Q.) What is Ohio's Commercial Activity Tax?

A.) Visit our CAT Tax page for more information.

Q.) How long should a person retain their tax and financial records?

A.) Visit our Record Retention Guide for more information.

Q.) Do I have to file a tax return?

A.) For each tax year, a return must be made by a U.S. citizen or a resident alien who has at least a specified minimum amount of gross income.  In most cases if your gross income is below these amounts, you do not have to file a return, the gross income requirements vary by age and marital status.  Consult your tax advisor to determine if you must file.

Q.) Are there situations when you should file even if you are not required to file?

A.) Yes.  Even if your gross income falls below the levels in which you are required to file, you may have federal income tax withheld on wages received from your employer that qualify for a refund.

Q.) Is the gain from the sale of my home taxable income?

A.) The sale of your principal residence generally is not reported on a taxpayer's return.  However, if a portion of the home was used for business, suchas office in the home or a rental, this may trigger a taxable gain.  The taxpayer must have lived in the residence for at least two of the last five years, and can only claim this exclusion for one sale every two years.  There is a maximum exclusion amount and other criteria that need to be checked.

Q.) Does the financing of a business asset purchased change how the asset is depreciated or expensed?

A.) No.

Q.) As a business owner, what amount of equipment can I expense?

A.) Instead of depreciating the cost of business property over a period of years a business owner may choose to expense these costs.  Generally, for the 2007 tax year a business owner may chose to expense up to $125,000.00 equipment ($250,000.00 for 2008), but is limited by the owner's earned income.  The equipment must be placed in service during the tax year and be used in the active conduct of a trade or business to be eligible.  Whether the equipment is purchased through a financing agreement or not has no effect on the amount that may be expensed.

Q.) Can I deduct the medical expenses incurred by me and my family during the year?

A.) An itemized deduction is allowed for non-reimbursed medical expenses paid during the year for the medical care of the taxpayer, the taxpayer's spouse and the taxpayer's dependents to the extent that such expenses exceed 7.5% of the taxpayer's adjusted gross income.  These expenses are reported on Schedule A, Itemized Deductions, Form 1040.  Those taxpayers claiming the standard deduction cannot deduct non-reimbursed medical expenses on their form 1040.

Q.) As a business owner, what vehicle expenses can I deduct for the use of my vehicle in my business?

A.) Expenses for gasoline, oil, tires, repairs, insurance, depreciation, parking, and licenses involved for vehicles used in a trade or business are deductible.  However, the standard mileage rate method is a simplified method which can be used to compute the deduction for vehicle expense in lieu of calculating these various actual expenses.  Under this method, the taxpayer determines the allowable deduction by multiplying his business miles by the standard mileage rate as determined by the Internal Revenue Service each year.  In either case, a deduction is allowed only for the part of the expenses that are attributable to business use.