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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...

December 22, 2021 12:04 am

If you itemize your personal deductions, the portion of closing costs representing real estate taxes may be deductible. And points paid to obtain a mortgage may be deductible in full or have to be spr...

December 22, 2021 12:02 am

Under a new 10-year rule applicable to beneficiaries who inherit IRAs from someone dying after 2019, the account must be distributed in full by the end of the 10th year after the year of the owner’s...

December 21, 2021 11:52 pm

Unlike deductions for charitable contributions to IRS-recognized organizations, there is no income tax deduction for gifts you make to individuals. What’s more, if gifts of cash exceed the annual gi...

October 28, 2021 1:27 am

There are different tax reporting rules for professional gamblers versus those who gamble for fun. A professional gambler is someone who spends substantial time on a regular basis in gambling activiti...

October 28, 2021 1:25 am

Due to the stepped-up basis rule, the basis for inherited property usually is its value on the date of sale (special rules apply for property from estates using the alternate valuation date and for th...

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 ...

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...

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...

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...

If you itemize your personal deductions, the portion of closing costs representing real estate taxes may be deductible. And points paid to obtain a mortgage may be deductible in full or have to be spr...

Under a new 10-year rule applicable to beneficiaries who inherit IRAs from someone dying after 2019, the account must be distributed in full by the end of the 10th year after the year of the owner’s...

Unlike deductions for charitable contributions to IRS-recognized organizations, there is no income tax deduction for gifts you make to individuals. What’s more, if gifts of cash exceed the annual gi...

There are different tax reporting rules for professional gamblers versus those who gamble for fun. A professional gambler is someone who spends substantial time on a regular basis in gambling activiti...

Due to the stepped-up basis rule, the basis for inherited property usually is its value on the date of sale (special rules apply for property from estates using the alternate valuation date and for th...

It depends on your plan. Tax law allows plans to permit “in-service withdrawals” by those who are still employed at the company maintaining the plan. However, plans are not required to offer this ...

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 ...

U.S. citizens and residents pay tax on their worldwide income. However, if you live abroad, the articles of most tax treaties allow the country of residence to tax pensions under its laws. If you live...

No, you can do it more than one time. However, you must wait until the following year to make a Roth IRA conversion of the funds that had been recharacterized....

Unfortunately not, except for certain reinvestments in qualified small business stock or empowerment zone business stock (see the Schedule D instructions for these special rollover rules). Apart from ...

You don’t have to amend the return on which the taxes were deducted. Instead, you report the income on the return for the year of the refund under the tax benefit rule. This rule says that you pick ...

A repayment of principal is never deductible. Interest on the loan may be deductible, depending on what you used the proceeds for. If you purchased securities, the interest is treated as investment in...

Yes. The specific identification method allows you to use the cost basis of the shares you sell to figure your gain or loss. FIFO, or first-in, first-out, is the default method for figuring basis if y...

This rule expired at the end of 2014 and has not yet been extended for 2015. Many believe it will be extended, but it is advisable to wait until later this year to see what Congress does before making...

While you clearly have an economic loss, tax rules prevent you from deducting the decline in value from your $120,000 purchase price to the value at the time you converted the condo to rental property...

You can deduct the unpaid principal if you can show that the debt is fully worthless. The fact that the borrower filed for bankruptcy does not automatically establish worthlessness. However, even if y...

It depends. First, you must itemize to do so. Then, you must choose to deduct state and local sales tax rather than state and local income taxes. If you make this choice, you can add the sales tax on ...

Yes, if you have a record of your driving. The rate for driving for medical purposes is 23 cents per mile in 2015 and 19 cents per mile in 2016....

The payment of pre-college tuition is not tax deductible. However, if you pay the tuition directly to the school, the payment is not subject to gift tax, regardless of the cost of tuition....

It depends on when the sale takes place. If you sell so that you will have used the home for at least two years within the five years before the sale, you will be able to take the exclusion. If it tak...

The cost of adaptive equipment for a medical condition is a deductible expense. However, you must itemize and your total medical costs must exceed your applicable threshold (10% of adjusted gross inco...

Unfortunately, the tax law limits a medical expense itemized deduction for travel costs to the patient in most cases. The only exceptions: Travel to accompany a patient who is unable to travel on ...

Yes. While it’s not the usual situation that someone in a younger generation gives gifts to someone in the older generation, there’s no tax rule barring this. In fact, under tax law there’s no b...

No. You can give each person up to the annual exclusion amount ($14,000 in 2015 and 2016) without any gift tax, or even the need to file a return. A person can make one gift on December 31, 2015, and ...

For income tax purposes, there’s no tax on gifts—to make or receive them. For federal gift tax purposes, there’s an annual exclusion ($14,000 in 2015 and 2016). Above that, you can apply your li...

Yes. Exchange traded funds, or ETFs, are essentially stock, and the wash sale rules apply to stock as well as mutual fund shares and bonds. Thus, a loss on the sale of an EFT cannot be recognized if y...

Not really. Most of the taxes you refer to (as well as taxes on airline tickets, gasoline at the pump, and cable and Internet access) are excise taxes, which are not deductible as itemized deductions ...

The law doesn’t put a cap on generosity. However, when gifts to an individual exceed a certain amount, you’ll have to deal with federal gift taxes. In 2014, you can give up to $14,000 per individu...

While the interest on municipal bonds is tax free, this doesn’t mean gain or loss on the sale of bonds is excludable from gross income. Gain or loss on the sale of municipal bonds is figured in the ...

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...

A child who is unrelated to the person who provides support may be able to claim a dependency exemption if the child is a qualifying relative. Even though there are no blood ties, a qualifying relativ...

The starting point is determining whether you have a gain or loss. If you have a gain, your other buying or selling activities have no impact on reporting the gain. If you have a loss and buy substant...

Once you enroll in Medicare (April 1, 2015), you are no longer eligible to contribute to an HSA. You can, however, contribute to an HSA for the months prior to this date (assuming you are covered by a...

When a person cannot handle his or her financial affairs because of physical or mental impairment and did not make arrangements (e.g., a durable power of attorney or trust) prior to impairment, a cour...

It depends. HH bonds were issued in exchange for E and certain other bonds to enable bondholders to continue deferring the tax on the interest that accrued. The Treasury stopped issuing HH bonds in 20...

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