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February 20, 2019 9:26 pm

Because you repaid an amount you thought you had an unrestricted right to and which may have been included in income (up to 85%) in an earlier year, special rules apply. The repayment will be netted a...

January 16, 2019 8:54 pm

Severance pay is taxable in the year in which it is received. If it’s received in a lump sum, then it’s taxable in one year. If it’s spread over two or more years, then the portion received in e...

January 16, 2019 8:53 pm

Unreimbursed employee business expenses used to be a miscellaneous itemized deduction subject to the 2% of adjusted gross income floor. However, this deduction has been suspended for 2018 through 2025...

January 16, 2019 8:52 pm

The basis for depreciation is the lower of the adjusted basis of the property (usually cost) or its fair market value on the date it starts to be used for business. For equipment (e.g., a computer, fu...

January 4, 2019 12:56 am

The tax law allows individuals who receive foster care payments to exclude them from gross income if all three of the following conditions are met: (1) Payments are made pursuant to a foster care prog...

January 4, 2019 12:54 am

It depends. Legal fees related to a recovery for unlawful discrimination under various federal laws such as the Family and Medical Leave Act are deductible as adjustments to gross income (i.e., they a...

January 4, 2019 12:53 am

For 2018 through 2025, there is no phase-out of itemized deductions for high-income taxpayers....

January 4, 2019 12:51 am

Yes. Executor’s fees are taxable income. But if a taxpayer is not a professional executor, the fees are reported as miscellaneous income (not business income) and are not subject to self-employment ...

November 19, 2018 10:21 pm

A qualified charitable distribution (QCD) can only be taken from a traditional or Roth IRA. It cannot be taken from a SEP or SIMPLE-IRA. However, SEPs and SIMPLE-IRAs can be rolled over to an IRA and ...

November 19, 2018 10:20 pm

The qualified business income (QBI) deduction is not a business deduction; it does not appear on Schedule C or any other business tax return. Instead, it is a personal deduction on Form 1040 that is s...

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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 ...

If you itemize deductions (instead of taking the standard deduction), medical expenses you pay out of pocket (i.e., are not covered by insurance or a government program) can be deducted to the extent ...

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 ...

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...

Yes. Normally, to qualify for the home sale exclusion of up to $250,000 of gain on the sale of a principal residence ($500,000 for joint filers), you must own and use your home for two out of the five...

Only cash contributions (e.g., checks, credit card charges) are acceptable in 529 plans. You’ll have to sell the stock and donate the proceeds. If the stock has appreciated, you’ll owe capital gai...

What you do for your family is great, but the tax law doesn’t reward you with any special tax breaks. If you care for grandchildren in your home and are paid, you must report the income (you may owe...

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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 ...

Long-term disability income that you receive prior to the minimum retirement age under your employer's plan and that is shown as taxable compensation in box 1 of Form W-2 is treated as earned income f...

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...

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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...

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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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