, or call the Social Security Administration at 800-772-1213. It usually takes about 2 weeks to get a social security number.If the filing deadline is approaching and you still do not have a social security number, you have two choices. File the income tax return on time without claiming the Earned Income Credit. After receiving the social security number, file Form 1040X (PDF), Amended U.S. Individual Income Tax Return, claiming the Earned Income Credit. Attach a completed Form 1040, Schedule EIC (PDF), Earned Income Credit. (this is not recommended) Request an automatic extension of time to file your return. You can get this extension by filing Form 4868 (PDF), Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. You can file a paper Form 4868 or you can file it electronically.
What should I do if I have a tax problem?	Top
If you are experiencing a tax problem with the OnLine Taxes website you may contact our Customer Service Department to assist you. If your tax problem is more in depth, you will need to consult the IRS and/or perhaps a CPA.IRS Topic 104 - Taxpayer Advocate Program - Help for Problem SituationsWhile the IRS strives to provide accurate and complete service, some taxpayers experience delays in having Federal tax problems resolved. Other taxpayers may be suffering or about to suffer a significant hardship because of the way Internal Revenue laws are being carried out. If you are faced with such circumstances, you can get help from the Taxpayer Advocate Program. Before requesting this assistance, you should first attempt to use existing administrative or formal appeal procedures that are available to help you. Most tax problems are resolved through regular channels. However, if any of the following circumstances apply to you, you may ask for assistance from the Taxpayer Advocate Program: You are suffering or about to suffer a significant hardship, You are facing an immediate threat of adverse action, You will incur significant costs if relief is not granted (including fees for professional representation), You will suffer irreparable injury, or long term adverse impact if relief is not granted, You have experienced a delay of more than 30 calendar days to resolve a tax-related problem or inquiry, You have not received a response or resolution to your problem by the date promised, A system or procedure has either failed to operate as intended or failed to resolve your problem or dispute within the IRS. If one or more of the above applies to you, the Taxpayer Advocate may issue a Taxpayer Assistance Order to suspend, delay, stop, or speed up IRS actions to relieve your hardship. While Taxpayer Advocates cannot change the tax law or make a technical tax decision, they can clear up tax problems that resulted from previous contacts and ensure that your case is given a complete and impartial review. You may gain quick access to the Taxpayer Advocate Program by calling their toll-free number 1-877-777-4778, or you can call or write to your local Taxpayer Advocate, whose address and phone number should be listed in your local telephone directory. If you write, please be sure to include your Social Security or Employer ID Number, your return address and a telephone number where you can be reached during the day. Include with your letter copies of any correspondence you have received from the IRS.
Do I need a tax attorney?	Top
If you need professional advice, you must consult with an accountant, attorney, or other tax professional.Most people will not need a tax attorney. However, if you wish to consult a tax attorney, search the Internet. You can do this by typing tax attorney in any search engine. You will then be able to find the tax attorney that is right for you. OnLine Taxes is a self-prepared tax site. We cannot give tax advice. We can only advise on using the OnLine Taxes site and general information concerning taxes and errors.
