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April 22, 2022 2:36 am

A coronavirus-related distribution is a distribution that is made from an eligible retirement plan to a qualified individual from January 1, 2020, to December 30, 2020, up to an aggregate limit of $1...

April 22, 2022 2:26 am

The IRS allows victims of Ponzi schemes to deduct their losses as theft losses rather than as capital losses. While thefts of personal use property are currently barred (only disaster losses are allow...

April 22, 2022 2:24 am

Whether you can take a tax credit for a plug-in electric vehicle (EV) depends on the manufacturer. The tax law set a 200,000 sales limit on manufacturers for these vehicles and Tesla and GM have alrea...

March 17, 2022 2:54 am

No. A qualified charitable distribution (QCD) up to $100,000 from an IRA by those age 70½ or older is not includible in gross income and it counts toward required minimum distributions (RMDs) you wou...

March 17, 2022 2:52 am

Interest on the portion of the loan not in excess of the balance of original acquisition indebtedness at the time of refinancing is deductible as an itemized deduction, subject to the limitation appli...

March 17, 2022 2:50 am

Capital improvements to a principal residence are not deductible but instead are added to the cost basis of the home. This reduces the capital gain that results when the home is sold. The cost of the ...

March 17, 2022 2:49 am

The death of a spouse after the end of a tax year does not directly impact tax reporting. The surviving spouse may file a joint return. The decedent’s personal representative must consent to this, b...

February 22, 2022 2:19 am

Unfortunately, the distribution cannot be rolled back into the IRA because the 60-day rollover period has passed; it is a taxable distribution. The rollover deadline can be waived for certain situatio...

February 22, 2022 2:17 am

Because IRS employees worked remotely due to the pandemic, the IRS still has a significant backlog of unprocessed income tax returns. There is no authority for an individual to sue the IRS for failing...

February 22, 2022 2:16 am

Generally, prepaid medical expenses, including dental costs, are not deductible. An old Tax Court case said that advance payment for medical services to be rendered in the following year are not deduc...

The total amount of itemized medical expenses that are deductible are entered on Schedule A of Form 1040. There is no separate form used to list the specific medical expenses. You do not have to attac...

It may be possible to claim a dependency exemption for a relative living in Mexico. While the niece cannot be a qualifying child because she does not live with you, the niece may be a qualifying relat...

You cannot deduct the interest that accrues on a reverse mortgage until it is actually paid, which doesn't happen until the mortgage is paid off in full. At that time, the mortgage interest usually is...

A vacation home is a capital asset. As such, gain is reported on Schedule D (after entering the transaction on Form 8949 in the space for long-term transactions not reported on Form 1099-B). If the sa...

The amount of premiums for a long-term care policy that are treated as a deductible medical expense if you itemize deductions is based on your age as of the end of the year. The fact that you paid a l...

When a taxpayer dies, the tax basis of the property is the value of the property on the date of death. As such, if property is sold for this date-of-death value, there is no gain or loss....

If such care is medically necessary, as prescribed and certified by a licensed health care provider, then it can be treated as a deductible medical expense if you itemize deductions. For 2016, only ou...

Yes. If your income is too high to allow you to benefit from the credit, you can let your child use it. To do this, you must forego the dependency exemption you would otherwise have claimed for her....

Probably not. These likely are considered nondeductible personal expenses for you. Legal fees are usually deductible only if they are related to: The collection of taxable income, such as legal fe...

An employee who receives sick pay is taxed on it. It is treated the same as other taxable compensation, which means it is taxable for income tax purposes and subject to FICA. Employers who give sic...

Yes. Even though you are required to start drawing down the account, you can continue to add to it through deductible contributions as long as you have net earnings from self-employment. However, you ...

No. Having a decal or a removal sign that helps to advertise your business does not entitle you to deduct all of your driving as business mileage. You’re limited to the actual miles driving for busi...

Job-loss mortgage insurance is a policy that pays some or all of the mortgage payments (and, under some policies, real estate taxes and homeowners insurance) if you lose your job. The IRS has not rule...

A Form 1099-MISC is required to be issued only by a business that pays $600 or more to an independent contractor. If your rental activity is only an investment and not a business, you don’t have to ...

The cost of housekeeping services are never a deductible medical expense; only personal care services may be deductible under certain conditions. However, the cost of housekeeping services incurred to...

No. A Schedule C is required if you are in a trade or business. However, you can report miscellaneous income on line 21 of Form 1040 (“other income”). This miscellaneous income is not subject to s...

Unreimbursed employee business expenses can be deducted as a miscellaneous itemized deduction on Schedule A of Form 1040. So you must itemize, and only amounts in excess of 2% of adjusted gross income...

Earned income remains taxable regardless of age. Similarly, such income continues to be subject to Social Security and Medicare taxes (FICA for an employee; self-employment tax for a self-employed per...

