100 Tax Questions & Answers – YebboTax
Your expandable, mobile-friendly client FAQ. Tap a question to view the answer.
Q1: What documents do I need to bring for tax preparation?
Bring all W-2s, 1099s, Social Security statements, mortgage statements, student loan interest forms, last year’s return, proof of deductions (receipts, mileage logs), and identification (photo ID and Social Security card).
Q2: When is the tax filing deadline?
Usually April 15. If it falls on a weekend or holiday, the deadline moves to the next business day.
Q3: What happens if I miss the filing deadline?
You may face late filing penalties and interest. If you’re owed a refund, there’s no penalty, but you must file within 3 years to claim it.
Q4: Can you file my taxes electronically?
Yes. E-filing is secure and the fastest way to process returns and refunds.
Q5: How long does it take to get my refund?
If you e-file and choose direct deposit, refunds typically take 7–21 days. Paper filing takes longer.
Q6: What if I owe taxes—when is the payment due?
Taxes are due on the filing deadline (April 15). Paying late results in penalties and interest.
Q7: Can you file for an extension?
Yes, file Form 4868 for a 6-month extension to file. It does not extend the time to pay.
Q8: Do I still need to file taxes if I earned very little?
If your income is below the IRS filing threshold, you may not be required to file—but filing could get you a refund or credits.
Q9: Do I need to file taxes if I live abroad?
Yes. U.S. citizens and green card holders must file regardless of where they live. You may qualify for the Foreign Earned Income Exclusion or Foreign Tax Credit.
Q10: How do I check the status of my refund?
Use the IRS “Where’s My Refund?” tool at IRS.gov or call 1-800-829-1954.
Q11: Do I need to report cash income?
Yes. All income, including cash, must be reported to the IRS.
Q12: What if I have multiple W-2s?
You must report all W-2s. The IRS receives copies from employers, so leaving one out can trigger a notice.
Q13: How do I report 1099 income?
Report Form 1099-NEC income on Schedule C (self-employment). Certain 1099s may go on Schedule E/F depending on type.
Q14: I drive for Uber/Lyft—how is that income reported?
You’ll receive a 1099; report ride earnings, tips, and fees on Schedule C. Deduct eligible expenses (mileage, fees, phone, etc.).
Q15: Do I have to report tips?
Yes. Tips are taxable income and must be reported.
Q16: What if I do freelance or gig work?
You must report all income, even if you don’t receive a 1099. Track expenses to offset income.
Q17: How do I report rental income?
Report rental income and expenses on Schedule E. Deduct mortgage interest, repairs, insurance, and depreciation.
Q18: How is Social Security income taxed?
It may be taxable depending on your combined income. Up to 85% may be taxable if you exceed certain thresholds.
Q19: Do I need to report unemployment benefits?
Yes. Unemployment benefits are taxable and reported on Form 1099-G.
Q20: Is disability income taxable?
It depends. Private disability insurance benefits may be taxable; Social Security disability (SSDI) may be partially taxable depending on income.
Q21: Should I take the standard deduction or itemize?
Choose whichever results in the lower tax. The standard deduction is fixed; itemizing requires receipts for mortgage interest, taxes, medical, donations, etc.
Q22: What are common deductions I might qualify for?
Medical expenses, mortgage interest, state and local taxes (subject to limits), charitable donations, student loan interest, and retirement contributions.
Q23: Can I deduct medical expenses?
Yes, the portion that exceeds 7.5% of your adjusted gross income (AGI) if you itemize.
Q24: Can I deduct mortgage interest?
Yes, generally on up to $750,000 of qualifying home acquisition debt (subject to rules).
Q25: Can I deduct student loan interest?
Yes, up to $2,500 per year if you meet income limits; this is an above-the-line deduction.
Q26: What education credits are available?
The American Opportunity Credit (AOC) for the first four years of college and the Lifetime Learning Credit (LLC) for ongoing education.
Q27: Can I claim child care expenses?
Yes, via the Child and Dependent Care Credit for qualifying care needed to work or look for work.
Q28: What is the Child Tax Credit?
A credit up to $2,000 per qualifying child (subject to phase-outs); partially refundable under current law.
Q29: Can I deduct charitable donations?
Yes, if you itemize and donate to qualified charities. Keep receipts and acknowledgement letters for $250+ donations.
Q30: What is the Earned Income Tax Credit (EITC)?
A refundable credit for low- to moderate-income workers; eligibility depends on income, filing status, and number of qualifying children.
Q31: What expenses can I deduct as a small business owner?
