Foxx & Coleman LLC

02/16/2021

So we received an inquiry from a non-tax client for this year she heard about our services after she had already filed her return. Her question was if she refers an individual or a business will she receive our discount and e-gift card.

Answer! Absolutely a lot of people hear about our services after they have already completed their return and since you can’t double-file they onboard with us the following year.

Great question!

Foxx & Coleman LLC
FoxxandColeman.com
[email protected]

02/10/2021

The Internal Revenue Service announced that the nation's tax season will start on Friday, February 12, 2021, when the tax agency will begin accepting and processing 2020 tax year returns.

The February 12 start date for individual tax return filers allows the IRS time to do additional programming and testing of IRS systems following the December 27 tax law changes that provided a second round of Economic Impact Payments and other benefits.

To speed refunds during the pandemic, the we urges taxpayers to file electronically with direct deposit as soon as they have the information they need. People can begin filing their tax returns immediately with tax software companies.

Foxx & Coleman LLC
FoxxandColeman.com | [email protected]
North Carolina | Afghanistan | International

02/05/2021

02/02/2021

I'm a sole proprietor and pay personal expenses out of my business bank account. Should I include the money used for personal expenses as part of my business income? Can I write these expenses off?

Answer:
• You would include the money used to pay personal expenses in your business income when your business earned it.
• You wouldn't write off these expenses as business expenses because they're not ordinary and necessary costs of carrying on your trade or business.
• Personal, living, or family expenses are generally not deductible.
• It's a good idea to keep separate business and personal accounts as this makes it easier to keep records.

02/02/2021

If I sell my home and use the money I receive to pay off the mortgage, do I have to pay taxes on that money?

Answer:
The amount of the proceeds from the sale of your home that you use to pay off the mortgage isn't a factor in figuring your taxable amount for the sale. Instead, the amount you realize on the sale of your home and the adjusted basis of your home are important in determining whether you're subject to tax on the sale.

If the amount you realize, which generally includes any cash or other property you receive plus any of your indebtedness the buyer assumes or is otherwise paid off as part of the sale, less your selling expenses, is more than your adjusted basis in your home, you have a capital gain on the sale.
Your adjusted basis is generally your cost in acquiring your home plus the cost of any capital improvements you made, less casualty loss amounts and other decreases. For more information on basis and adjusted basis, refer to Publication 523, Selling Your Home. If you financed the purchase of the house by obtaining a mortgage, include the mortgage proceeds in determining your adjusted cost basis in your residence.

You may be able to exclude from income all or a portion of the gain on your home sale.
If you can exclude all of the gain, you don't need to report the sale on your tax return, unless you
received a Form 1099-S, Proceeds From Real Estate Transactions. To determine the amount of the gain you may exclude from income or for additional information on the tax rules that apply when you sell your home, refer to Publication 523. You must report on your return as taxable income any capital gain that you can't exclude.

02/02/2021

So we received a question on what free giveaways do we offer?

Below are the promotions that we a running for this year. We would love to pay for yourself or your child's higher education at a university or trade school for a future increase in income. However, some taxpayers just need a trip.

We offer a free round trip: All expenses paid for (Domestic /International) for the taxpayer that has the highest percentage of taxpayer referrals that file with us. We do follow the Depart Of State travel advisory forum.

529 Plan Donation: for the taxpayer that has the highest percentage of taxpayer referrals that file with us. We step up their child's future college tuition payment or themselves if they don’t have children

Collectively the area or region that has the highest percentage of taxpayers we donate to a charity in that area. Last year was Fort Worth Texas.

For every taxpayer, we offer free tax planning.

Contact Us Today! For more information
FoxxanColeman.com

02/01/2021

Can I receive a tax refund if I am currently making payments under an installment agreement or payment plan for another federal tax period?