No. The value of employer-paid health insurance for an employee, spouse, and dependent is a tax-free fringe benefit. However, under the Affordable Care Act, employers (other than small employers curre...

If the distribution is a qualified charitable distribution (QCD), enter the total distribution on line 15a of Form 1040. Then, if the total amount distributed is a QCD, enter -0- on line 15b. If only ...

Roth IRA contributions must be based on earnings as an employee or from self-employment. Executor fees, while included in gross income, are not treated as self-employment income for someone who is not...

Usually, a distribution from a qualified retirement plan is treated as ordinary income in the year in which it is received. However, for someone born before 1936, there is a special 10-year averaging ...

If the distribution was a required minimum distribution, it cannot be rolled over to an IRA (the proceeds can be used to fund an IRA if you are eligible to make an IRA contribution for the year). If t...

No. A taxpayer who has not reported interest annually but opted to defer it must take all of the accrued interest into income on the earlier of these events: When the bonds are cashed in When yo...

A vacation home is a capital asset. As such, gain is reported on Schedule D (after entering the transaction on Form 8949 in the space for long-term transactions not reported on Form 1099-B). If the sa...

Usually, a spin-off does not result in any gain or loss to a shareholder. A portion of the basis of the old stock is allocated to the new stock in the spin-off company. The IRS usually gives a ruling ...

Charitable contributions are fully deductible for estate tax purposes. Unlike donations for income tax purposes, there are no adjusted gross income percentages or other limits. However, be sure to ...

Lump-sum benefits are treated the same as monthly benefits. Thus, if your income is low enough, no benefits are includible in gross income. Otherwise, the benefits may be includible in gross income to...

Interest on federal savings bonds is taxable; the portion of the redemption representing principal (your initial cost for the bond) is not. If bonds (Series EE and I) are issued after 1989 and rede...

The American opportunity and lifetime learning credits apply only for qualified expenses required for an enrollment at an "eligible education institution." This is a school eligible to participate in ...

If the replacement doors constitute an energy-saving improvement, you may qualify for a tax credit (not a deduction) of up to $500. This dollar limit is lifetime, so if you've already used up the full...

Sorry for your loss, but unfortunately, funeral expenses cannot be claimed as an income tax deduction. If the value of your husband's estate was large enough to require the filing of a federal estate ...

Gambling losses (referred to as wagering losses) are deductible only to the extent of gambling winnings. However, the deduction for these losses is not one of the enumerated deductions that can be cla...

No. Opting to claim the standard deduction is in lieu of any itemized deductions. The five-year carryover for charitable contributions applies only to amounts that were claimed as itemized deductions ...

You can claim a theft loss if this scam amounts to a theft under state law. Usually, the taking of money through fraud or misrepresentation constitutes a theft loss. If so, then you must itemize deduc...

If such care is medically necessary, as prescribed and certified by a licensed health care provider, then it can be treated as a deductible medical expense if you itemize deductions. For 2016, only ou...

Yes. Those age 70-1/2 and older can transfer up to $100,000 annually directly from an IRA to a public charity. The distribution is not taxed, although no charitable contribution deduction can be taken...

Some marketers are touting a "consumer rebate" in order to get individuals to subscribe to certain newsletters or buy other materials. The so-called rebate is nothing more than a tax deduction for sta...

Unfortunately, no. Of course, you are free to make donations to whomever you choose,  but the tax law limits deductible contributions to those made to 501(3)(c) organizations. Explore the organizatio...

While the interest is not subject to income tax, it must be reported on your federal income tax return. If you collect Social Security benefits, the interest is taken into account in determining wheth...

Because you are married, you cannot be treated as single. You can file a joint return, or you can opt to file as "married filing separately." However, if spouses live apart and meet certain tests, one...

The Home Affordable Foreclosure Alternatives (HAFA) Program is a federal program to help distressed homeowners retain their homes. Payments received under the program usually are not taxable. They are...

Fellowship payments used for incidental expenses, including room and board, travel, and optional equipment are taxable. So too are amounts received for teaching, research, and other services required ...

Dependents must file a tax return and pay taxes if income exceeds set limits. For 2016, a single dependent under age 65 who is not blind must file a return if any of the following applies: Unearne...

All interest income must be reported on Form 1040, unless there is a special rule that applies (such as interest on U.S. savings bonds redeemed for higher education costs). Thus, whether or not you re...

Yes. Sick pay is treated as taxable compensation. It is reported to you on Form W-2....

You don't have to file an amended return or contact the IRS. The IRS will contact you by mail and ask that you send the schedule. The IRS letter will have instructions on where to mail it....

The fact that you don't claim the exemption for a dependent child does not prevent you from using head of household status on your tax return. As long as you meet the other conditions for this status,...

Probably not. As part of the installment agreement, you agreed to have any future tax refunds applied to your outstanding bill. Of course, if the amount of the refund exceeds what you still owe, you'l...

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