Some of these items may surprise you. There are a number of areas in the tax code that cause confusion as to the taxability of money received. Here are some of the most common areas of confusion. Alimony. Alimony is taxable to the person who receives it and deductible to the person who pays it. Special rules apply. Make sure you have proper documentation as part of a divorce decree
Picture this; for the past few years you have picked up your tax return and have had a small but nice refund. Now imagine your surprise, when next year, you are required to send in a fairly big check to settle your tax bill. Believe it or not, this message is almost as hard to deliver to a taxpayer as it is to hear it. Here are some tips to
Lost in the recent news regarding stolen identities at Snapchat and the credit and debit card theft at major retailers, is the dramatic increase in identity theft and scams using the IRS. One of the more recent scams announced by the IRS is worth noting. The scam Callers identifying themselves as the IRS phone you and disclose that you owe delinquent taxes. They say that unless there is immediate payment
Surprise! Your stock loss is not deductible. As you look for year-end tax moves to save on your bill from Uncle Sam, you may consider selling stocks that have lost value. This can be a great strategy when up to $3,000 in stock losses can offset your ordinary income. However, there is a little known rule called the Wash Sale rule that could surprise the unwary taxpayer. Wash Sales If
The term “kiddie tax” was introduced by the Tax Reform Act of 1986. The IRS introduced this rule to keep parents from shifting their investment income to their children and have this income taxed at their child’s lower tax rate. The law requires a child’s unearned income (generally dividends, interest, and capital gains) above a certain amount ($2,000 in 2013) to be taxed at their parent’s tax rate. Here is
Health Flex Spending Arrangement Rules Changing Do you have funds in an employer provided Health Flexible Spending Arrangement (FSA)? If you worry about the long-standing rule of using up those funds or you’ll lose them, then a new notice from the IRS could be helpful for you this year. Background Millions of Americans take advantage of their employer’s cafeteria plan that allows setting aside pre-tax dollars to be used
Tips to ensure their deductibility One often over-looked way to reduce your tax obligation is to donate gently used items to a favorite charity. Too often this is done without the necessary forethought to ensure you can deduct the value of these donations on your tax return. Here are some tips to ensure you can receive this tax benefit. Good or Better Condition. Remember only items donated that are in
“Fair market value (FMV) is the price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts.” Source: IRS Publication 561 This is the standard the IRS uses to determine if an item sold or donated by you is
If you own your own business, by hiring your children you can save in the following ways: Salaries paid to children under 18 are not subject to Social Security or unemployment taxes (in most states). No Federal withholding taxes are required if the child is under age 21 and earns under $5,950 per year. Even if the child must pay taxes, the child’s rate of tax is normally lower than
On average less than 2% of over 90 million tax returns are selected for audit each year. The percentage increases for higher income groups and tax returns in areas of specific interest to the IRS. If you should receive notice from the IRS of an impending audit please remember: IRS computers usually flag the tax returns for audits. The vast majority of them are routine. Because of the flagging process,
