TurboTax Answers Most Commonly Asked Tax Questions

Tax Planning

tax questionTax season is now fully underway, and with it comes a wide range of tax questions from filers. These questions range from those asked perennially (“can I claim my boyfriend as a dependent?”) to those specific to the events of 2012 (Hurricane Sandy, healthcare reform and the fiscal cliff). To help make the tax filing process as easy as possible, TurboTax has answered the most commonly asked tax questions for this tax season.

Who can I claim as a dependent?

Your significant other is probably many things to you—but is he or she also a tax deduction? The question of who you can claim as a dependent has confused taxpayers for years.

The short answer: You can claim a “qualifying child” or “qualifying relative” if they meet specific requirements related to residence, relationship to you, age, financial support provided and income. And yes, you may be able to claim a girlfriend, boyfriend, domestic partner or friend as a qualifying relative in some cases. Claiming dependents can give you a tax deduction worth up to $3,800 per dependent and also make you eligible for many other tax deductions like the Earned Income Tax Credit.

What is the Earned Income Tax Credit and How Do I Claim it?

The Earned Income Tax Credit is a tax credit for low to middle income wage earners that has lifted nearly 7 million people out of poverty, however many people still miss it. Why do so many people miss it? Many think they don’t make enough to file their taxes so they don’t claim it. You have to file your taxes to get this valuable tax credit, which may help a family with three dependents receive a credit worth up to $5,891.

Does healthcare reform impact my 2012 taxes?

There’s been a lot of confusion about healthcare reform and taxes. Rest assured, the requirement to purchase healthcare does not impact your 2012 or 2013 taxes. You do not have to purchase health insurance until January 2014 and there may be a few exceptions based on income, religious beliefs, and citizenship. You will not see changes to your taxes related to the purchase of health insurance until your 2014 taxes are filed in 2015 if you buy healthcare coverage at a health insurance exchange.

Are unemployment benefits taxable?

The unemployment rate has dipped to 7.9 percent vs. 8.3 percent in January 2013. But that’s little comfort to the jobless who find out their unemployment income is taxable income. The good news is that job search and moving expenses may be tax-deductible. See the next question for more details.

Can I deduct the cost of searching for a job? Are moving expenses for my new job tax deductible?

Job seekers may be able to deduct many expenses related to their search: printing resumes, fees for employment and outplacement agencies, career seminar costs and business-related travel. Moving expenses relevant to your job search may be deductible if you meet the distance and time test.

What are the tax implications of withdrawing money early from a retirement account to pay bills or debt?

In difficult economic times, many people start eyeing their retirement accounts to pay off bills or debt. While it is your money, you may be unaware of the impacts of withdrawing from your nest egg. Withdrawing money early from a retirement account comes with a 10 percent tax penalty in addition to the regular income tax on the amount withdrawn. There can be other consequences, too. The retirement money may bump you into a higher tax bracket, which can result in the taxation of other income, such as social security, that you wouldn’t have been taxed on otherwise.

What are qualified education expenses? And when can I file?

College tuition skyrockets every year, but the U.S. government provides incentives with education credits and deductions. For example, the American Opportunity Credit, which was extended through 2012, benefits full-time and part-time college students with a maximum $2,500 credit per student, provided you meet modified adjusted gross income requirements.

My house foreclosed, how does that impact my taxes?

The Mortgage Forgiveness Debt Relief Act survived the recent ‘fiscal cliff,’ receiving a one-year extension through 2013. This means you don’t have to pay taxes on the loss of your home through foreclosure or short sale, up to $2 million (or $1 million if married filing separately).

I started my own business; can I deduct my home office expenses?

Many entrepreneurs are reluctant to write off the business use of their home for fear of being audited. But home office expenses are a legitimate tax deduction you shouldn’t miss out on. Keep in mind the space you claim as a home office should be used exclusively and regularly for that purpose.

Will January tax law changes impact my taxes?

On Jan. 1, 2013, Congress kept the U.S. from going over the ‘fiscal cliff’ by passing The American Tax Relief Act of 2012. The act includes a permanent extension of the Alternative Minimum Tax (AMT) patch, the permanent reduction of tax rates and the reinstatement of several tax deductions, including the Educator Expense Deduction, the Tuition and Fees Deduction, and state sales taxes in lieu of state income taxes.