What can I do if I have a Federal Government Tax Lien?	Top
The text supplied below is directly from the IRS website. Therefore, all references to "us" or "we" refers to the Internal Revenue Service - IRS. Notices of Federal Government Tax Lien Liens give us a legal claim to your property as security or payment for your tax debt. A Notice of Federal Government Tax Lien may be filed only after: We assess the liability; We send you a Notice and Demand for Payment - a bill that tells you how much you owe in taxes; and You neglect or refuse to fully pay the debt within 10 days after we notify you about it. Once these requirements are met, a lien is created for the amount of your tax debt. By filing notice of this lien, your creditors are publicly notified that we have a claim against all your property, including property you acquire after the lien is filed. This notice is used by courts to establish priority in certain situations, such as bankruptcy proceedings or sales of real estate.The lien attaches to all your property (such as your house or car) and to all your rights to property (such as your accounts receivable, if you are a business). Caution! Once a lien is filed, your credit rating may be harmed. You may not be able to get a loan to buy a house or a car, get a new credit card, or sign a lease. Therefore it is important that you work to resolve your tax liability as quickly as possible, before lien filing becomes necessary. Releasing a Government Tax Lien We will issue a Release of the Notice of Federal Government Tax Lien: Within 30 days after you satisfy the tax due (including interest and other additions) by paying the debt or by having it adjusted, or Within 30 days after we accept a bond that you submit, guaranteeing payment of the debt. In addition, you must pay all fees that a state or other jurisdiction charges to file and release the lien. These fees will be added to the amount you owe. Refer to Publication 1450, Request for Release of Federal Tax Lien.Usually 10 years after a tax is assessed, a lien releases automatically if we have not filed it again. If we knowingly or negligently do not release a Notice of Federal Tax Lien when it should be released, you may sue the federal government, but not IRS employees, for damages. Payoff Amount The full amount of your lien will remain a matter of public record until it is paid in full. However, at any time, you may request an updated lien payoff amount to show the remaining balance due. An IRS employee (either over the toll-free customer service telephone line, or at a walk-in service site, or at your local IRS' lien desk) can issue you a letter with the current amount due in order to release a lien. Applying for a Discharge of a Federal Government Tax Lien If you are giving up ownership of property, such as when you sell your home, you may apply for a Certificate of Discharge. Each application for a discharge of a tax lien releases the effects of the lien against one piece of property. Note that when certain conditions exist, a third party may also request a Certificate of Discharge. If you're selling your primary residence, you may apply for a taxpayer relocation expense allowance. Certain conditions and limitations apply. Refer to Instructions on Form 14135, Application for Certificate of Discharge of Property from Federal Tax Lien. Making the IRS Lien Secondary to Another Lien In some cases, a federal tax lien can be made secondary to another lien. That process is called subordination. Refer to Form 14134, Application for Certificate of Subordination of Federal Tax Lien . Withdrawing Government Tax Liens By law, a filed notice of tax lien can be withdrawn if: The notice was filed too soon or not according to IRS procedures, You entered into an installment agreement to pay the debt on the notice of lien (unless the agreement provides otherwise), Withdrawal will speed collecting the tax, or Withdrawal would be in your best interest (as determined by the Taxpayer Advocate), and in the best interest of the government. We will give you a copy of the withdrawal, and if you write to us, we will send a copy to other institutions you name. Appealing the Filing of a Lien The law requires us to notify you in writing not more than 5 business days after the filing of a lien. We may give you this notice in person, leave it at your home or your usual place of business, or send it by certified or registered mail to your last known address. You may ask an IRS manager to review your case, and you may request a Collection Due Process hearing with the Office of Appeals by filing a request for a hearing with the office listed on your notice. You must file your request by the date shown on your notice. Some of the issues you may discuss include: You paid all you owed before we filed the lien, We assessed the tax and filed the lien when you were in bankruptcy, and subject to the automatic stay during bankruptcy, We made a procedural error in an assessment, The time to collect the tax (called the statute of limitations) expired before we filed the lien, You did not have an opportunity to dispute the assessed liability, You wish to discuss the collection options, or You wish to make spousal defenses. At the conclusion of your Collection Due Process hearing, the IRS Office of Appeals will issue a determination. That determination may support the continued existence of the filed federal tax lien or it may determine that the lien should be released or withdrawn. If you disagree with Appeal's determination, there is a 30-day period starting with the date of determination, in which you may request judicial review in a court of proper jurisdiction. Refer to Publication 1660, Collection Appeal Rights, for more information.
What if I need Tax Help?	Top
If you need tax help, there are many types of tax help available. Click here for tax help from OnLine Taxes Click here for IRS tax help. Click here for State tax help.
