Frequently Asked Tax Questions

1. When are my Federal and New Jersey taxes due?

April 18, 2011

2. How early can I file my tax return?

For most taxpayers, the 2011 tax filing season starts on schedule, January 14, 2011. However, the tax law changes encated by Congress and signed by President Obama in December mean some people need to wait until mid-to late February to file their tax returns in order to give the IRS time to reprogram its processing systems. Some taxpayers - Including those who itemize deductions on Form-1040 Schedule A - will need to wait to file. Those who need to wait include: Taxpayers claiming Itemized Deductions on Schedule A, Taxpayers claiming the Higher Education Tuition and Fees Deduction and Taxpayers claiming the Educator Expense Deduction.

3. What does tax preparer registration mean to me?

Prior to 1/1/2011 any person was able to prepare any tax return for someone else for a fee. There was no requirement for continuing education or competency. Enrolled agents, CPA's and attorneys do have continuing education, competency and testing. As of 1/1/2011 all preparers come under the same rules. All preparers at the Tax Stop have complied with the new regulations.

4. I live in NJ and work in PA. Why doesn't my employer take NJ withholding from my paychecks?

If you are an employee, your tax liability is to your home state of NJ since there is a reciprocal agreement between PA and NJ. It is a courtesy for the foreign state employer to withhold tax for your home state. If the employer does not register with NJ to withhold and remit the tax for you, you will have to make estimated payments to NJ yourself. NOTE: If you are self-employed and perform work in PA, you DO owe tax to PA and will take a credit for the tax you paid to PA on your NJ tax return. NOTE 2: If you work in Philadelphia, you must pay Philadelphia wage tax. Again, you may take a credit on your NJ tax return.

5. What do I need to bring when I come for my appointment?

You should bring a copy of your prior year return to use as a reference tool for the preparer. You will need the social security numbers for all of your dependents (children or others) as well as their birthdates. You will also need all of your W-2's, 1099 interest statements, 1099 dividend statements from your broker or individual stocks, 1099-R from your pensions or IRA's, your Social Security statement and all other paperwork regarding income from any source. You will also need information on your deductions such as medical expenses including medical mileage(bring them even if you don't think you have enough!), your mortgage interest statement, your real estate taxes, proof of charitable donations, and any out-of-pocket business expenses. If you are self-employed, we will need to know how much money you brought in (the revenues) and all of your expenses by category. If you made estimated payments to IRS or NJ, you will need to know when you paid the monies and how much you paid.

6. I got a letter from IRS (or NJ). What do I do?

First - Don't panic. Second - Bring the letter to your preparer for review!!! Do not just pay what it says. Third - Be very careful of the date a response is expected! Bringing the letter to your preparer or calling IRS (or NJ) yourself after this date might compromise any agreement or leniency you may have been able to negotiate had your response been timely. Fourth - DO NOT respond to any phone call or email asking for personal tax information. THIS IS A SCAM!! No government agency will contact you via either of these methods! Fifth - DO NOT, UNDER ANY CIRCUMSTANCES, IGNORE THE LETTER! The situation will not just go away!!

7. Can I deduct my expenses to get to work?

Generally, no. Everyone has to get to work and commuting back and forth is not deductible.

8. I have my own business but I have expenses. What do I report for income?

If you are a sole proprietor, you will complete a Schedule C along with your regular tax return. That form asks for the total amount you received for your business for the year. Then you may itemize the expenses you incurred and arrive at a "net" figure for taxable income. This amount is generally also subject to social security and medicare taxes which will be calculated on Schedule SE and also attached to your tax return.

9. Is my social security taxable?

It could be. There is a formula which calculates how much of your social security is subject to tax. If you add half of the social security you receive to your other income (the combination of your Adjusted Gross Income on your tax return plus nontaxable interest) and your total is over $25000 if you are single or $32000 if you are married, then yes you must complete the worksheet to determine how much of your social is subject to federal taxation. The State of New Jersey does not tax your social security benefits.

10. What is the "SDI", "UI" & "FLI" on my W-2 form.

These are New Jersey State Disability and New Jersey Unemployment taxes you have paid through amounts deducted from your paycheck during the year. There is a base limit for which you are liable for this tax ($27,700 in 2008) and it is mandatory to participate. If you have more than one employer, you can get the excess refunded on your New Jersey tax return. It is a deductible tax expense for your Federal Schedule A itemized deductions. Beginning on January 1, 2009 there will be an additional mandatory tax withheld from your New Jersey paychecks in the amount of .09% for the Family Leave Act.

11. I didn't get my W-2. Can I use my last paystub?

There is a substitute form available if you truly cannot get a copy of your W-2. You must state what you have done to try to get a copy of the W-2 and what documentation you will be using to reconstruct the information necessary to file your tax return. You will need some information about the employer also. Filing with the last paystub just because you want to is not permitted.

