Taxing Matters

10 Most Asked Questions Regarding Your Tax Organizer

1. What are the tax estimates?
   
   Tax estimates are quarterly taxes paid during the tax year directly to the taxing authority which you make in addition to withholdings from your employer.
   
   
2. Where do I find my routing transit number for direct deposit?
   
   
   The routing transit number is located on the bottom left hand corner of your check.
   
   It is the first 9 digits. It is followed by your account number . The individual check number is also usually located on this line. Do not include the check number.
   
   
   
   
3. When I sell a stock or mutual fund, am I taxed on that money even if it was reinvested into another fund or stock?
   
   Yes, however you are only taxed on the difference between the amount you sold the fund for and the amount you originally paid for the fund. If you had dividends reinvested into the same fund, this amount will increase your tax basis. We will need to know what you paid for the stock and date originally purchased as well as the date sold and sales price to correctly figure your capital gains or losses.
   
   
4. What if I don’t have records of the purchase date and price of stocks or mutual funds sold?
   
   You will need to contact the brokerage firm through which you purchased the investment. They should be able to provide you with this information. If the stock or mutual fund was gifted to you then your basis is the same as that of the person who gave it to you. If you inherited the investment, then your basis is the value of the stock or mutual fund on the date of death or 6 months after the date of death.
   
   
5. I took out a loan from my 401(k). Do I have to report this on my tax return?
   
   No, as long as you don’t default on the loan. On the questions page on the organizer we ask if you took money out of your IRA, 401(k) or any other retirement account. This does not include a loan which you are paying back.
   
   
6. Can I file as head of household?
   
   You can file as head of household only if you are unmarried and have a qualified dependant. If you are married and did not live with your spouse at anytime during the tax year and have a qualified dependant then you may also qualify to file as head of household. In both situations, you must have a qualified dependant.
   
   
7. I am married however would like to file separately from my spouse. Can this be done?
   
   Yes, however there are some tax disadvantages in doing this.
   
   Both spouses must either itemize deductions or take the standard deduction. You will need to know how your spouse is filing
   
   If you have student loan interest, you will not be allowed this deduction as married filing separately.
   
   If you have capital losses you will each be limited to $1500 loss rather that the $3000 allowed to single taxpayers or those filing married filing jointly.
   
   There may be other disadvantages as well please call or email us if you are considering this option.
   
   
8. I received a 1099-DIV form which reports dividends and capital gain distributions however I never received this money. Why do I have to pay taxes on these?
   
   One reason is that these amounts reported on your 1099-DIV statement may have been reinvested into the funds you own meaning that you now own more shares of that fund. In this case you pay tax as if you received the money in hand and then went out and purchased more shares of that same fund. The amount you report on your tax return this year becomes your basis in the fund when you sale it.
   
   
9. What is the average of crew member’s professional deductions?
   
   These amounts very depending on the amount you spend per year. According to IRS publication 463 the IRS does not require you to keep receipts for any single expenditure under $75. We suggest you have the receipts for anything you deduct because proving to the IRS auditors can be quiet difficult and costly. The average that we see is between $2000 and $2500 however it should be whatever your actual expenses are.
   
   
10. I am unclear as to how to report my flying schedule?
    
    If you fly domestic trips then all you need is the number of days flown each month.
    If you fly internationally, then we need to know the layover city and the number of day of the trip. If you are a crew member for American Airlines, please report the half day counts reported on your HI-1s. This number is reported after each trip next to the layover city code. For example: LHR 5. If you fly for another airline then all you need is the city code and the number of days of the trip.
    

We hope these questions and answers help you in filling out your tax organizer.

In Appreciation - continues....

This year we are offering a special incentive for you, our clients. We appreciate your continued loyalty and look forward to working with you in the years to come.

We believe word-of-mouth is our best advertising, so we have put together this offer:

If we do the tax returns of 5 new clients you refer to SKYTAX, we will credit your account $250.

This is like having your tax return prepared for FREE.

An easy way to get started is to use the Forward To A Friend button on the bottom of the page.  Send this along to someone who may be interested. If they use our service, you are 1/5 of the way there!