Ask JK

You can include medical expenses of a person who would be your dependent but for the fact that his or her gross income exceeds the exemption amount ($3,800 in 2012; $3,900 in 2013). Thus, if you provi...

Payments to a spouse or former spouse can be treated as deductible alimony only if the obligation to make the payment ends on the death of the recipient-spouse. Ending the payment obligation on the sp...

If you made a contribution to your HSA for 2012, you must complete Form 8889, Health Savings Account. However, you don’t have to attach any receipts or other documentation showing withdrawals from t...

Yes. Track your mileage, noting the date, odometer reading, and purpose of each trip (e.g., making repairs, interviewing prospective tenants, collecting rents). You can deduct your actual expenses or ...

If you have an HSA, you must complete Form 8889, Health Savings Accounts (HSAs), and attach it to your return. The form is used to figure your deductible contributions and report your distributions. ...

You can claim the American Opportunity credit for $4,000 used for tuition (the credit is 100% of the first $2,000, plus 25% of the second $2,000), assuming your modified adjusted gross income does not...

There are tax consequences, but they depend on how you transfer your property.If you give the property, you have to determine your gift tax liability, if any. Likely, you will be able to appl...

It would seem that he qualifies as your dependent. The tests to meet:He must be a member of your household; He cannot have gross income over $3,800 in 2012; and You must contribute more than ...

Unfortunately, she probably can’t deduct the interest because she isn’t liable on the mortgage. (She may be able to deduct interest if there is a contract between her and her father obligating her...

If you itemize deductions, the cost of a medically needed home improvement, such as a chairlift, is deductible. Obtain a doctor’s note that the chairlift is required because of a medical condition a...

It depends. Look at your wage withholding and/or estimated tax payments for 2012 thus far. Now project your tax liability for the year. You won’t owe any underpayment penalties for 2012 if your with...

No. In order to claim the earned income credit, a taxpayer must have earnings from working for someone else or from your own business. Unemployment benefits are not treated as earnings for this purpos...

If your move was work related and you work at least 39 weeks (78 weeks if self-employed) in your new U.S. location, then you can claim the moving expense deduction. The deduction is taken from gross i...

Yes. There is no minimum age requirement for an IRA. As long as a child has earned income from a job or self-employment, he or she can set up and fund an IRA or Roth IRA. You can make the contribution...

It depends on the terms of your new employer’s plan. Usually you have to start RMDs once you reach age 701/2. However, if the terms of the plan allow participants to postponed RMDs until they cease ...

Tips, regardless of amount, are taxable income. They should be included as such on your tax return. You also have certain reporting obligations. If the amount of tips for the month exceeds $20, you ar...

It depends. Even though many employees today work from home after hours, this doesn’t mean they can claim a home office deduction. In order for an employee to claim a home office deduction for busin...

If you have not incorporated your subcontracting business, then you are self-employed. You are responsible for your income and employment taxes....

There is no hard-and-fast rule; essentially, you can choose either one to report your income and expenses. The choice of schedule does not impact the IRS’s inquiry into whether you are running a bus...

No. Elective deferrals to a 401(k) are excluded from your salary; you are not taxed on them. You may also be permitted to make after-tax contributions (e.g., to a Roth 401(k)). These are not excluded ...

It depends on how these benefits are paid to you. If you are an “alternate payee” so that the plan pays the benefits directly to you, then you are taxed on the benefits to the same extent that you...

No. This rule expired at the end of 2011 and has not yet been extended for 2012. However, it could still be extended as part of “extender legislation.” We’ll report here on any developments abou...

Yes. The retirement saver’s credit is one of the few examples in the tax law where you can double dip—get the benefit of not being taxed on the salary you put into the 401(k), plus a tax credit to...

Currency trades on FOREX are treated like other commodity trades. Gains and losses are reported on Form 6781, Gains and Losses from Section 1256 Contracts and Straddles. ...

A contribution must be based on earned income in most cases. This is wages or earnings from self-employment. It does not include unemployment compensation or retirement plan distributions, even though...

