**The questions and answers posted on this site are provided for informational purposes only and are not intended and should not be considered as tax advice. Each taxpayer's situation is different and the information provided here may not be relevant to or correct for your specific situation. You should contact your own tax professional for advice about your own specific situation. **
Q: I just received a phone call/email from the IRS. They said they are on their way to arrest me, what should I do?
A: First of all, do not panic. The IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels. The IRS also does not ask for PINs, passwords or similar confidential access information for credit card, bank or other financial accounts. Recipients should not open any attachments or click on any links contained in the message. Instead, forward the e-mail to email@example.com.
How to know it's really the IRS calling
Q: What about a letter from the IRS?
A: Again, do not panic. Bring the letter to our office and we will help you with it.
Q: I got married/divorced this year. Do I file Single or Married?
A: The IRS considers your marriage status for the entire year on the last day of the year. If you are Married on December 31st, then you will file married. If you are Single on December 31st, you will file Single
Q: Can I email scanned copies of my forms?
A: If you forget one or two items or live out of the area, you are welcome to email information to us. Before you send the pdf's, please look at them to make sure they are readable and the entire page is scanned. Please do not send pictures taken with your phone as these are often hard to read. Please be aware that sending information via email is not secure, make sure that your Social Security number is obscured.
Q: Do I need bring you the original forms or can I just fill in the amounts on my organizer.
A: We need to see all forms that are official tax forms such as W-2, 1099-SSA's, 1099-DIV, 1099-INT, 1099-G, etc.
Q: I inherited an IRA this year. What should I do?
A: Call us immediately. This area is a minefield and can be costly if you take the wrong step.
Q: I received an inheritance this year. Do I have to pay tax on the money and property?
A: You do not have to pay Federal or State income tax on money or property that you inherit. You will most likely receive a 1041 K-1 from the Estate Personal Representative that may include income earned on the estate assets between the date of death and when you received the inheritance. Even if there was not income, there may be deductions that could reduce your income in the final year of the estate. If you inherit an IRA, contact our office immediately.
Q: I received a cash gift from my aunt this year. Do I have to pay tax on the cash I received?
A: No. The donor is responsible for filing a Gift Tax Return if the gift is over $14,000.
Q: How long should I keep my tax documents?
A: Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return. Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction
Q: I don't have the money to pay what I owe. What should I do?
A: There are options but each case is individual so it is best that you call our office and one of our tax professionals will assist you in figuring out the best approach to your situation.
Q: I have heard that almost no one is going to itemize in 2018 due to the increased standard deduction. So that means you don't need any of my usual information, mortgage interest, property tax and charitable contributions, right?
A: It is true that many taxpayers who normally itemized on their 1040 will no longer itemize because of the increased standard deduction. BUT, the standard deduction for Oregon has not changed. It is currently $4435 MJF and $2215 Single. We still need to see your normal paperwork, mortgage interest paid, property tax and charitable contributions, to see if you will itemize for Oregon only.
Q: I have saved all of my medical receipts. Do you need to see them?
A: We do not need to see your receipts. You can simply total up the amounts and list them in the proper place on your organizer. You will need to save your receipts with your completed tax return in case you are audited.
Q: I heard there was a Special Medical deduction for Oregon. Can you tell me about it?
A: Oregon has a Special Medical deduction for taxpayers 64 and over who have a Federal Adjusted Gross Income of less than $200,000 MFJ, ($100,000 Single). It is a deduction of up to $1800 from your Oregon income. If you or your spouse is 64 or over, please list your out-of-pocket medical expenses for you and your spouse separately. We need to report them separately for each taxpayer.
Q: What exactly can I deduct as a non-cash contribution?
A: How much is the bag of clothes that you dropped off at Goodwill worth? We all think that our treasures are worth more than they really are. We have found that "It's Deductible" over values most items. The IRS states that you can deduct "fair market value". Take a quick trip around Goodwill or other thrift shops and see what similar items are sold for. Taking pictures of your items will be another step that you can take to show what you donated. We do not need to see the pictures. Keep them just in case the IRS wants proof of your donation.
Q: I just bought a bunch of stuff at the school auction. What can I deduct?
A: If you received a benefit as a result of purchasing items at a charity's auction, you can deduct only the amount of your purchase price that is more than the value of the item or service you receive. For example, if you pay $100 to go to the auction dinner and the dinner is worth $25 then you can deduct the amount over the cost of the dinner, $75. The same goes for items that you purchase at an auction. If you pay $30 for a gift certificate worth $50 then you can not deduct anything. If you paid $100 for the $50 gift certificate then you can deduct $50.
