The April 15 deadline is looming for last-minute income tax filers across the nation.
Mellody Hobson, "Good Morning America's" personal finance expert and president of Ariel Investments, appeared on the show and shared some tips for people who are scrambling to finish their taxes, and answered some questions submitted by viewers:
Q: Ernesto in Houston asked: "I owe the IRS money, but can't afford to pay it right now. I already have an installment agreement in place. How many can you have at one time?"
A: Hobson said you can agreement to pay the IRS what you owe in small amounts for up to 5 years, and you can only have one installment plan at a time, but you may be able to re-structure your existing agreement to include your most recent debt.
You'll probably have to complete a collection information agreement with details about your situation. If the IRS agrees to change your payment plan, you'll have to pay a $45 fee to make the changes, she said.
Q: Victoria from Fort Collins, Colo., wrote: "I was married all of last year up until mid-November. Can I claim married filing single or do I have to claim single for the year?"
A: More than a million divorces happen every year, Hobson said, so it's important to know how it affects your tax filing status.
Your marital status on Dec. 31 determines your filing status for the entire year. Since Victoria was divorced before the end of the year, she would file an individual tax return, Hobson said.
For someone who claims "married filing separate" status, there are certain benefits. First, the IRS will not hold you responsible for any unpaid taxes that are due to the actions of your partner. Also, if you file jointly, you could be partially responsible for what your partner owes, Hobson said.
But there is a drawback. If you claim "married filing separate" status, you can't claim certain deductions and credits that are available to married couples.
Another important issue divorcing couples must consider is alimony and child support. Parents who receive child support payments don't pay taxes on them, but the payments aren't deductible for the parent who is writing those checks, Hobson said.
It's the reverse for alimony, though.
Alimony is considered income and it is taxable, and the payer can get a deduction as long as long as the payment adheres to certain stringent guidelines. Otherwise, it's not deductible.
Q: Joe from Elmont, N.Y., submitted a question by Skype. He asked about the Making Work Pay tax credit, if he is eligible and how he could claim it.
A: The Making Work Pay tax credit comes from the 2009 federal stimulus plan. It's available for 2009 and 2010 only, and provides a credit of up to $400 for individuals and $800 for married taxpayers who file joint returns.
You're eligible if you are a U.S. citizen or legal resident with a valid social security number. Your possible credit is reduced if you make more than $75,000 as a single filer or $150,000 as a joint filer, and you won't get the credit at all if you make more than $95,000 as an individual filer or $190,000 as a joint filer.
If you receive a paycheck and pay withholding taxes, the credit may already have been paid to you directly through an adjustment in the withholding taxes paid by your employer. If you don't have taxes withheld, you can still get the benefit on your tax return.