12. What is a "BRC?"

These initials stand for a "Business Registration Certificate." All businesses in the State of New Jersey must register as a business with the State. This certificate is the proof that the business is registered. It does not serve as a referral for the business or say anything about a business' reputation. It does, however, indicate that the person you are working with has made the efforts to be a legitimate business enterprise. NOTE: If you are also a business (including owning rental property!!) you must use contractors who furnish you with a BRC. If they do not provide this certification, you are responsible for withholding 7% income tax from their payment from you AND you are responsible for submitting it to the state. The risk if you do not do this is that the contractor will be classified as your employee and all associated payroll taxes will be imposed on you. This does not apply to homeowners.

13. How much does it cost to get my taxes prepared?

It depends on the complexity of your tax return. The Tax Stop, Inc. has a schedule of fees for each form used to complete your return. Therefore, someone who has one job and one W-2 and does not own a home will pay less than someone who is married, both spouses work, they own a home, their children have childcare expenses, they donate to charity and invest in the stock market. If you would like to contact our office, we will be able to discuss your individual situation with you.

14. What is a "RAL?"

This stands for "Refund Anticipation Loan." Some tax professionals work with a bank to offer you a loan based on the amount of your tax refund. There are also fees in conjunction with these loans that you will have to pay to bank to initiate the loan and "open an account" to receive your refund when it arrives. In most cases, you will receive your loan check for the refund (or a portion of the refund based on bank policies) very quickly - sometimes within a day or two. IT IS A LOAN!!!! If IRS for any reason does not send your refund to the bank to pay the loan, you are responsible for paying this money back! It is an arrangement between you and the bank - IRS is not a third party and will not discuss these loans with you. The Tax Stop, Inc. does not have these loans available. We will electronically file all eligible returns that we prepare at no fee. Your refund could be received in as little as ten days.

15. Do I have to still have mail my return if I electronically file it?

No, electronic filing takes the place of mailing your return once your preparer receives an acknowledgement that IRS (or your state) has received the return. The acknowledgements usually arrive at your preparer's office (electronically) within a day or two of filing. If there is a problem, your preparer should notify you that your return will have to then be mailed. A return "rejects" very rarely and usually involves some very unusual and abnormal circumstance.

16. How much does it cost to electronically file my tax return?

The Tax Stop, Inc. does not charge for this service when your returns are prepared in our office. A fee will apply if you have prepared your own return (or paid another preparer who does not electronically file) and bring it to us complete and otherwise ready to file.

17. Does my husband (wife) have to be there when you do my taxes?

Generally, no. If you have all of the necessary information, The Tax Stop, Inc. can complete your return with just one of you present. However, see the next question regarding signatures.

18. Can I sign the return for my spouse? How about my children?

No you cannot sign for your spouse unless you have a valid Power of Attorney. The tax return signature follows an oath that says the information on the return is true and correct. Each person must say that himself or herself. Since both of you are responsible for the information contained in the tax return, both of you should review the return before you sign it. Your child's tax return may be signed by you if the child is underage and you are the legal or custodial parent. You are then acknowledging the accuracy of the return for your minor child.

19. What is a "kiddie tax?"

The "kiddie tax" subjects a portion of your child's investment income (interest, dividends, capital gains....) to tax at the parent's tax rate if that rate is higher then the child's would have been. This rule applies to all children under age 18 at the end of 2008 as well as those children who are 18 or age 19 - 23 and a full-time student unless their earned income (wages and salaries) is more than 50% of their total support. You may remember an age limit of 14 but that law has been changed!!!

20. I owe IRS a lot of money and I don't have it. What can I do?

DO NOT IGNORE IRS!!! You can make payment arrangements with them. If your balance due comes from the current year taxes, you can file a payment arrangement application with your tax return. If it comes from prior years, you can write or call to obtain a payment agreement. It is extremely important that you not miss a monthly payment. You will also need to be current with all tax filings, stay current in future years and pay future tax liabilities timely. If you cannot ever make enough to pay your debt, you may be able to qualify for an "Offer in Compromise" (OIC). IRS does not necessarily have to accept your offer, but if it is in good faith and the amount you offer is truly all you will ever be able to pay even if you liquidate assets, this may be your path to resolution.

21. I didn't file my tax return and IRS says will levy my bank account. Can they do this?

Actually, yes they can. However, this is probably not the first communication you have received from them regarding the year in question and the fact that the return was not filed. IRS will ask for the return. If you ignore them, they will prepare a return for you - called a "substitute for return" (SFR) - using the filing status that will generate the greatest tax liability, usually married filing separate or single. If you continue to ignore them, they will assess the tax and, yes, they can take your bank account or other assets to pay the tax liability. Often, preparing the requested tax returns with your actual documentation will result is a lower tax liability and IRS will accept your filed returns. Waiting until a lien or levy is placed, however, does make the process much more difficult.

22. How can I become a client of The Tax Stop, Inc?

You can call 856-779-1714 or go to the contact page of this website and send us an email to info@taxstop.com.

23. What if I made a mistake on my tax return?

You have up to 3 years (generally) to amend your return and tell the IRS the correct information.

24. Do I have to withhold NJ Tax on people I hire to do repair work on my building?

Unless they are registered to do business in the state of New Jersey, YES! Proof is a business registration certificate (BRC). As of 1/1/2011 the IRS now requires you to file a 1099-misc form for all independent contractors you hire. NOTE: If you won rental property, THIS MEANS "YOU TOO!"