How much is the 2006 tax exemption for each individual that I claim?
The exemption is $3,300, which is $100 more from 2005.

If I am single and I earned $5000 throughout the entire year, will I need to file a tax return?
If you are single, divorced, or legally separated, under the age of 65, you do not have to file tax returns unless you made $8,200 or more.  If you are over the age of 65, you do not need to file unless you made over $9,450

What does it mean to file head of household?
To file head of household, the following must be true:
You file a separate return from your spouse
You paid more than half of the cost to keep up your home
Your spouse did not live with you during the last 6 months
For over 6 months, your home was the principal home for your dependent

Who pays more tax, a married couple filing jointly or a married couple filing separately?
In most cases, married couples filing jointly will pay less federal taxes
What are some examples of income we do not report
   Welfare benefits
   Workers compensation benefits
   Child support payments
   Scholarship grants
   Life Insurance proceeds received because of a person’s death

What are some examples of income that I have to report?
   Alimony payments
   Prizes and awards
   Lottery winnings
   Gambling winnings
   Severance pay
   Tax refund

If we are married and made money on the sale of our home, are we going to pay taxes on our gain?
You may exclude your gain of $500,000 if you are married filing jointly, or $250,000 if you are filing separately, on the sale of your principal home if during the 5 year period ending on the date of the sale you owned the property for 2 years before the sale and lived in it for 2 years

If I have several businesses, do I combine the incomes and expenses for all of them to file 1 Profit & Loss Statement on my tax returns?
No, you must file a separate Schedule C for each business that you operate.

I started a business, and I have many expenses to report, even though the business didn’t make any money.  Can I still claim the expenses?
You can deduct expenses if your business made at least $600 during the course of the year.

I replaced a broken window in my home this year.  Can I claim that as an improvement
Improvements include paving the driveway, replacing the roof, room additions, etc.  These are improvements that add value to the home, and therefore can be claimed as expenses.

I moved from 1 apartment to another this past year.  Can I claim moving expenses on my tax returns?
If you moved to a new residence because your principal work place changed, you may claim moving expenses as long as you there is a difference of at least 50 miles between your new home and old home.  You may claim expenses like transportation. Storage of household goods, and other personal effects.

Are people required to file a state tax return in every state?
No, some states do not require their residents to file tax returns, such as in the state of Washington. 

Can I file tax returns on my own?
You may file your own tax return, however, tax laws are very complicated for someone who has not had much training to understand.  In order to avoid making mistakes, you will be better off having a trained professional complete them.  This is even more true if you have a business and need to file a Schedule C.

I am not self-employed, but I receive a 1099-MISC.  How do I file this on my tax returns?
If you have received a 1099-MISC form, you are being treated as a self-employed worker, also referred to as an independent contractor. You do not necessarily have to "have a business," but simply perform services as a non-employee to have your compensation treated this way. The payer has determined that an employer-employee relationship does not exist in your case.  For example, you may charge your neighbor $600 for taking care of his kids for 2 weeks while he & his wife go on vacation.  You are not exactly an employee, but he can give you a 1099 form for paying you.  You must then include this income on your tax return as earned income.

Are gifts and inheritances considered taxable?
Generally, property you receive as a gift, bequest, or inheritance is not included in your income. However, if property you receive this way later produces income such as interest, dividends, or rentals, that income is taxable to you.  For example, if your mother buys $3000 leather sofas to place in your new home, you do not need to report this as income.  However, if she gives you a $3000 savings bond that is going to earn you interest, you do need to include this as unearned income on your tax returns