YOUR CHRISTIAN CPA, Inc.
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Phone 1-(443) 377-3272
Fax 1 (301) 769-5842
info@christiancpa.com

Frequently Asked Questions

We have put together a list of frequently asked questions we are asked often.

Q: What is E-Filing?
A: E-Filing is the process where your returns are filed electronically with the IRS and your state and local tax authorities if necessary.  This approach means you do not have to worry about having your tax returns getting lost in the mail.  Nor do you have to worry about the IRS claiming they didn't receive them.  Instead your return is received in a much shorter time, and because its electronic, it preserves your tax information exactly as it was when it was sent.  This too means if you are expecting a tax refund you will get it much quicker.


Q: Which form should I file? the 1040EZ, 1040A, or 1040?
A: All three forms are used when you filing your individual federal income tax returns  However the actual requirements on which ones you use differ.  In order to be eligible for the 1040EZ form you must meet all ten requirements imposed by the IRS.  In general, your total income last year must be less than $100,000 dollars.  Likewise, 1040A has an additional seven requirements that may allow you to file that if you don't qualify for the 1040EZ form. It too has a maximum income threshold of $100,000 dollars.  When you come to us with your documentation we will assess the best course of action and file the proper forms with the IRS so as to ensure your returns are prepared accurately and efficiently.

Q: I just received an IRS notice. It says I owe money. Should I just do as it says and pay the money to the IRS?

A: Chances are if you are reading this just now, you have gotten several notices and ignored them.  Hopefully, however, this is only your first notice.  When you get a notice, your best bet is to get ahold of the documentation to which the notice is referring to and find out why the IRS thinks you owe them money.  Our firm can help you here.  With your permission, we will represent you with the IRS and find out why the IRS has sent you this notice and if they are wrong we will step in and correct the problem.  In some cases the accrued interest and penalties can be waived, but in others that will not occur.  It depends on the situation.  However when we do discover error on the part of the IRS, we will correct the issue and work to remove the problems associated with the incident.  You may still end up owing money but maybe not as much.  One case we had, the IRS originally told the client to pay over $200,000 dollars but after seeing us, we found several errors and the client received almost $20,000 dollars back from the IRS.  However, these results should not be expected as they are not normal.

Q: My paycheck just got cut 2% what is going on?

A: If this just started happening in 2013 then its probably due to the expiration of the payroll tax cut.  This tax cut was put in place to temporarily boost workers paychecks by reducing the amount of money put towards social security by 2%.  Of course that means in theory 2 percent less nationwide went towards the coffers of social security.  Now that 2013 has rolled around, the tax cut has expired and your employer is now witholding at the origninal rate of 6.2%.  You will see less take home pay.

Q: Do you work with out of state clients?

A: Yes, we do.  We currently have clients all over the United States of America and overseas in other countries.  Working with out of state clients is handled efficiently through email, fax, phone, and postal mail.  Often we use many aspects of the Internet Special as part of the process.  If you are out of state and have found us, go ahead and give us a try.

Q: Are you open any other hours than those posted on your website?

A:Contact us to schedule an appointment.  Usually we can accomodate your schedule should you have a specific need for an off hour meeting.  Sometimes though it is easier to use the Internet Special, as you will get fast access to our service via email and fax.

 

Q: What are the tax implications of personal residence short sales?

A:A sale where the mortgage debt exceeds the net sale price (after subtracting all commissions and other associated selling costs) is called a short sale. If the lender decides to forgive some or all of the unpaid debt, the forgiven amount constitutes debt discharge income (DDI) for federal income tax purposes.
The general rule says that DDI income is a taxable item. For the year the debt discharge occurs, the lender is supposed to report the income amount to the borrower and to the IRS on Form 1099-C (Cancellation of Debt). The borrower generally must include the amount as income on that year's Form 1040. However, IRC Section 108 provides several exceptions to the general rule that DDI is taxable.
Principal Residence Mortgage Debt Exception - This one is the most likely candidate to help a homeowner for DDI that occurs in 2007 through 2012. You can find more about it in the 108(h) of the Internal Revenue Code.  If you have any short sales and need help trying to figure out the tax issues, we can help you with this. To get help, email us.
 

Q: What is the Federal Income Tax impact of foreclosure on a borrower?

A: A foreclosure occurs when a mortgage borrower defaults and the mortgage lender seizes the mortgaged property in order to sell it, before things get worse.  Depending on the type of mortgage the borrower has will direct the mortgage lender's next actions.

With a recourse mortgage, the lender can pursue the borrower for any deficiency between the foreclosure sale proceeds and the loan balance plus foreclosure costs.

In contrast, when a mortgage is a nonrecourse loan, the lender's only remedy is to seize the property and sell it. If there is a deficiency, it is the lender's problem, because the lender cannot go after the borrower to collect the deficiency. If you have a short sale tax issue and you would like our help, please email us and we will help you get everything straightened out.

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