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December 9, 2020 10:33 pm

Legal fees related to seeking a refund of individual income taxes normally would be deductible as a miscellaneous itemized deduction subject to the 2%-of-adjusted-gross-income floor. However, this ded...

December 9, 2020 10:31 pm

Gifts of cash and current interest property (not gifts of a future interest) do not have to be reported to the IRS on a gift tax return, Form 709, if the total to any recipient does not exceed the ann...

December 9, 2020 10:29 pm

According to AARP, this is a common scam that has cost grandparents millions of dollars. Unfortunately, the tax rules don’t help in any way. The deduction for a theft loss—assuming such scam is a ...

November 3, 2020 11:18 pm

There are no longer any age limits on making contributions to traditional IRAs. The cap of age 70½ expired after 2019. This means that those of any age who continue to have earned income (or other in...

November 3, 2020 11:17 pm

There are no required minimum distributions for 2020 (the requirement for 2020 was waived by the CARES Act), so the starting age is not significant for this year. After 2020, the starting age for comm...

November 3, 2020 11:15 pm

The cost basis of a home includes only capital improvements. Ordinary expenses, such as utility costs and property taxes, do not increase basis....

November 3, 2020 11:14 pm

The distribution is included in gross income; there is no exclusion in the law for using retirement account funds for this purpose. However, because you are over age 59½, there is no 10% early distri...

October 6, 2020 12:18 am

The IRS sets an interest rate each quarter that is applicable to underpayments by individuals. The rate for the third and fourth quarters of 2020 is 3%. You can see all interest rates listed by the Na...

October 6, 2020 12:17 am

For purposes of determining whether an employee fringe benefit is taxable to the employee, the same rules apply whether the employers are tax-exempt organizations or private sector businesses. If the ...

October 6, 2020 12:15 am

The definition of a disabled person is based the definition used for purposes of Social Security disability benefits. A person is disabled if unable to have substantial gainful employment. For purpose...

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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 ...

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...

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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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