Child Tax Credit Questions and Answers	Top
Can a custodial parent claim the Child Tax Credit if the noncustodial parent claims the child as a dependent due to the divorce agreement?The custodial parent cannot claim the Child Tax Credit for a child in the tax year that the noncustodial parent takes the exemption for that child. Does the Form 8332 (used to release the exemption to the noncustodial parent) affect the Child Tax Credit?Yes. The Child Tax Credit can only be claimed by the parent claiming the exemption. In this case the noncustodial parent would qualify for the dependency exemption and therefore the child tax credit. Reference: Publication 17, Your Federal Income Tax Can you file for the Child Tax Credit and the Child Care Credit, too?The Child Tax Credit and the Child and Dependent Care Credit can both be claimed on the same return. They can be claimed on either 1040 Form (PDF), U.S. Individual Income Tax Return, Publication 503, Child and Dependent Care Expenses, has more information for the child care credit. If I file using filing status married filing separately, can I still claim the Additional Child Tax Credit?Yes. You will need to complete Form 8812 (PDF), Additional Child Tax Credit to see if you qualify, and attach it to your 1040 Form. Reference: Schedule 8812, Child Tax Credit Does a grandchild, who is a dependent, qualify for the Child Tax Credit?Your grandchild under the age of 17 who is your dependent and is a U.S. citizen or resident alien is a qualifying child for the child tax credit. Can I get the Child Tax Credit for a child with an ITIN, not a social security number?Yes, with an individual tax identification number (ITIN), you can claim the Child Tax Credit if you otherwise qualify. The Child Tax Credit can only be claimed by the parent claiming the child as a dependent. My child lived for only 12 days and I never received a social security number, because the Social Security Administration will not issue a social security number for a deceased child. Can I still qualify for the Child Tax Credit?Yes, you may attach a copy of the child's birth certificate and enter "DIED" in column 2 of line 6c. You will also need to put a check mark in column 4 of line 6c.
How do I get more information on the child tax credit? Visit the IRS Page Child Tax Credit beginning in January to see if you're eligible to claim the Child Tax Credit or Credit for Other Dependents. The Child Tax Credit begins to be reduced to $2,000 per child if your modified AGI in 2023 exceeds: $400,000 if married and filing a joint return; or $200,000 for all other filing statuses. Reduces the Child Tax Credit by $50 for each $1,000 (or fraction thereof) by which your modified AGI exceeds the income threshold described above that is applicable to you.
What are Capital Gains and Losses?	Top
Almost everything you own and use for personal purposes, pleasure, or investment is a capital asset. When you sell a capital asset, such as stocks, the difference between the amounts you sell it for and your basis, which is usually what you paid for it, is a capital gain or a capital loss. While you must report all capital gains, you may deduct only your capital losses on investment property, not personal property.A "paper loss" - a drop in an investment's value below its purchase price - does not qualify for the deduction. The loss must be realized through the capital asset's sale or exchange.Capital gains and losses are classified as long-term or short-term, depending on how long you hold the property before you sell it. If you hold it more than one year, your capital gain or loss is long-term. If you hold it one year or less, your capital gain or loss is short-term. For more information on the Capital Gains tax rates, refer to IRS Publication 544, Sales and Other Dispositions of Assets.If your capital losses exceed your capital gains, the excess is subtracted from other income on your tax return, up to an annual limit of $3,000 ($1,500 if you are married filing separately).Capital gains and losses are reported on Schedule D, Capital Gains and Losses. Additional information on capital gains tax and losses is available in Publications 550, Investment Income and Expenses, and 17, Your Federal Income Tax. You may download the publications from this Web site or order your free copies by calling 1-800-TAX-FORM (1-800-829-3676).
Who Must File Schedule SE?	Top
You must file Form 1040 Schedule SE if: You had net earnings from self-employment from other than church employee income (line 4 of Short Form 1040 Schedule SE or line 4c of Long Form 1040 Schedule SE) of $400 or more or You had church employee income of $108.28 or more. Income from services you performed as a minister or a member of a religious order is not church employee income (see page SE-1). Note: Even if you had a loss or a small amount of income from self-employment, it may be to your benefit to file Form 1040 Schedule SE and use either "optional method" in Part II of Long Form 1040 Schedule SE Exception: If your only self-employment income was from earnings as a minister, member of a religious order, or Christian Science practitioner and you filed Form 4361 and received IRS approval not to be taxed on those earnings, do not file Form 1040 Schedule SE. Instead, write "Exempt-Form 4361" on Schedule 2 (Form 1040), line 4.