On Thursdays, CPA and Vice President of Corporate Tax Network, Gary Milkwick, answers 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.
Carol: If you are a retiree, do you have to pay taxes? Also, if you are a retiree and you work and you work and you get injured on the job and you collect workmen’s compensation (WC) do you have to pay taxes on the money collected from WC?
Corporate Tax Network: Carol, it depends on what type of income you receive in your retirement. Social security benefits may be taxable depending on your level of income and sources of income. Income received from pensions is generally taxable, and most type of investment income (interest, dividends, the sale of stock, etc.) is taxable. Workers’ compensation income is nontaxable.
Heather: Ok my soon to be ex husband have been filing married the entire time we have been married and this past year we weren’t together and I was wondering if there is any way he could have filed on me without my knowledge.
Corporate Tax Network: If he was filing a joint tax return for a year during which you were married, you should have had the opportunity to sign the return before it was filed. However, now that most tax returns are electronically filed, the act of “signing” the return is not so obvious. So yes, he definitely could have filed the tax return without your knowledge. You can call the IRS to find out if your return has been filed.
Heather: How can I find the number for the IRS?
Corporate Tax Network: The phone number for individuals (not businesses) to call the IRS is (800) 829-1040. If you ever need to look it up in the future, you can find it on the IRS website at www.irs.gov.
Jill: Hello, my question is….if you take money out of your 401k to purchase a retirement home, will you be dinged with taxes? Thanks for your time.
Corporate Tax Network: Jill, you can take out a loan for a first-time home purchase and repay it without having to pay tax. In general, if you take money out of your 401(k) before the age of 59 1/2 to purchase a house that is not a first-time purchase, you have to pay taxes on the withdrawal at your personal tax rate plus a 10% penalty. If you are over the age of 59 1/2, you can take money out of your 401(k) without the 10% penalty to purchase anything you want, including a house; however, you will pay taxes at your personal tax rate on the withdrawal.
LegalZoom: That’s a wrap for our very first edition of Ask The Tax Pro! Gary and Corporate Tax Network will be back next Thursday to answer more tax questions. Come join us then! http://zoo.mn/AskTheTaxPro