Income Tax Preparation Tips, Advice, & Help

How do I enter a foreign address?

Check the Foreign Employer Address? box. This will cause the foreign country information boxes to appear.

Enter the employer foreign street address in the Employer's address information box. Enter the foreign city in the Employer's city box. Enter any province information in the Foreign employer's province box and postal code information in the Foreign employer's postal code box. Select the foreign country from the Foreign employer's country box.

Why isn't my state listed as a withholding state?

Certain states don't allow a state return to be e-filed if it has unemployment state tax withheld.

If you're only filing a federal tax return, you do not need to enter the state tax withheld on the screen. You can omit that information. The only information from the screen that is used on the federal tax return is the taxable amount of unemployment and the federal tax withheld.

Combat Pay

Menu Path: Income > W-2 Wages

Enter on the W-2 Income screen.

Nontaxable combat pay should be shown in Box 12 of your W-2 (W2) with code Q next to it. In Box 12, enter the letter Q in the description box and enter the nontaxable combat pay in the amount box. If you are eligible for the Earned Income Credit or the Additional Child Tax Credit, we'll automatically use the nontaxable combat pay if it increases either one of those credits. If it doesn't increase those credits, it will not be used.

Can I report actual tips as income on my tax return instead of allocated tips from Box 8 of my W-2 (W2)?

Taxpayers must report allocated tips as income on their tax return unless either of the following exceptions applies:

The taxpayer kept a daily tip record, or other evidence that is as credible and as reliable as a daily tip record, as required under rules explained earlier.

The taxpayer's tip record is incomplete, but it shows that the actual tips were more than the sum of the tips reported to the employer plus the allocated tips.

If either exception applies, report actual tips on the return. Do not report the allocated tips.

You can find more detail about allocated tips here.

What are allocated tips?

Allocated tips are tips an employer assigns to an employee. They are in addition to the tips the employee reports to the employer. Restaurants, cocktail lounges, and similar businesses must allocate tips to employees. Allocated tips are shown separately in Box 8 of Form W-2 (W2), Allocated tips. They are not included in the amount in Box 1 of the W-2 (W2) so they need to be shown as income on your tax return and are reported on Form 4137. Enter the amount of allocated tips as unreported tip income on the Employer Unreported Tips screen.

What are the exceptions for excluding the gain on the sale of my home if I lived there less than two years?

If one of the following exceptions applies, part or all of your gain can still be excluded from income even if you lived in your home for less than two years before it was sold.
  • Change in place of employment (more than 50 miles away)
  • Change of health
  • Unemployment (if you are eligible for unemployment benefits)
  • Death, divorce or legal separation
  • Multiple births from the same pregnancy (twins, triplets, etc.)
  • Change in employment that leaves you unable to pay reasonable basic living expenses
  • Condemnation or destruction of home

What is "change of health" for the Home Sale Exclusion?

An exception to the gain on the sale of your home lived in for less than two years will be considered because of health if the primary reason is related to a disease, illness, or injury of a qualified person. If a physician recommends a change in residence for health reasons, that will suffice. A qualified person for health reasons includes certain close relatives, so that sales related to caring for sick family members will qualify.

If I haven't received my W-2 (W2) or if I lost my W-2 (W2), can I still e-file my tax return?

No. You need to wait until you get your W-2 (W2). Ask your employer for a new W-2 (W2) if you lost the original one.

How do I enter more than one Form W-2 (W2)?

Enter your first W-2 (W2). After your first W-2 (W2) is entered, it will be displayed on the Add/Edit/Delete W-2 screen.

On that screen, you will be asked, "Do you need to enter any additional W-2 (W2) forms?". Answer Yes to that question, and you can enter another W-2 (W2). Repeat the cycle until you have entered all of your W-2 (W2) forms.

Remember to only enter a single W-2 (W2) for each employer. A W-2 (W2) will have a federal copy, a state copy, and a copy for your records. You only enter the same W-2 (W2) once, not multiple times.

My W-2 (W2) doesn't have a control number. Can I just leave it blank?

Yes. Simply leave the Control Number box blank if you do not have a control number on your W-2 (W2). Not all W-2 (W2) forms have a control number. Don't type anything in the control number field if your W-2 (W2) doesn't have a control number.

Do I need to enter all of the information from my W-2 (W2)?

Yes. Since you do not send a paper copy of your W-2 (W2) to the IRS when you electronically file, you need to enter all of the information from your W-2 (W2).

What should I do if the address on my W-2 (W2) is different than the mailing address on my tax return?