No. Contributions withheld from your pay as a contribution to a 401(k) plan are not deductible, but instead reduce the taxable amount of compensation. You get a tax benefit by not having to pay income...

No. Elective deferrals to a 401(k) are excluded from your salary; you are not taxed on them. You may also be permitted to make after-tax contributions (e.g., to a Roth 401(k)). These are not excluded ...

You can recognize the loss only when all amounts in the Roth IRA have been distributed to you and the total distributions are less than your unrecovered basis (your total Roth IRA contributions). If y...

The benefits are income to your child, even if you receive the payment for your child’s benefit. However, unless your child has income from other sources exceeding $25,000 (taking into account one h...

It depends on whether you have any other nondeductible or deductible IRA accounts. If not, then you can take a tax loss for the difference between your contribution and the distribution. It is an ordi...

Unfortunately, no. The law specifically says that tuition for kindergarten and higher grades is not a qualified expense. Only the costs of preschool can qualify....

Yes. You must file a separate Schedule C for each business to report the income and expenses of each activity. You may qualify for a home office deduction even though you use the same space for two or...

Homeowner’s insurance isn’t deductible as a personal itemized deduction on Schedule A. Part of it may be taken into account in figuring a home office deduction if a portion of the home is used for...

It depends on which deduction is involved. For example, you claim all of the expenses you paid for (e.g., your medical costs). If you own your home jointly, you can claim a deduction for the amount of...

Yes. If you itemize and choose to deduct state and local sales taxes instead of state and local income taxes, you can deduct your actual tax payments (which would include the sales tax on a car purcha...

As a rule of thumb, a tax deduction saves you the amount of the write-off multiplied by your tax bracket ($3,000 × 28% = $840 tax savings). However, to be precise, the savings can be different. The ...

Any IRA beneficiary, whether primary, contingent, or otherwise, must take RMDs over his or her life expectancy using a special IRS table (Table I in IRS Publication 590) for this purpose....

You can include medical expenses of a person who would be your dependent but for the fact that his or her gross income exceeds the exemption amount ($3,800 in 2012; $3,900 in 2013). Thus, if you provi...

It depends. Usually, dividends on a life insurance policy are considered a return of capital, which means you are not taxed on them until dividends exceed the total premiums paid. However, in some cas...

Payments to a spouse or former spouse can be treated as deductible alimony only if the obligation to make the payment ends on the death of the recipient-spouse. Ending the payment obligation on the sp...

No. Distributions from qualified retirement plans, such as pensions, are not treated as earned income for purposes of the self-employment tax....

We’re sorry for your loss, but Uncle Sam won’t allow you to deduct this expense. It’s personal and not deductible....

Unfortunately, no. The law specifically says that tuition for kindergarten and higher grades is not a qualified expense. Only the costs of preschool can qualify....

Yes. You must file a separate Schedule C for each business to report the income and expenses of each activity. You may qualify for a home office deduction even though you use the same space for two or...

No. The costs of commuting to and from work (including the cost of parking at your work location) are treated as nondeductible personal expenses. However, if your employer provides free parking, you a...

Homeowner’s insurance isn’t deductible as a personal itemized deduction on Schedule A. Part of it may be taken into account in figuring a home office deduction if a portion of the home is used for...

Probably not. Insurance proceeds from accidents usually aren’t taxable. However, they are if they exceed your adjusted basis in the vehicle. For a car used for personal driving, this isn’t likely ...

The rebate you received because of the mandated medical loss ratio may or may not be taxable. If you paid for health insurance but didn’t claim any deduction for the premiums, the rebate is tax free...

It depends on which deduction is involved. For example, you claim all of the expenses you paid for (e.g., your medical costs). If you own your home jointly, you can claim a deduction for the amount of...

Not really. Unemployment benefits are fully includible in your gross income. If you looked for a job, you may be able to deduct your job-hunting expenses. They are claimed as a miscellaneous itemized ...