On Thursdays, CPA and Vice President of Corporate Tax Network, Gary Milkwick and his team, answer tax questions for free on the LegalZoom Facebook Page. Did you miss the last Ask the Tax Pro? Don’t worry. We’ve got it all right here.
Sheik: I have two years of tax returns sitting on my desk, i have plenty of deductions plus this years coming up. What form do I use to file the previous two years tax returns?
Corporate Tax Network: Hello Sheik, for an individual return, you would still use the form 1040 for the year of the return. You can get prior year forms from the IRS at:
George: If own a LLC ( in wyoming or delaware ) with pass through taxation to the owner, but the owner is not a U.S. residence or operate in U.S. and the LLC are getting only none-U.S. source income, does he need to file & pay any income tax?
Corporate Tax Network: Hi George, if the LLC is registered in the United States then all of the worldwide income earned by this LLC is reportable as income in the United States and is subject to income tax. If this is a single member LLC, then as long as there was any kind of business activity, it must be reported on the owner’s individual income tax return. For a US nonresident the appropriate form is 1040NR. The business owner will also have to apply for an Individual Taxpayer Identification Number (ITIN) using Form W-7 attached to the first 1040NR if that person does not have one already and is not eligible to receive a social security number.
Melissa: Hello! My husband and I became homeowners this year! What deductions should we be aware of for 2012? PMI? Mortgage interest? Home repairs? Thanks so much!
Corporate Tax Network: Melissa, congratulations on buying your house! The main items you can deduct on your taxes are mortgage interest and property taxes. Your lender will send you a Form 1098 in January showing the amount of deductible mortgage interest. Also, if you paid points to obtain your mortgage, the amount of points paid on the purchase of your primary residence are tax deductible as well. Unfortunately, Private Mortgage Insurance deduction is no longer available for 2012, unless Congress decides to extend it before the end of the year.
Princess: Im only 19 and Some one claimed me last year on they taxes and my mom does know either, so how do I go about tryin to file my own taxes this year because I couldn’t file last year? Do I need to have a dependent to file?
Corporate Tax Network: Hi,
It looks like you may have been a victim of identity theft in 2011. If you were required to file tax return last year or were trying to file one to receive a refund of taxes paid, and were notified that your Social Security number has already been reported on another tax return, I would suggest that you contact the IRS Identity Theft Department- 1-800-908-4490. After filing a claim with the IRS, you may not be able to e-file your 2012 return, and instead would need to mail it. You do not need to have a dependent in order to file a tax return.
Ray: If I was earning a pension th rough PERS (CA) and live in AZ, do I have to pay state tax in CA or AZ?
Corporate Tax Network: Ray, PERS pension is not considered a California sourced income for income tax purposes as long as you were not a resident of California for the entire year. Public Law 104-95 signed by President Clinton prohibits any state from imposing income taxes on pension income of a non-resident. But since you are a resident of Arizona, you would have to report all of your income in your state and it will be taxed.
Wayne: Does an LLC pay the same amount of taxes as an S Corp? Thanks
Corporate Tax Network: Hi Wayne,
Both the LLS and the S-corporation are considered flow-through entities. The Net profit/loss gets reported on the owner’s tax return, and the taxes are paid on the individual return. If you have an LLC, your net profit from business would be subject to Self Employment tax (13.3% in 2012) and Income tax (based on your individual tax bracket). If you have an S-Corp, you would be required to pay yourself a reasonable salary, which is subject to FICA taxes (Social Security tax and Medicare Tax) however the net profit from business is subject to income tax ( on your personal return) and avoids the self employment tax.
LegalZoom: That’s a wrap for today’s tax Q&A with Diana Shaginyan of Corporate Tax Network. The tax pros will be back next week to answer more of your questions. Join us then!