Frequently Asked Questions about Taxes

I haven't filed taxes for six years. So far, the IRS has not sent me any letters. I don't think I owe any taxes. Should I file the back returns?

If you worked or had taxable income in any of the years, you should file for that year or those years. If you are due a refund, you waive (give up) that refund if you wait too long to file your return. That means that the refund will not be applied to a year that tax is due. Even if you don't owe taxes for a year that you had taxable income, you should file. The IRS can file a return for you, taking into consideration only your income but not your deductions or correct exemptions.

I never worked until after my divorce two years ago. My husband always took care of the checkbook and the tax returns. In fact, I never signed a tax return. The IRS now says that I owe back taxes. What can I do?

You may qualify under the "innocent spouse" provisions of the IRS Code. Under that provision, a spouse can be excused from tax liability if certain facts are present.

My wife and I are getting a divorce. She will have the children with her and I will be paying child support and temporary alimony. Who gets what exemptions and deductions?

Unless the divorce decree says otherwise: you will get a deduction for the temporary alimony and she will include the temporary alimony as income; the child support is not deducted by you nor included by her as income; the exemptions for the children goes to the spouse with whom the children live.

I am going to be buying and selling stock. What records should I keep for my taxes?

You need to keep a record of the dates of each transaction, the number of shares in each transaction, the cost per share for each transaction and your commissions. If you are buying through a broker, you should receive written confirmation of each transaction as well as a year end summary. Keep all this information together. You only pay tax on a gain when you sell. It may be several years before you need the information, so save everything and match up your purchases and sales as they occur.

I want to give my children each a sum of money over the next ten years. What do I need to do as far as the IRS is concerned?

Depending on how much you give in any given year, the effect can vary. You may be required to file a gift tax return in some instances. Such gifts to your children are not tax deductible on your personal tax return. Depending on the size of your estate and the contemplated size of the gifts, you may want to consider estate planning.