Answer:
No, one of the conditions of your installment agreement is that the IRS will automatically apply any refund (or overpayment) due to you against taxes you owe. Because your refund isn't applied toward your regular monthly payment, continue making your installment agreement payments as scheduled.
If your refund exceeds your total balance due on all outstanding tax liabilities including accruals, you'll receive a refund of the excess unless you owe certain other past-due amounts, such as state income tax, child support, a student loan, or other federal nontax obligations which are offset against any refund. For more information on these non-IRS refund offsets, you can call the Bureau of the Fiscal Service (BFS) at 800-304-3107 (toll-free).
Additional Information:
Contact Us At

FoxxandColeman.com

02/01/2021

Questions that came in. I haven't paid taxes in years, what are my rights? I have see this all to often, and sometimes the problem can be that some accountants won't touch your case. So here is how it goes.

If you haven’t filed your federal income tax return for this year or previous years, you should file your return as soon as possible regardless of your reason for not filing the required return. If you need help, check our website: FoxxandColeman.com

If you're not sure whether you're required to file a return, visit Do I Need to File a Tax Return or refer to Publication 17, Your Federal Income Tax (For Individuals). If you're required to file and owe a balance, but you can't pay all the tax due on your return, the IRS may be able to help you establish a payment agreement. For additional information on tax payment options, refer to Topic No. 202.
If your return wasn't filed by the due date (including extensions of time to file):
• You may be subject to the failure-to-file penalty unless you have reasonable cause for your failure to file timely.
• Tax not paid in full by the original due date of the return (regardless of extensions of time to file) may also result in the failure-to-pay penalty unless you have reasonable cause for your failure to pay timely, or the IRS has approved your application Form 1127, Application for Extension of Time for Payment of Tax Due to Undue Hardship.
• Interest is charged on taxes not paid by the original due date, even if you have an extension of time to file or pay. Interest is also charged on penalties.
• There's no penalty for failure to file if you're due a refund. However, you risk losing a refund altogether if you file a return or otherwise claim a refund after the statute of limitations has expired. An original return claiming a refund must be filed within 3 years of its due date for a refund to be allowed in most instances. After the expiration of the three years, the refund statute prevents the issuance of a refund check and the application of any credits, including overpayments of estimated or withholding taxes, to other tax years that are underpaid. However, the statute of limitations for the IRS to assess and collect any outstanding balances doesn't start until a return has been filed. In other words, there's no statute of limitations for assessing and collecting the tax if no return has been filed.

02/01/2021

What should I do if I made a mistake on my federal return that I've already filed?
Answer:
It depends on the type of mistake you made:
• Many mathematical errors are caught during the processing of the tax return and corrected by the IRS, so you may not need to correct these mistakes.
• If you didn't claim the correct filing status or you need to change your income, deductions, or credits, you should file an amended or corrected return using Form 1040-X, Amended U.S. Individual Income Tax Return.
When filing an amended or corrected return:
• Include copies of any forms and/or schedules that you're changing or didn't include with your original return.
• To avoid delays, file Form 1040-X only after you've filed your original return. Generally, for a credit or refund, you must file Form 1040-X within 3 years after the date you timely filed your original return or within 2 years after the date, you paid the tax, whichever is later.
• Allow the IRS up to 16 weeks to process the amended return.
Additional Information:
Foxx & Coleman LLC

01/31/2021

Is there an age limit on claiming my child as a dependent?

Answer:
To claim your child as your dependent, your child must meet either the qualifying child test or the qualifying relative test:
• To meet the qualifying child test, your child must be younger than you and either younger than 19 years old or be a "student" younger than 24 years old as of the end of the calendar year.
• There's no age limit if your child is "permanently and totally disabled" or meets the qualifying relative test.
In addition to meeting the qualifying child or qualifying relative test, you can claim that person as a dependent only if these three tests are met:
1. Dependent taxpayer test
2. Citizen or resident test, and
3. Joint return test

01/31/2021

How much income can an unmarried dependent student make before he or she must file an income tax return?

Answer:
An unmarried dependent student must file a tax return if his or her earned or unearned income exceeds certain limits. To find these limits, refer to "Dependents" under "Who Must File" in Publication 501, Dependents, Standard Deduction and Filing Information. You can also refer to Do I Need to File a Tax Return? to see if your income requires you to file.

Even if you don't have to file a federal income tax return, you should file if you can get money back (for example, you had federal income tax withheld from your pay or you qualify for a refundable tax credit). See "Who Should File" in Publication 501 for more examples.