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 CPA?

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 are rebates for ENERGY STAR® Appliances

A.) You may be eligible to receive rebates from your state or territory for the purchase of new ENERGY STAR qualified appliances.  These rebates are being funded with $300 million from the American Recovery and Reinvestment Act of 2009.  Under this program, eligible consumers can receive rebates to purchase new energy-efficient appliances when they replace used appliances.  Learn more at the U.S. Department of Energy's rebate page at EnergySavers.gov.

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.) 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.  To learn how you can deter, detect and defend against identity theft, please visit the Federal Trade Commission's ID Theft webpage.  You can also use the FTC's site to report a case of identity theft.

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.

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.) 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.

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.) 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 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 the 2009 tax year a business owner may chose to expense up to $250,000.00 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.  Update - March 17, 2010: With today's passage of the 'Hiring Incentives to Restore Employment Act (HIRE)', qualifying businesses can continue to expense up to $250,000 of section 179 property for the 2010 tax year.

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.

Copyright 2003 - 2010

Thomas W. Parfitt, CPA