Tax Deductions and Credits

TurboTax Answers Your Most Common Tax Questions

Written by TurboTaxBlogTeam
Published Feb 15, 2012
4 min read

Tax season is here and with every tax season comes a lot of great tax questions.

Here are some of the most common tax questions from job seekers, parents, baby boomers, and homebuyers this tax season:

1. Job Seekers-With an average unemployment rate of 9.7%, millions of Americans were hunting for a new job in 2011. If you were one of them, your job search, moving expenses, and home office expenses might be tax deductible.

Can I deduct the cost of searching for a job? All those resume copies, employment, outplacement agency fees, career seminars, and even business related travel might be deductible if you were looking for a new job.
Are moving expenses for my new job tax deductible? Moving expenses related to a new job may be tax deductible if you meet the distance and time test.
Are unemployment benefits taxable? Many people are asking if the first $2,400 of unemployment income is tax free, however that tax benefit expired December 31, 2010.
I started my own business, can I deduct my home office expenses? Many entrepreneurs are hesitant to write off the business use of their home, however there are many deductions they can take advantage of and shouldn’t miss out on.

2. Parents– Being parents can be hard work and costly. Whether you have new additions to the family, college-bound students or kids in day care, at tax time you might be getting a little extra money back in your pocket.

Who qualifies as a dependent? This is one of our most frequently asked questions today, due to the changing dynamics of relationships. Many taxpayers are surprised to find out who qualifies as a dependent .
What are qualified education expenses? The U.S. government provides incentives, in the form of education tax credits and deductions, to help decrease the economic impact of pursuing a college education. If you paid eligible education expenses for you, your spouse, or your dependent, you may qualify for one of these tax benefits.
Can I deduct the costs of daycare for my children? If you paid for child care, dependent care, or even summer camp so you could work, you may be eligible to deduct 20 to 35 percent of qualifying expenses up to $3,000 for one qualifying individual and up to $6,000 for two our more qualifying individual.
How do I claim the adoption credit? If you chose to adopt, you may be eligible to take a Qualified Adoption Tax Credit up to $13,360 for qualified expenses associated with the adoption.

3. Baby Boomers – There are 78 million boomers nearing or already enjoying the benefits of retirement, and with these life changes comes common tax questions:

Is my social security income taxable? Social Security income is not always taxable, however all of your income sources need to be taken into consideration when figuring out how much of your social security income will be taxed.
How do the new reporting requirements for cost basis impact me? Effective 2011 brokers are now required to include the cost basis of investments sold if they were purchased in 2011 and after. Since this is a new law, you will still be responsible for the cost basis on previous equity purchases that were sold.
What are the tax implications of taking money out of a retirement account to pay bills/debt? Taking money out of your retirement account to pay off debt may seem like a good idea at the time, but withdrawing from your retirement can be costly. If you haven’t reached the age of 59-1/2, you not only will pay taxes based on your tax bracket, but also an additional 10% tax.

4. Homebuyers/Homeowners -Whether you were were one of the 302,000 new homeowners in 2011 or long-time homeowners, there may be tax deductions available to help offset some of the financial costs of being a property owner.

What can I deduct in a mortgage refinance? If you have taken advantage of lower interest rates and refinanced your home, you may be able to take a tax deduction for the points paid(loan origination fees) to refinance your home loan.
What qualified for home energy tax credits in 2011? The Residential Energy Tax Credit was reduced in 2011, however you still may be able to deduct up to $500 for insulation, roofs, and doors.
How do I repay the 2008 First-Time Homebuyer Tax Credit? If you were lucky enough to receive First-Time Homebuyer Tax Credit in 2008, you were supposed to start repaying the tax credit in 2010 over 15 years through your tax return.

Still have more questions? Don’t worry. TurboTax guides you step-by-step through entering the appropriate information, makes behind the scenes calculations, and puts your tax information on the appropriate tax forms. In addition, TurboTax tax experts are available to provide personalized guidance so that you can be confident you are getting the biggest tax refund and that your taxes are done right.

