Yahoo Finance

Countdown to tax day: 19 questions answered

Jeanie Ahn · Senior Producer/Reporter

The April 17 deadline to file your taxes is fast approaching, and according to the results of Yahoo Finance’s recent survey, many of you are still preparing your returns. To help you get to the finish line, we invited certified public accountants Sheila Brandenburg and John Lieberman for a live Q&A session where we answered audience questions.

Below are 19 viewer questions they answered during the 35-minute Q&A.

1) Is the interest paid on a reverse mortgage deductible, like it is on a regular 15- or 30-year mortgage? —Jack [This question was answered at timecode 1:21 on the video player above]

Reverse mortgages allow for cash-strapped homeowners age 62 and older to tap into their home equity through a lump sum, a line of credit, annuity payments, or some variation of the three, explains Brandenberg. Because no mortgage interest is due until you leave the property or pass away, you can’t think of it in the same way as a regular mortgage.

“Even if they were to pay that [interest] before they pass away, the interest that they’re paying is under the home equity rules, and that interest is really quite limited, so even in that case, it might not be deductible,” says Brandenberg.

2) I’m a college student living with my family while going to school full-time. Last year, I worked full-time for about 5 months making ~$10 an hour. How do I know if I’ll need to pay taxes for this year? [This question was answered at timecode 3:13 on the video player above]

It doesn’t matter how many hours you worked or how much you got paid – if you were paid for work, your employer would’ve issued you a W-2 and that employer is required to withhold taxes, says Lieberman. “If the child is on the parents’ tax return, it has to be looked at and they may not be entitled to the full deduction, but generally speaking the tax would be zero for them based on the standard deduction,” says Lieberman.

For students taking small part-time jobs, Brandenberg says you can put “exempt” on your W-4 so that taxes won’t be taken out. “That way, at the end of the year, that student won’t really have to file a return except to get those taxes back,” she says.

3) I was given some property as a gift from an estate. I am trying to determine the cost basis. Would I use the fair market value at the time it was given to me or the tax value? [This question was answered at timecode 4:43 on the video player above]

Brandenberg explains that if it’s an estate, then generally that person is the beneficiary of the estate and was probably given this as a bequest or they were left the property. You want to look at the fair market value at the date of the death of the decedent. That’s really going to govern what your cost basis will be, she says.

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