Q: What can I deduct if I make a political contribution?
A: Political contributions are not deductible as a charitable contribution on Schedule A. However, if you file an Oregon tax return and make a contribution (up to $50 single, $100 joint return) to a political candidate, political party or a PAC certified in Oregon, you may receive a credit equal to your contribution.
Q: I received a lot of statements from my brokerage firm this year. Which ones do you need to see?
A: Brokerages firms send a lot of statements. There are monthly, quarterly, and yearly statements. We do not need to see those. The one that we need to see will say something like "Year End 1099 Forms". We need to see this in its entirety. Often times there is important information hiding on a page that we need but you may not think is important.
Q: I received a 1099-MISC for some work I did this year. What is this form and why did I get it?
A: One of the most common reasons you will receive tax form 1099-MISC is if you are self-employed or did work as an independent contractor during the previous year. The IRS refers to this as “non-employee compensation.” Please include this form with your tax information.
Q: I have a rental property that is managed by a rental management company. What do you need?
A: The renal management company should give you a year end statement that lists your income and expenses. You can use this information to fill our your tax organizer. You may also have expenses that you paid out of pocket that didn't go through the management company. You need to also list these expenses but be careful to not list the same expenses twice.
Q: I cashed in some US Treasury Bonds this year. What do you need from me?
A: The bank where you cashed in the Bonds should issue a 1099-INT. If they didn't, you should contact them. If you did not report the increase in the redemption value of the bonds as interest annually and you did not report the interest in the year of maturity, you must report all interest in the year the bonds are redeemed.
Q: I sold my personal car this year. Do I have to report the sale?
A: It depends. Basically, the Internal Revenue Service (IRS) views all personal vehicles as capital assets. If you sell it for less than the original purchase price, it’s considered a capital loss that is a non-deductible personal loss. This means you do not have to report it on your tax return. However, if you sell it for a profit (higher than the original purchase price), this would be a gain to you and would result in you having to report this windfall on your income tax return and pay taxes on it.
Q: Can you tell me about the Oregon Cultural Trust tax credit?
A: If you donate to one of Oregon's heritage and humanities non profits, and then make a matching donation to Oregon's Cultural Trust, you not only will get a Federal charitable contribution for those donations, but you will also receive an Oregon Tax Credit for the donation to the Oregon Cultural Trust. For example, if you make a $100 donation to the Corvallis Public Schools Foundation and $100 to the Oregon Cultural Trust, Oregon will give you a credit of $100. That's a pretty good deal for a donation! See their website for limits and additional information.
Q: Can I get a deduction for contributions to a 529 plan?
A: Yes! Joint filers can get a deduction of up to $4620 ($2310 for Single filers) off of their Oregon tax return if contributions are made to an 529 plan through the Oregon College Savings Plan or MFS 529 College Savings Plan. Please see their website for more information. Oregon 529 network
Q: I received a scholarship. Is it taxable?
A: Generally, scholarships are tax free if they are used for qualified expenses (tuition and fees) and you are a degree candidate for a degree at a eligible educational institution. Scholarships used for Room & Board are usually taxable. Contact our office with your specific situation.
Q: I sold my personal residence this year. Do I have to pay tax on the gain?
A: You may be able to exclude gain up to $250,000 ($500,000 for joint filers) from your income. You must have owned and used the home as your personal residence for 2 out of the last 5 years.
Q: My buddy at the gym told me that the government is going to tax my estate when I die, what???
A: Yes, there may be a Federal and Oregon tax on assets that a decedent owned or had an interest in as of the date of death. For Oregon that limit is a low $1,000,000. For Federal, the 2017 limit is $5.49 million. An Oregon return is required to be filed if gross assets are over $1,000,000. Deductions for liabilities and expense are allowed in determining what portion of the estate that the tax is applicable to. However, you are required to file an Oregon Form 706 if the gross estate [before deductions] is over $1,000,000.
Q: You are kidding me right? What do I need to include in determining whether or not I am over the $1,000,000?
A: No, sadly we are not kidding you. The answer to your question, like most tax questions is not completely straightforward. However the common assets that are included in determining the $1,000,000 threshold are life insurance, real estate, personal property, bank accounts, investment accounts and retirement accounts. Oregon will expect a tax return if your gross assets are above $1,000,000. So even if your taxable estate
Q: How can I avoid or limit this tax?
A: Good Estate planning can reduce, eliminate or at least defer the Oregon Estate Transfer Tax and Federal Estate and Gift Tax. We recommend you see an attorney that has experience with Estates and Trusts and fortunately there are several good attorneys in Corvallis and Albany.