I was impacted by a natural disaster in 2012. What tax breaks are available to me?

Hurricane Sandy and other natural disasters last year left many picking up the pieces, filing insurance claims, and wondering how it will affect their taxes. It’s possible to take a tax deduction for property loss claims not compensated by insurance, or in some special cases, when you’re still waiting for compensation. These are known as casualty losses and include hurricanes, floods, earthquakes, tornadoes, fire—even vandalism and shipwrecks.

What if I still have questions?

TurboTax is here for you. Only TurboTax let’s you talk to tax experts who are CPAs, IRS enrolled agents, and tax attorneys while you prepare your taxes, free.

Comments (149) Leave your comment

  1. My husband and I were insured all last year, ( we had a family plan) and received the subsidy through the healthcare market place. We file our taxes separately every year. How do we file separately again legally, without being penalized.

  2. I had twins at the beginning of last year and two other children, I only made $4300 due to a lengthy medical leave due to the twins birth, why am I only receiving $2000 back on my income tax, does the amount of children not have an influence on the amount?

  3. Can I claim my 2 adult children (26 & 22) if still living in my home? They both have jobs but I still am main supporter

  4. my wife retired las jan. and withdraw her retirement pay and her 401k and then april of 2014, she open her own business as sole propreitorship. can we file a joint return for 2014 then she can file her own taxes as a sole proprietorship..

  5. My wife and I are partners in an LLC. I was told that each partner can automatically claim a $3800 deduction on our individual returns. Is this true?

  6. My wife sold a house in Mississippi this year and we used part of the money to pay off a mobile home that is in our daughter’s name. We lived in the trailer but we also bought another house that we moved into. The mobile home is being sold. Do I owe taxes on the money from Mississippi or would the mobile home have to be put in my name first?

  7. I am receiving social security benefits. I also am making mortgage payments on my house. If I stay in the range and don’t pay taxes would I still be able to get refund from interest being paid on mortgages. thank you

  8. For the 2014 tax year i adopted 4 children. i was told that i could get a one time payment of 13,000 per child. is this true

  9. My husband & I receive approximately $32,000 a year in Social Security. When we were preparing 2013 taxes, it said we owed no taxes. But we have itemized deductions that would have probably given us a refund. What do we do about that? Can we still get a refund when not owing taxes?

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  11. My daughter is 16, worked part time and earned $572.00 in 2013 and received a W2. As her parents we claimed her as a dependent. Does she need to file a tax return?

  12. For 2013 i earned roughly $4000.
    Was in college for half the year, and am being claimed as a dependent by my mother.

    Do i have to file taxes this year for 2013?

    1. Hi John,
      You do not make the income threshold to require you to file taxes, but you may be able to get a tax refund if you had taxes taken out. If you do file your taxes, you will not be able to claim an exemption for yourself.
      Thank you,
      Lisa Greene-Lewis

  13. Hello,
    I am a divorced father of 2. My kids are with me a minimum of 2-3 nights per week. I pay their healthcare, pay support to their mother etc. She claims both of them on her taxes. Can I claim head of household?
    Thank you.

    1. Hi,
      To qualify as head of household your kids have to live with you more than half the year. TurboTax will ask you the necessary questions to give you the deductions and credits you’re eligible for.
      Thank you,
      Lisa Greene-Lewis

  14. I’m getting slammed this year due to my wages vs lose of home deductions, dependents, head of household, etc. due to a divorce. I’m over 50 yrs of age and contribute 15% of my annual wages to a company sponsored 401K…..To lower the $5,000 amount that I owe on top of the 12,000 already paid via payroll tax deductions….Can I offset the tax burden of $5k and write a check for $5k to my 401k prior to April 15th? I’d rather pay myself rather than the government.

    1. Hi Sean, Sorry to hear about your tax return for this year. You’re asking a good question, however the contributions for your 401(K) are taken out of your wages each paycheck and reduce the amount of wages that is taxable. Your contributions can only be made through your paycheck. You can’t contribute directly to your 401(k).