Ordinary and necessary expenses: supplies, equipment, software, rent, utilities, insurance, advertising, professional fees, and mileage.
Q32: Do I need to file quarterly taxes?
Yes, if you expect to owe at least $1,000 for the year after withholding and credits. Pay estimated taxes quarterly.
Q33: How do I track mileage for business use?
Keep a contemporaneous log (date, purpose, start/end odometer). You may use the IRS standard mileage rate or actual expenses.
Q34: Can I deduct my home office?
Yes, if used regularly and exclusively for business. Use simplified square-foot method or actual expenses.
Q35: What records should I keep for my business?
Receipts, invoices, bank and credit statements, payroll records, mileage logs, and tax filings. Keep at least 3–7 years.
Q36: How are business meals and entertainment deducted?
Business meals are typically 50% deductible (with proper documentation). Entertainment expenses are generally not deductible.
Q37: Can I deduct startup costs?
Yes, deduct up to $5,000 in the first year (subject to phase-outs) and amortize the remainder over 15 years.
Q38: Do I need a separate bank account for my business?
Yes. Separating finances improves recordkeeping and protects liability positions.
Q39: How do I pay myself from my business?
Sole prop/LLC: owner’s draws. S-corp/C-corp: reasonable salary via payroll; dividends/distributions may apply.
Q40: Should I form an LLC or stay sole proprietor for tax purposes?
An LLC offers legal protection; tax treatment can be sole prop, partnership, or S-corp. Best choice depends on income, risk, and goals.
Q41: How are stocks taxed?
Sales trigger capital gains: short-term taxed at ordinary rates; long-term at 0%, 15%, or 20% depending on income.
Q42: What’s the difference between short-term and long-term capital gains?
Short-term: held < 1 year; taxed as ordinary income. Long-term: held > 1 year; taxed at preferential rates.
Q43: Do I pay taxes on dividends?
Yes. Qualified dividends get lower capital-gains rates; nonqualified dividends are taxed as ordinary income.
Q44: How are retirement accounts taxed?
Traditional IRA/401(k): tax-deferred growth; withdrawals taxed. Roth IRA/401(k): tax-free qualified withdrawals.
Q45: What is the penalty for withdrawing early from retirement accounts?
Generally 10% penalty plus income tax if withdrawn before age 59½, with some exceptions.
Q46: Do I pay taxes on crypto transactions?
Yes. Selling, trading, or spending crypto is a taxable event; report gains/losses.
Q47: How do I report real estate sales?
Report on Form 8949 and Schedule D. You may exclude up to $250,000 ($500,000 MFJ) of gain on a primary residence if tests are met.
Q48: Do I need to pay taxes on interest income?
Yes, interest from banks, CDs, and bonds is taxable and reported on Form 1099-INT.
Q49: How are mutual funds taxed?
You may owe tax annually on dividends and capital gains distributions, even if you reinvest them.
Q50: What is cost basis, and why does it matter?
Cost basis is what you paid for an asset (plus adjustments). It determines your gain or loss when you sell.
Q51: Who qualifies as a dependent?
A child or qualifying relative who meets IRS tests for relationship, age, residency, support, and income.
Q52: Can both parents claim the same child?
No. Only one parent can claim a child per year. Tie-breaker rules usually favor the custodial parent.
Q53: Can I claim my elderly parent as a dependent?
Yes, if you provide more than half their support and they meet income limits and residency tests.
Q54: How does divorce affect taxes?
Filing status may change; only the custodial parent typically claims dependents unless Form 8332 is used.
Q55: What if I pay child support?
Child support is not deductible by the payer and not taxable to the recipient.
Q56: Is alimony taxable?
For divorces finalized after 2018, alimony is neither deductible by the payer nor taxable to the recipient.
Q57: Can I claim foster children?
Yes, if they lived with you more than half the year and meet other dependency tests.
Q58: What if my child has a part-time job?
You may still claim them if they meet dependency tests; the child may need to file a return for their income.
Q59: Can I claim adoption expenses?
Yes, up to an annual per-child limit (subject to income phase-outs).
Q60: What happens if both parents claim the same child?
The IRS applies tie-breaker rules. Usually the child goes to the parent with whom they lived longer during the year.
Q61: Do I have to file a state return?
Yes, if your state has an income tax and you meet its filing thresholds.
Q62: What if I worked in more than one state?
You may need to file in multiple states; credits often prevent double taxation.
Q63: How do state tax refunds affect federal taxes?
Refunds may be taxable if you itemized deductions the prior year and benefited from the deduction.
