Do you have a questions about your taxes? Our experienced tax consultants take turns answering some of your most frequently asked questions
Is there a quick way to regularly reduce my tax burden?
Answer:
With yearlong planning, most people can reduce the amount of taxes they pay. Our best advice: start early and educate yourself about the types of deductions available -- and which ones you may claim on your returns.
If you are not taking all the deductions entitled to you, you are likely losing money on your returns. There are hundreds of ways to save on taxes, and a qualified tax advisor can help you discover the best solution for you and your family.
Question :
Do I have to pay tax on reinvested dividends?
Anawer :
Dividend reinvestment plans let you choose to use your dividends to buy (through an agent) more shares of stock in the corporation instead of receiving the dividends in cash. If you are a member of this type of plan and use your dividends to buy more stock at a price equal to its fair market value, you must report the dividends as income.
If you are a member of a dividend reinvestment plan that lets you buy more stock at a price less than its fair market value, you must report as income the fair market value of the additional stock on the dividend payment date.
Other rules may apply. For additional information,Publication 17 , Your Federal Income Tax, and Tax Topic 404, Dividends.
Question :
Can a person claim a girlfriend as a wife if they have a child or do they have to be married?
Answer :
You are considered married if you are living together in a common law marriage that is recognized in the state where you now live or in the state where the common law marriage began. If you are considered married, then you may file as married filing jointly. If you are not considered married, then you would have to file as single or head of household.
In order to claim your girlfriend as a dependent, your relationship must not be in violation of local law, your girlfriend must have lived with you for the entire year, and the following 5 dependency exemption tests must be met:
Refer to Publication 501, Exemptions, Standard Deduction and Filing Information, for an explanation of the five exemption tests.
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