91 responses to “TurboTax Answers Your Most Common Tax Questions”

rickc says:

April 9, 2012 at 7:01 pm

is there a phone # to contact, so I can askk some questions, as I’m doing my taxes now?? I’ve done my own taxes..

Reply
mehari stifanos says:

April 4, 2012 at 8:05 pm

i made some renovations on my house in 2010 can I claim the expenses on my 2011 Tax?

Reply
Diana says:

March 27, 2012 at 8:35 am

My husband pays 40.00 a week to his company for a company car. Is this expense deductible?

Reply
- TurboTaxLisa says:
  
  April 3, 2012 at 11:27 am
  
  Hi Diana,
  This expense should be deductible as an employee business expense as long as he was not reimbursed for the expenses and the 40.00 covers the business use of the car and not personal use.
  Thank you,
  Lisa Greene-Lewis
  
  Reply
Misty says:

March 24, 2012 at 8:40 am

For the state of Oklahoma can you write off the taxes you paid to the state the previous year?

Reply
Jennifer says:

March 20, 2012 at 7:20 am

Hi Lisa

I am doing my taxes and a question came up asking if I finished college in 4 years. Why do they ask that and does it get me a tax break if I did finish in 4 years?

Reply
- TurboTaxLisa says:
  
  March 20, 2012 at 9:45 am
  
  Hi Jennifer,
  They ask that to determine which education credit or deduction you qualify for and which one is best for you. If you finished your first four years of college you are not eligible for the American Opportunity Credit only either the Lifetime Learning Credit or the Tuition and Fees deduction.
  Thank you,
  Lisa Greene-Lewis
  
  Reply
Karen Hatte says:

March 19, 2012 at 9:27 am

While working on our tax return on Turbo Tax – I indicated that we refinanced our home in 2011. I never came across an area to put the amount for the loan origination fees. I have gone over the form several times. Where is it?
Thanks so much!
Karen

Reply
Heidi says:

March 13, 2012 at 8:07 am

I don’t know if I don’t know how to do this, but I don’t see either of my comments. I left one on Feb 26 and the 27, it is now the 13th, I have still not received my return with an efile sent and received on Feb 8… I can’t get thru to the irs can you help me find my refund?

Reply
Jade says:

March 11, 2012 at 3:56 pm

The property tax cmorapison is all but useless due to the complexity of each individual taxing entity. I live in Texas and know first hand that the figure given in this and all other articles on the subject does not give an accurate assessment of the property tax burden. It is based on the median home value which is very low in Texas except for the major metro areas. Unless you plan to be living in a trailer, better be prepared to pay through the (fill in the orifice of choice). Plus, the rate keeps going up and can be legally raised as much as 8% per year until 65, but there is no cap on the assessment. Not to mention the fact that it is so corruptly administered, nobody trusts any part of it.

Reply
Olen C. Akins says:

March 1, 2012 at 7:47 am

My wife died on 12-29-2110 and I inherited her IRA. I received a 1099R showing the total and the same amount as taxable income without any taxes taken. I rolled the full amt into another IRA belonging to me with no funds received. How do I show this on the 1040 or A so that I am not taxed on $ not taken from the fund? I have been billed by you and it did not work correctly when I printed my return. Please HELP.

Reply
- TurboTaxLisa says:
  
  March 1, 2012 at 6:25 pm
  
  Hi Olen,
  This can be done in TurboTax. You may have missed a question that you need to check off. One question missed can impact your tax return. I just ran through your scenario in the product and it works. Go to the Wages and Income section of the return, choose explore on my own, you will come to the 2011 Income Summary, scroll down to 1099-R and update the info or start over. Code 4 for death is should be on your 1099-R. After you put in the 1099-R info and hit continue, you will come to “Did you Inherit This IRA?”, Mark “Yes”, “This was inherited from, mark “spouse” click continue, You will come to “Transferred the Funds?” screen, mark “you put the money in your own account in 2011, click continue.
  It will show as a rollover and 0 dollars on line 15b
  Thank you,
  Lisa Greene-Lewis
  
  Reply
Maher says:

February 26, 2012 at 11:08 am

I am waiting for an answer to my question on 02/25/12, thanks

Reply