Q64: Are state taxes deductible?
Yes, state and local income/sales/property taxes are deductible if you itemize, subject to the SALT cap.
Q65: What if I moved during the year?
You may file as a part-year resident in both the old and new states.
Q66: Do I need to pay city taxes?
Some cities (e.g., NYC) impose income taxes; check local rules.
Q67: How does living in a no-income-tax state affect me?
You won’t file a state income tax return, but sales and property taxes still apply.
Q68: Can I deduct property taxes?
Yes, if you itemize, but within the overall SALT deduction limit.
Q69: What is SALT deduction limit?
The total deduction for state and local taxes is capped by federal law (commonly referenced as $10,000).
Q70: Do I have to pay estimated state taxes?
Yes, if you expect to owe over the state’s threshold after withholding and credits.
Q71: What triggers an IRS audit?
Common flags include large/unusual deductions, unreported income, mismatched forms, and certain business losses.
Q72: How long should I keep my tax records?
Keep at least 3 years; up to 7 years for certain loss claims; indefinitely for records related to property basis.
Q73: What do I do if I receive an IRS letter?
Read it carefully and respond by the deadline. Contact your tax professional for guidance.
Q74: What if I can’t pay the IRS in full?
Consider an installment agreement, temporary delay, or an Offer in Compromise if eligible.
Q75: Can I set up a payment plan with the IRS?
Yes. Apply online or file Form 9465 to request an installment agreement.
Q76: What if I made a mistake on my tax return?
File Form 1040-X to amend your return and correct errors or omissions.
Q77: How do amended returns work?
They replace parts of your original return. You’ll explain changes and include revised forms/schedules.
Q78: How far back can the IRS audit?
Generally 3 years; up to 6 years for substantial understatements; no limit for fraud or non-filing.
Q79: What if I get audited?
Provide documentation and explanations. A tax pro can represent you before the IRS.
Q80: Will using a tax preparer reduce my chance of audit?
No guarantees, but accurate, well-documented returns generally reduce audit risk.
Q81: How do I get direct deposit for my refund?
Provide your routing and account numbers on your return or refund form.
Q82: Can I split my refund into multiple accounts?
Yes, use Form 8888 to split your refund across accounts or buy savings bonds.
Q83: What if my refund is delayed?
Check IRS “Where’s My Refund?”. Delays can be caused by errors, identity checks, or amended returns.
Q84: Can the IRS take my refund for debts?
Yes. Refunds can be offset for federal/state taxes, child support, and certain federal debts.
Q85: How do I pay taxes owed?
Use IRS Direct Pay, EFTPS, check/money order, or a debit/credit card (fees apply).
Q86: Can I use a credit card to pay taxes?
Yes, via approved processors, but convenience fees apply.
Q87: Will I be charged interest on late payments?
Yes. Interest and penalties accrue until the balance is paid.
Q88: Can I apply my refund to next year’s taxes?
Yes. You can apply part or all of your refund to next year’s estimated taxes.
Q89: Can I track my state refund?
Most states offer online tools similar to IRS “Where’s My Refund?”. Check your state’s tax website.
Q90: What is an IRS offset?
When the IRS reduces your refund to pay certain debts you owe; you’ll receive a notice explaining the offset.
Q91: How are scholarships taxed?
Amounts used for tuition and required fees/books are tax-free. Room, board, and stipends are taxable.
Q92: How do I file taxes if I’m in the military?
Military pay is taxable, but special rules apply for combat zones and certain allowances.
Q93: What if I inherited money or property?
Inheritance itself is not taxed federally, but income it produces is taxable. Your basis may step up to fair market value.
Q94: Do I have to pay taxes on gifts I received?
No. The giver may need to file a gift tax return if gifts to one person exceed the annual exclusion.
Q95: How are gambling winnings taxed?
Winnings are fully taxable. You may receive Form W-2G and must report all winnings.
Q96: Can I deduct gambling losses?
Yes, if you itemize, up to the amount of gambling winnings. Keep detailed records.
Q97: How are foreign bank accounts reported?
File FBAR (FinCEN 114) if aggregate foreign account balances exceed $10,000 at any time during the year.
Q98: What if I’m a non-resident alien?
You may need to file Form 1040-NR for U.S. source income; treaty benefits may apply.
Q99: Do I need to file if I live overseas?
Yes. U.S. citizens must file regardless of residence. Extensions and exclusions may apply.
Q100: How do foreign tax credits work?
They provide a dollar-for-dollar credit for foreign taxes paid on the same income to mitigate double taxation.
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