Use the address shown on your W-2 (W2) for entering your W-2 (W2) information. It doesn't matter if it's different than the mailing address you will use on your tax return. You need to enter your W-2 (W2) information as it appears on your W-2 (W2).

If I file electronically, what do I do with my W-2 (W2) forms?

Keep them in a safe place with a copy of your tax return. When you file electronically, you don't mail in a copy of your W-2 (W2) forms to the IRS.

Are my unemployment benefits taxable?

Yes. You should receive a Form 1099-G showing the total unemployment compensation paid to you in 2014.

What if I repaid some of my unemployment benefits?

If you received an overpayment of unemployment compensation in 2014, and you repaid any of it in 2014, enter the amount of the repayment on the Unemployment Compensation screen and it will reduce the amount of unemployment compensation reported as taxable income. You can find this screen by following the menu path Income > Common Income > Unemployment Compensation.

If you received an overpayment of unemployment compensation in 2013 or earlier, and you repaid any of it in 2014, you can deduct the amount you repaid in 2014 as an Itemized Deduction. To do this, enter the amount of the repayment as a miscellaneous deduction on the Other Itemized Deductions Screen. You can find this screen by following the menu path Deductions/Credits > Itemized Deductions > Other Itemized Deductions.

Are my Social Security benefits taxable?

Enter the total amount of Social Security benefits you received and we will calculate how much, if any, of the benefits are taxable. Generally, if your income (including half of your Social Security benefits) is less than $25,000 ($32,000 if married), your Social Security benefits will not be taxable. If your income is above that threshold, then part of the Social Security benefits will be taxable. Once again, just enter your total Social Security benefits and we'll calculate the taxable portion.

Is my state refund taxable?

Your state refund is NOT taxable if you took the Standard Deduction on last year's tax return instead of itemizing your deductions on Schedule A. The general rule is that your state refund is taxable if you deducted your state tax payments on last year's tax return. However, there are a few exceptions that may reduce your taxable state refund or make it nontaxable.

What are the codes in W-2 (W2) Box 12?

The following list explains the codes shown in W-2 (W2) Box 12:

A - Uncollected social security or RRTA tax on tips
B - Uncollected Medicare tax on tips
C - Taxable cost of group term life insurance over $50,000--included in boxes 1, 3 (up to social security wage base), and 5
D - Elective deferrals to a section 401(k) cash or deferred arrangement (Also includes deferrals under a SIMPLE retirement account that is part of a section 401(k) arrangement)
E - Elective deferrals under a section 403(b) salary reduction agreement
F - Elective deferrals under a section 408(k)(6) salary reduction SEP
G - Elective deferrals and employer contributions (including non-elective deferrals) to a section 457(b) deferred compensation plan
H - Elective deferrals to a section 501(c)(18)(D) tax-exempt organization plan
J - Nontaxable sick pay (information only, not included in boxes 1, 3, or 5)
K - 20% excise tax on excess golden parachute payments
L - Substantiated employee business expense reimbursements (nontaxable)
M - Uncollected social security or RRTA tax on taxable cost of group term life insurance over $50,000 (former employees only)
N - Uncollected Medicare tax on taxable cost of group term life insurance over $50,000 (former employees only)
P - Excludable moving expense reimbursements paid directly to employee (not included in boxes 1, 3, or 5)
Q - Nontaxable combat pay
R - Employer contributions to your Archer MSA
S - Employee salary reduction contributions under a section 408(p) SIMPLE (not included in box 1)
T - Adoption benefits (not included in box 1) (You must complete Form 8839, Qualified Adoption Expenses, to compute any taxable and nontaxable amounts.)
V - Income from exercise of non-statutory stock option(s)--included in boxes 1 and 3 (up to social security wage base), and 5
W - Employer contributions to your Health Savings Account (Report on Form 8889, Health Savings Accounts (HSAs).)
Y - Deferrals under a section 409A non-qualified deferred compensation plan
Z - Income under section 409A on a non-qualified deferred compensation plan (This amount is also included in box 1. It is subject to an additional 20% tax plus interest.)
AA - Designated Roth contributions to a section 401(k) plan.
BB - Designated Roth contributions under a section 403(b) salary reduction agreement
DD - Cost of employer-sponsored health coverage.
EE - Designated Roth contributions under a governmental section 457(b) plan.

Should I include my child's Social Security benefits (Form SSA-1099)?

Don't include your child's Social Security benefits (Form SSA-1099) on your tax return. Your child's Social Security benefits are reported on a separate return if necessary. Very few children need to file a tax return even if they get Social Security benefits. Even if the child needs to file a tax return to report wages or significant investment income, the child's Social Security benefits will usually not be taxable.

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