Questions

If you have a general interest question about accounting or tax matters, please contact us from here. We will answer the most common questions on this page.

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Q.1.  What is the status of the federal Estate Tax? A.1.  Deaths occurring in 2010 are not currently subject to a federal estate tax.  Barring a change in present law, deaths in 2011 and thereafter will be subject to the federal estate tax on estates in excess of $675,000.  Taxable gifts made during one’s life may reduce the threshholds mentioned in this summary answer.  Please contact us for the latest information on the Federal estate tax.

Q.2.  What is the status of the Wisconsin Estate Tax?
A.2.  Wisconsin no longer assesses an estate tax on decedents dying after 2007.  Barring a change in present law, deaths in 2011 and thereafter will be subject to the Wisconsin estate tax on estates in excess of $675,000.  Please contact us for the latest information on the Wisconsin estate tax.

Q.3.  What is the “Kiddie Tax”? A.3.  In an effort to prevent parents from shifting assets and income to their children in an attempt to have the income taxed at the children’s lower tax rate, Congress requires certain children to be taxed at their parents’ marginal tax rate for all investment income in excess of $1,700-$1,800.  Since 2008, this includes children age 19 or under (age 24 or under for full time students).  You can learn more about the “Kiddie Tax” at this link.  Wisconsin does not impose a “Kiddie Tax.”

Q.4.  What is the difference between a “tax return” and a “tax refund”?
A.4.  A “tax return” is the physical document (either paper filed or electronically filed) reporting your income and tax liability information to the appropriate government agency.  A “tax refund” is the money you receive back from the government when you pay more to the government during the year than what your actual tax bill totals.

Q.5.  Where’s my tax refund money?
A.5.  Each tax agency has its own procedure for taxpayers to check on the status of their expected refunds.  For the I.R.S. and Wisconsin Department of Revenue, the appropriate on-line information is available through our Helpful Links and Forms page.  Wisconsin pays 9% interest on tax refunds not mailed out within four months of receiving a tax return claiming a refund; this interest is subject to income taxes!

Q.6.  Can I deduct Long Term Care (LTC) insurance premiums?

A.6.  Yes, but with limitations.  Although all medical expenses (including health and dental insurance premiums), when taken together as a total, must exceed 7.5% of your adjusted gross income before being allowed as an itemized deduction on the federal Schedule A, long term care insurance premiums are limited as to the amount includible in the total medical expense amount.  For those Age 40 or younger, only $290 of LTC premiums are allowed.  Ages 41-50 can deduct $550, Ages 51-60 can deduct $1,110, Ages 61-70 can deduct $2,950, and Ages 71 and older can deduct $3,680 of LTC premiums as part of their medical expenses.  These amounts are for 2007 and are adjusted for inflation each year.

Q.7.  What are the standard mileage rates?

A.7.  The optional standard mileage rates are used by taxpayers not wanting to track actual vehicle expenses for vehicles used for business, medical, moving or charitable purposes.  For 2010, the business rate is 50 cents per mile.  The medical and moving rate is 16.5 cents per mile.  The charitable rate is 14 cents per mile.  Each year (or more frequently if the conditions warrant), the I.R.S. adjusts the business, medical, and moving rates based on a study of the fixed and variable costs of operating an automobile; the charitable mileage rate is set by Congress.  Even when using the standard mileage rates, you are still permitted to deduct actual parking fees and toll charges as incurred.

Q.8. Is any information available regarding the tax evasion investigation of Al Capone?

A.8. Yes.  Although federal tax records are confidential as a matter of law, the I.R.S. was able to release some historical material regarding the investigation of Al Capone.  It was the I.R.S. and tax evasion charges that sent Al Capone to prision; the public material is available here.

Q.9. What can you tell me about the new Health Care law passed in March, 2010?
A.9. The AICPA’s Journal of Accountancy magazine has an excellent summary available here.