Frequently Asked Questions
We have put together several general questions that we are frequently asked. The information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. For more information on anything on tomparfittcpa.com, or for assistance with any of your tax, business, or financial strategy concerns, contact our offices.
Q.) Why do I need a Certified Public Accountant?
A.) Your CPA will keep your taxes at a minimum, satisfy record keeping and report filing requirements, use financial and audit reports to make smart business decisions, achieve maximum success and profitability in your business, build your net worth through sound investing and financial planning, communicate effectively with bankers, lawyers, government agencies, and others connected with your financial life, plan for comfortable retirement, and last but not least, preserve your estate for your intended heirs.
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.) Can I receive a tax credit for the purchase of new energy-efficient products for my home?
A.) If you purchase an energy-efficient product or renewable energy system for your home, you may be eligible for a federal tax credit. The Residential Renewable Energy Tax Credit will not expire until December 31, 2021. Learn more at the U.S. Department of Energy's Residential Renewable Energy Tax Credit webpage.
Q.) Are there other incentives available that promote renewable energy and energy efficiency?
A.) There are numerous incentives and policies throughout the United States that promote renewable energy and energy efficiency. These tax credits, rebates and savings are offered through state and local governments as well as various utility companies. Database of State Incentives for Renewables and Efficiency (DSIRE) is an ongoing project of the N.C. Solar Center and the Interstate Renewable Energy Council and is funded by the U.S. Department of Energy. Visit DSIRE at dsireusa.org to search the database and learn more. You can also click here to search for these programs at U.S. Department of Energy's website.
Q.) How do I get my Social Security Statement?>
A.) Begining in 2015, when you turn age 25, 30, 35, 40, 45, 50, 55 or 60 and don't have a Social Security online account, you can expect to receive a paper Social Security statement that lists your earnings history, taxes paid and expected benefit about 3 months before your birthday. And after age 60 workers will receive a statement annually. These mailings, which were sent annually to all workers age 25 and older between 1999 and 2011, were suspended in April 2011 to save money. Statements are also available online at any time by visiting www.socialsecurity.gov/myaccount. To access your online statement, you must be at least 18 years old, have a Social Security number, have a valid email address and have a U.S. mailing address.
Q.) What should I know to protect myself from identity theft?>
A.) Identity theft is a serious crime that can cost you time, money, destroy your credit and ruin your good name. It happens when your personal information is stolen and used without your knowledge to commit fraud or other crimes. The IRS has published the following tips to help taxpayers avoid becoming the victim of an identity thief.
Additional information is avalable from:
Q.) How can I get a free copy of my credit report?>
A.) Law requires the major nationwide consumer credit reporting companies - TransUnion, Experian and Equifax - to give you a free copy of your credit report each year if you ask for it. Visit www.AnnualCreditReport.com or call 1-877-322-8228, a service created by these three companies, to order your free credit report.
Q.) Where can I find information on Ohio's Minimum Wage Laws?
A.) Visit the Ohio Department of Commerce - Division of Labor and Worker Safety homepage for more information. Specifically, look for their Minimum Wage Poster under 'Resources'.
Q.) I received the First Time Homebuyer Credit, how do I find my account information and repayment amount?
A.) The IRS offers an online tool to lookup your First Time Homebuyer Credit Account.  You can visit the First Time Homebuyer Credit Account Look-up on the IRS website.  To access you account information, you must your Social Security Number (or your IRS individual taxpayer identification number), date of birth, street address and Zip Code.
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. You may also want to file a return if you meet the requirements of any of the many refundable tax credits that are available. These refundable credits include the Earned Income Tax Credit, Additional Child Tax Credit, American Opportunity Credit, Adoption Credit and Health Coverage Tax Credit. Consult your tax advisor to determine if you qualify for any of these refundable tax credits.
Q.) Can I file my individual income tax return for free?>
A.) Those taxpayers who meet the filing and income guidelines may use the Internal Revenue Service's FreeFile program. The IRS website can direct you to online tax service providers that can help you file your return at no cost. In addition to filing your federal income tax return, many of the providers can also file your state income tax return as well. Visit the IRS FreeFile page to learn more and to find the online tax service provider that is right for you. The state of Ohio also offers options to file your individual income tax return electronically. Visit the Ohio Department of Taxation File Faster page to learn more.
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, such as 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.) As a business owner, what amount of equipment costs 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 2017 a business owner may chose to expense up to $510,000.00 ($1,000,000.00 for 2018) of equipment, 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.) Does the financing of a business asset purchased change how the asset is depreciated or expensed?
Q.) Can I deduct the medical expenses incurred by my family and me 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.
Q.) How can I reduce the amount of unsolicited mail and telephone calls I receive?
A.) The following are three easy steps you can take at no cost to reduce the number of unsolicited mail and telephone calls you receive (and maybe save a tree at the same time).
The national consumer credit reporting companies offer a toll-free number that enables you to opt-out of all pre-approved credit offers you receive in the mail with just one phone call. Call 1-888-5-OPTOUT (1-888-567-8688) for more information.
The Direct Marketing Association (DMA) offers a webpage that allows you to set your direct mailing options to stop mailings from those direct mailers that subscribe to the DMA's listings. You can set these options on the DMA's DMAchoice.org webpage.
You can subscribe to the National Do Not Call list to significantly reduce the number of telephone calls you receive. The federal government administers the list. To learn more about the Do Not Call list and to sign up, visit www.DoNotCall.gov. You can also file telemarketing complaints at the website.
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Parfitt & Associates, LLC