Common Questions & Answers

Tax season is just about upon us, and here are some common questions our clients have:

Q: Does an extension also extend the amount of time I have to pay my taxes?

A: An extension only extends the amount of time to file your return, but if you owe taxes, then you will incur penalties and interest for late payment of taxes. In NJ, if you do not pay 80% of your tax liability on April 15th, (100% for NY) then your extension will be disallowed.

Q: Is it better to file a separate tax return from my spouse?

A: Also known as “Married Filing Separately,” usually results in a higher amount of taxes being paid, but can be advantageous in certain situations. We always do an analysis to see if this is better for our married clients.

Q: Do I have to make estimated tax payments, and if so, why?

A: Usually self-employed taxpayers, retirees, and anyone who has income from sources that do not have taxes withheld are required to make quarterly estimated tax payments. If you need to make estimated payments and do not, you may be subject to underpayment penalties.

Q: Can I claim my elderly mother or father as a dependent?

A: Possibly. Certain rules have to be met, such as the amount of support provided and their gross income (the definition of gross income would take up half of this article). Interestingly, your parents do not have to live with you.