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Tax panel fields 'very good questions'<br> Accountants were surprised by how many callers were doing taxes by hand

Can a taxpayer claim his 92-year-old mother as a dependent? What about a 19-year-old who isn't a student? How are taxes affected if you gift a house but still live in it?

These were among the queries 10 local accountants fielded Wednesday night during The Buffalo News' annual Tax Help Line Call-in Night. Phones started ringing at 5 p.m., while questions and answers flew back and forth online.

"They're very pleased we're here to answer their questions," said Tim Hoelscher, senior tax manager for Tronconi, Segarra & Associates, the panel coordinator.

Unlike in past years, there was little consistency to the questions, as there weren't as many, if any, significant changes to either federal or state tax laws. As a result, the questions ran the gamut. While some addressed unique situations, they often involved more routine parts of the tax code. "They're asking very good questions," said Christine A. Learman, an independent accountant with her own firm, who worked the live Web chat.

Even so, they weren't easy, and accountants were surprised how many callers were doing taxes by hand. "A lot of people are missing the boat because they won't get the software or pay someone," Hoelscher said. "It's well worth the money."

Peter Bellanti, senior tax manager for Amato, Fox & Co. PC, took a question from a taxpayer asking if he can claim his 19-year-old son as a dependent, even though he's not in college.

On its face, no. But if he doesn't earn enough income and lives at home, he may be claimed as a "qualifying relative."

On the other side of the age spectrum, another man asked Joe Kabacinski, an assistant professor of accounting at D'Youville College, if he could claim his 92-year-old mother, who doesn't live with him. The answer is yes, under an exception to the dependency rules, because he contributes more than half of her support.

Hoelscher fielded a question from someone in a same-sex relationship, asking how to file. Since neither the state nor the federal government recognize same-sex relationships as having legal status, he said, the two men have to file separately. "It's a good question. It's the world we live in now," he said.

One man whose daughter moved to Georgia to take a job asked Kabacinski if she could deduct her moving expenses from renting a van. Yes, because it's more than 50 miles from her previous place of employment.

There were also questions concerning property. Hoelscher took two questions about selling a home that was inherited or gifted, and how to value it for tax purposes. Normally, in those situations, the home would be valued as of the time of the inheritance or gift.

But in the case of the gift, the mother continued to live in the house, so it's not considered a gift under the tax code.

"You can't give something away and still enjoy it for life. The IRS doesn't like that," Bellanti said.

One subject that did merit several questions was the Making Work Pay refundable credit, valued at up to $800 per couple or $400 for a single person. Taxpayers with Social Security or earned income can file for it now, but only if they didn't get it during the 2010 year.

Then there was the call at the end of the evening to Todd Zgoda, tax manager of Bruce M. Zgoda CPA. A woman asked if she qualified to withdraw money from her 401(k) prior to age 59 1/2 without paying a penalty, under the hardship rules for medical or funeral expenses, or a home purchase. Based on the discussion, Zgoda said no.

"Hopefully, they won't catch me," she said.

The online questions and answers will be posted on The News' Strictly Business blog.

The program was sponsored by the Buffalo chapter of the New York State Society of Certified Public Accountants. Other participants included: Debbie Todaro, tax manager for Sanderson & Co. Investment Consultants; Rosemarie Steeb, owner of Rosemarie C. Steeb CPA; Bruce and Todd Zgoda, owner and tax manager, respectively, of Bruce M. Zgoda CPA; and Dennis and Jane Jewell, partners at Noonan & Jewell CPAs.


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