  15. I receive a FERS (not CSRS) annuity from the US Postal Service. Turbo tax is not clear on which selection to make for the 1099R. It doesn’t seem right to choose the 401K category for a pension. Help would be appreciated…

  16. My boyfriend and I opened a business in 2013. We did not incorporate and instead opened it as a sole proprietor. We do business with multiple companies and received 1099’s for them. Some of the 1099’s came with his info and some came with my info. We are so confused as to how to do our taxes. We are children together but are not legally married. How do we determine what portion of the business each one claims. Can I claim everything myself?

    1. Hi Liz,
      If you are not incorporated you would each have to prepare your taxes separately and claim the 1099s on each of your taxes according to who they are issued to. You could not claim everything yourself since the 1099s are tied to your individual social security numbers and the IRS will match the 1099 copies they receive to your individual tax returns so file only the 1099s that are made out to you and your boyfriend will have to file the ones made out to him on his tax return. TurboTax will guide you through accurately filing your taxes and if you have any questions while you’re preparing your taxes you can ask our tax experts who are CPAs and Enrolled Agents your question.
      Thank you,
      Lisa Greene-Lewis

  17. I didn’t pay my 2012 taxes couldn’t afford to pay I recently amended them in order to claim eic for my child and now expect a refund. I got a notice stating they Took $500 from 2013 due to non payment for 2012 will they send a check back as I no longer owe them?

    1. Hi Tamika,
      Yes, once they process your 2012 taxes they will most likely send your tax refund for 2012 as well as the money deducted from your 2013 taxes.
      Thank you,
      Lisa Greene-Lewis

  18. I’ve heard the starting next year (2014 tax season). That you’ll no longer be able to claim your child or non working spouse as a dependant. Is that true?

    1. Most likely you will owe IRS. Plus you are lying to the governtment when you claim dependants thst you are not entitle.

  19. If you are claiming your girlfriend as a dependent, what option do you pick from the drop down box? I don’t see an option that will fit. thank you

    1. Hi,
      In the drop down menu select “other” and then answer the rest of the questions. If you claim a non-relative you have to answer the question about whether or not they live with you the entire year, you provide over half of their support, they make less than $3,900 earned income for the year, and citizenship.
      Thank you,
      Lisa Greene-Lewis

  20. My ex did not claim my daughter last year 2012 taxes. He said I could claim my daughter this year 2013 taxes. I didn’t work in 2012 can I claim her on my taxes this year for 2012?

    Im just trying to figure out what I can do for this years taxes on claiming my daughter

  21. I use turbo tax to guide me through the tax process it asked my filing status and i filed married seperate return. I was asked aboit child care expenses. I answered the questions and it calculated 600 towards this expense. My return refund was changed by the ira and my refund reduced by 600 because you cant claim this deduction if your filing status is married filing separately. I am really dissatisfied with the turbo tax product and feel i should get a reduction in my preparation fees.

  22. My boyfriends in jail and he’s telling me I can file he’s taxes he never claimed from 2009 to 2010 how can I get poa and he’s w2 forms??!! He said he doesn’t have them I have to go to he’s old job but how can I do this?!?!? Please help!!

  23. Am I able to file for a tax refund I got my w2 from ihss I made 4,726 it show all $0 with federal,Medicare, social security tax withheld I called the payroll they said its because I made to little to take taxes out.. I’m so confused ?? Last year my made way lesser n I was able to do tax n some tax we’re takin out

  24. I am planning on using the Home and Business version for my husband and myself to file jointly and use schedule C to report sole proprietor income. Our college age student has income and wants to apply for his refund. Can I use the same software- chosing the 1040EZ form-or must I purchase another set of software for his return?

  25. Can i claim my mom as dependent? I support her financially regularly on a monthly basis. She lived here for about 6 months but decided to go back to El Salvador she has SSN. Does she qualify since she is in Cental America?

    Thank you.

  26. My employee benefits package includes flexible spending account which I take advantage of. This year I had expenses in excess of the amount set aside in the account. Can I deduct them?

  27. My grandson borrowed money and signed a promissory note. He and his wife divorced and he has moved out of town and has not made anymore payments since May. Can I claim this as a loss?

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