Q&A: Tax filing status; loans
Readers get help with filing status, Social Security taxes and failure to file.
February 20, 2002: 6:40 a.m. ET
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NEW YORK (CNN/Money) - You need not file a tax return if your only source of income is Social Security benefits. The refund check you received last year has no bearing on your 2001 return. And you are not required to pay taxes on the money you loan to others.
Those are among the answers to reader's questions this week in our latest Q&A. Check back to our Tax Center page every Wednesday from now until the filing deadline, on April 15, for more.
This week's questions are answered by Cindy Hockenberry, an enrolled agent with the National Association of Tax Practitioners.
- If I were to loan a relative or child of mine money, temporarily, to purchase a home and did not charge interest, would I be liable to pay taxes on the amount loaned? The loan would be repaid within two years. -- a Virginia resident
Hockenberry: You are not required to pay tax on money you loan to others. Presumably, this money has already been taxed at some time. Also, you are not required to charge interest on a loan if the amount is less than $10,000. Different rules apply if the loan exceeds $10,000.
- How does that rebate that came out last summer effect the amount of my return this year if at all? -- unnamed
Hockenberry: The amount of the advance refund you received this past summer has no effect on your 2001 tax return. You are allowed a credit if you did not receive the full amount. If you did receive the full amount -- $300/single; $500/head of household; or $600/married filing jointly -- you do not need to do anything. If not, you would fill out the worksheet found in the instructions to the tax form you are using for the Rate Reduction Credit.
- Hi. Thank you first for being willing to help with answers. My husband and I are not older, but we both live on Social Security. Do we file and if so what form? Grateful for your assistance. - Joan
Hockenberry: If your only source of income consists of Social Security benefits, you do not need to file. Social Security benefits are not taxable if you have no other source of income.
- I was separated in the year 2001, but the divorce was not final until Jan 2002. Do I file single, or married filing separately? Thank You. -- Karen, Montgomery, Ala.
Hockenberry: Since you are still legally married on December 31, 2001, you can either file separately, or joint with your spouse. If you have children living in your home and you did not live with your spouse for the last six months of 2001, you may be eligible to file as head of household. You cannot file as single.
- Last year I went through a very brutal divorce, serious depression, etc., etc. ... Good news, I am better. Bad news, I did not file last year. (I have a problem to say the least!) I have no intentions of being a tax cheat. I just don't know what to do. I don't want all my salary garnished, but am most willing and able to make necessary payments. What? Who? How do I go about this with least problems? Thanks! -- unnamed
Hockenberry: It's never too late to file your tax returns and pay what you owe. If you do owe tax, interest and penalties continue to accrue from the date the return was originally due. The sooner you file, the less the interest and penalty will be. If you are due a refund, you have three years from the original due date to claim the refund. Either way, file as soon as possible. Any qualified tax professional can assist you with filing your returns. If you can, you can also go in to your local IRS office and they will assist you in getting your tax return filed. 
* Disclaimer
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