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Tax Q & A

Tax Questions Answered by Your San Francisco Tax accountant

July 2017

MFS|  Family joint business|  Tax record

Married filed separately

Question: I'm married but I want to file my taxes as married filing separately to keep our finance separately. Can I do that?
 

 

Answer: Yes, if you want to separate your tax liability or in very limited cases, it results in less tax than filing jointly. However, generally, you will pay more combined taxes if you choose MFS.

If you live in Arizona, California, Louisiana, New Mexico, Texas, Washington, Wisconsin or Idaho, (community property states) you will need to be extra careful if you want to file MFS. Many of the income earned by one spouse is considered community income and need to be split equally into two and report on each of the returns. Exception: Sometimes when couples are separated and you have no idea and no reason to know about her(or his) income, you do not have to include it in your separate return. 

Husband and wife joint business

Question: My son has been diagnosed with dyslexia and we are planning to enroll him in a special program at his school to help him deal with his condition. Will the tuition cost for the program deductible?

 

 

Answer:  Children diagnosed with autism, Asperger's syndrome, dyslexia, unusual low IQ etc may attend a special school (or enroll in an extra service provided by school) for the principal purpose of obtaining medical care in the form of special education. As a result,  IRS has recognized that costs to attend special schools or curriculum for intellectually disabled children are considered the qualified medical expense.

Keep tax records

Question: I am cleaning my garage. Should I throw away my old tax records? I still have mine tax records from 10 years ago.

 

Answer: Despite suggestions from IRS and many other sources, I would recommend never throw away your tax records. Digitize all paper documents and keep digital record forever. For one reason, it contains your social security tax payment history and can come in handy many years later if you have a dispute with SSA and protect your social security benefit.  In addition, there is no statute of limitation on fraud or non filed taxes. Record retention is a great way to protect yourself even after decades.

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Circular 230:The articles are for general information only. In accordance with IRS Circular 230 they are not considered tax opinions for purposes of relying on such statements in any challenge of the reporting of the above transaction by the IRS. If a full tax opinion is required certain procedures must be met . Also there is a significant cost for a full tax opinion to meet the requirements of Circular 230.

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