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Brilliant Deductions Frequently Asked Questions

What information do you need to prepare my taxes?
We like clients to complete our client checklist available here and on our links page, and include all backup documentation.

Do I have to file a return?
Even if you do not have to file, you should file a tax return if you can get money back. For example, you should file if one of the following applies.

  1. You had income tax withheld from any income.
  2. You are self-employed and made estimated tax payments for the year.
  3. You qualify for the making work pay credit or the government retiree credit. See IRS Schedule M (Form 1040A or 1040).
  4. You qualify for the earned income credit. See IRS Publication 596, Earned Income Credit (EIC), for more information.
  5. You qualify for the additional child tax credit. See the instructions in your tax forms package for more information on this credit.
  6. You qualify for the refundable American opportunity education credit. See IRS Form 8863, Education Credits.
  7. You qualify for the health coverage tax credit. For information about this credit, see IRS Form 8885, Health Coverage Tax Credit.
  8. You qualify for the refundable credit for prior year minimum tax. See IRS Form 8801, Credit for Prior Year Minimum Tax — Individuals, Estates, and Trusts.
  9. You qualify for the first-time homebuyer credit. See IRS Form 5405, First-Time Homebuyer Credit.

Do my kids have to file a return if they had income?
Everyone must file a tax return if they had taxes withheld from any income. A tax return usually must be filed for a child whose income included investment income, such as interest and dividends, and totals more than $750

How long do I have keep tax records?
For assessment of additional taxes, the IRS statute of limitation generally runs three years from the date you file your return. If you're looking for an additional refund, the limitations period is generally the later of three years from the date you filed the original return or two years from the date you paid the tax. For the 2009 return you file in 2010, the statute of limitations expires in 2013.

There are some exceptions:

  1. If you file a fraudulent return or don't file at all, the limitations clock never begins to run. The IRS can pursue you at any time.
  2. If you don't report all your income and the unreported amount is more than 25% of the gross income actually shown on your return, the limitations period is six years.
  3. If you've claimed a loss from a worthless security, the limitations period is extended to seven years.

Can I file as “head of household?”
You can claim the Head of Household (HOH) filing status on your tax return if you are unmarried, have cared for a dependent for over half the year, and paid more than half the cost of maintaining a home. Taxpayers claiming the Head of Household filing status benefit from a higher standard deduction and lower tax rates than single taxpayers. The definition of HOH filing status is quite specific, so read over the criteria carefully.

  1. You are unmarried or "considered unmarried" on the last day of the year.
  2. You paid more than half the cost of keeping up a home for the year.
  3. A "qualifying person" lived with you in the home for more than half the year (except for temporary absences, such as school). However, if the "qualifying person" is your dependent parent, he or she does not have to live with you.

What’s the status of my refund?
Once a tax return has been e-filed with the IRS and state, the easiest way to check the status is to visit their websites:

What’s the fastest way to get my refund?
With IRS e-file, taxpayers get refunds in half the time it takes to file a paper tax return and receive a refund check. E-filers who choose Direct Deposit can receive their refund in as few as 10 days.

Why do I have to efile my return?
We e-filing all returns we prepare several years ago because the IRS and states mandate that reparers e-file all returns.

Should I have my refund direct deposited?
E-filers who choose Direct Deposit can receive their refund in as few as 10 days. The IRS reminds taxpayers that direct deposit also guards against theft and lost refund checks. Direct deposit is available for electronically filed returns.

Do you do refund loans?
We do not participate in any refund anticipation loan programs.

Should I claim a deduction for an office in my home?
A home office deduction is generally easier for self-employed individuals to claim. But even then, the Internal Revenue Service has certain requirements a taxpayer must meet. First, your home office area must be used regularly and exclusively for your business needs. You can't set up a computer in your den, sporadically type invoices and claim that room as your home office.

Secondly, the business part of your home must be either your principal place of business or where you meet or deal with patients, clients or customers in the normal course of your business. A separate, detached structure, such as a garage or guesthouse, that is used for business also may qualify as a home office.

What information do you need if I sold stocks or mutual funds?
When you sell shares, the tax gain or loss is calculated by comparing your tax basis in the shares sold to the sales proceeds, net of brokerage commissions and transaction fees. We need purchase and sale documentation to figure your tax.