fREQUENTLY ASKED QUESTIONS
Our FAQ section should provide you with some of the most commonly asked questions. If you do not find something you looking please get in touch.
What is ITIN? It is the personal identification number of a taxpayer who does not have a Social Security number assigned. How do I apply for the ITIN? Filling out the 1040NR and W7 forms respectively, attach the requested documents and send to the IRS ITIN Department for approval. What is the EIN? It is the Employer identification number. How to apply for the EIN? Filling out the SS4 form, it is recommended to seek the advice of an accountant to choose the best type of Corporation that suits you according to your Status and business name. Who must declare? All natural and legal persons, residents and non-residents who have received income within the United States or US territories in the immediately preceding year How should I declare my taxes? According to your status you can declare: as Single, Married Filing Jointly, Married Filling Separate, Head of Household or widower. How do I know that a person depends on me? Through these five tests:1-Support Test. The taxpayer must provide more than half the support of the claimed dependent, except for special rules with respect to multiple-support agreement and children of divorced or separated parents.
2-Gross Income Test.
3-Member of Household Relationship Test.
4-Joint Return Test.
5-Citizen/Residency Test How do I determine my marital status? Marital status (single, married etc.) is determined for the last day of the fiscal year (December 31). What if he dies during the year? By the date of your death. So, if he dies during the year, who declares? Testamentary assignments and inheritances are generally tax exempt, however amounts received that would have been taxable to the deceased person. They will be taxable for the beneficiary. What is an Income? Generally speaking, Income is financial gain derived from work, capital (money), or a combination of the two. What is taxable income? They are: a) Earnings from work (wages, commissions, tips). b) Capital Income (interest, dividends, royalties, leases). What is a gross income? It is the total worldwide income received, Example; taxable money, properties or services. What is Exempt income? They are Income indicated by law, such as pensions, support of minor children, interest from municipal bonds, social security benefits, VA loans and some military and religious allowances. What is a VA? They are government aid. Are social security pensions exempt? Generally Yes, but in some circumstances they may be partially taxable, depending on the total income of the taxpayer. What types of forms are completed for Corporations? Forms 1065 - 1120 -1120S
What type of forms must be filled out with personal Income Taxes? There are two forms; 1040 and 1040-SR. Can I fill out the forms? Yes you can, but it is recommended to consult an accountant or tax preparer to fill out the different annexes that allow you to report your different types of Income, Deductions and Credits. What is a Deduction? It is the amount of Income that is not subject to Tax.
What is a credit? They are valuable means of saving taxes. Unlike deductions, credits are not taken into account until after taxable income is calculated and taxes determined, some of these credits are refundable and some are not. What is a non-refundable credit? Non-refundable means that the combined amount of these credits cannot reduce the taxpayer's taxes payable below zero, example: (child care and disabled dependents credit, adoption credit). What is a refundable credit? A refundable credit is a tax credit that is refunded to the taxpayer no matter how much the taxpayer's liability is. What is the earned income credit? The Earned Income Tax Credit (EITC) helps low- to moderate-income workers and families get a tax break. If you qualify, you can use the credit to reduce the taxes you owe – and maybe increase your refund. What requirements must I meet to claim the child and dependent care credit? a) The taxpayer must have earned income. b) The taxpayer must have paid more than half of the maintenance cost during the year of the qualified person at least during 6 months of the tax year.b) The expenses must have been necessary to allow the taxpayer to work.NOTE: The above is true until the child turns 19 years old or 23 if attending college or permanent disable. How is a dependent determined? You have to take into account your marital status (single, married etc.), age and your gross income. On what amounts is required to prepare a tax return? When gross income is greater than or equal to the sum of the standard deduction, plus the personal exemption. What requirements must I meet to be consider for EIC? Have proof of residency for more than half of the year, not be 19 at the end of the year (24, if you are a full-time student or permanet disable), not be married, have proof of relationship. Do I have to pay taxes on unemployment compensation? Yes, it is definitely taxable. (Reported on Form 1099-G ). What other non-earned income and capital gains must be reported? Winnings from games, prizes, awards, jury duty income, trusts and estates. If the IRS sends me a tax refund, do I have to pay taxes on it? No, but if you recieved any interest for late payment, the interest is taxable. What is alimony? It is a payment made to a person pursuant to an agreement or decree of divorce or separation from a court. Is alimony taxable? The person receiving the alimony does not have to report the alimony received as taxable income. Prior to the changes in the Tax Cuts and Jobs Act, alimony payments were tax-deductible by the person making the payment. What is "Child Support"? It is a pension for minor children, these payments are not deductible for the payer or taxable for the beneficiary.
What is a credit? They are valuable means of saving taxes. Unlike deductions, credits are not taken into account until after taxable income is calculated and taxes determined, some of these credits are refundable and some are not. What is a non-refundable credit? Non-refundable means that the combined amount of these credits cannot reduce the taxpayer's taxes payable below zero, example: (child care and disabled dependents credit, adoption credit). What is a refundable credit? A refundable credit is a tax credit that is refunded to the taxpayer no matter how much the taxpayer's liability is. What is the earned income credit? The Earned Income Tax Credit (EITC) helps low- to moderate-income workers and families get a tax break. If you qualify, you can use the credit to reduce the taxes you owe – and maybe increase your refund. What requirements must I meet to claim the child and dependent care credit? a) The taxpayer must have earned income. b) The taxpayer must have paid more than half of the maintenance cost during the year of the qualified person at least during 6 months of the tax year.b) The expenses must have been necessary to allow the taxpayer to work.NOTE: The above is true until the child turns 19 years old or 23 if attending college or permanent disable. How is a dependent determined? You have to take into account your marital status (single, married etc.), age and your gross income. On what amounts is required to prepare a tax return? When gross income is greater than or equal to the sum of the standard deduction, plus the personal exemption. What requirements must I meet to be consider for EIC? Have proof of residency for more than half of the year, not be 19 at the end of the year (24, if you are a full-time student or permanet disable), not be married, have proof of relationship. Do I have to pay taxes on unemployment compensation? Yes, it is definitely taxable. (Reported on Form 1099-G ). What other non-earned income and capital gains must be reported? Winnings from games, prizes, awards, jury duty income, trusts and estates. If the IRS sends me a tax refund, do I have to pay taxes on it? No, but if you recieved any interest for late payment, the interest is taxable. What is alimony? It is a payment made to a person pursuant to an agreement or decree of divorce or separation from a court. Is alimony taxable? The person receiving the alimony does not have to report the alimony received as taxable income. Prior to the changes in the Tax Cuts and Jobs Act, alimony payments were tax-deductible by the person making the payment. What is "Child Support"? It is a pension for minor children, these payments are not deductible for the payer or taxable for the beneficiary.