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July 22, 2018 10:46 pm

To catch up on missed depreciation, you must make a change in accounting method. However, this is an automatic change; you don’t need IRS approval but do have to follow procedures. Details on how to...

July 22, 2018 10:43 pm

State estimated taxes are deducted as itemized deductions for the year in which they are paid. For example, 2017 state estimated income taxes paid on April 18, 2017, June 15, 2017, and September 15, 2...

July 22, 2018 10:40 pm

Employee contributions to 401(k) plans are done on an annual basis. There is no period after the end of the year to complete contributions. So unlike IRA contributions that can be made up to the filin...

June 18, 2018 10:54 pm

Legal fees paid in connection with certain whistleblower awards are deductible from gross income; no itemizing is required. One such deductible award is a “Section b” award (which is a mandatory a...

June 18, 2018 10:52 pm

Federal income taxes withheld from a retirement plan distribution, which are listed in box 4 of Form 1099-R, are claimed as a credit on your return against the taxes you owe; they’re reported as tax...

June 18, 2018 10:50 pm

The Tax Cuts and Jobs Act ended the penalty for not having minimum essential health coverage starting in 2019 (not for 2018). However, an individual without coverage in 2018 may be able to escape the ...

May 30, 2018 11:42 pm

The commission paid to the gallery is a selling expense that reduces the sales proceeds reported for the transaction. Thus, the commission effectively reduces the amount of gain (or increases the amou...

May 30, 2018 11:40 pm

Not for self-employed individuals. For example, an independent contractor filing Schedule C can claim a home office deduction in 2018. However, employees who work from home cannot claim a home office ...

May 30, 2018 11:38 pm

Medicare beneficiaries with modified adjusted gross income (MAGI) over a set amount ($85,000 for single individuals and $170,000 for married persons filing jointly) pay an additional Part B and Part D...

May 21, 2018 11:15 pm

No. Deductions usually must be claimed for the year in which they were paid. There’s no provision in the tax law allowing a person to “save” deductions and use them in a subsequent year....

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The cost of repairs and maintenance for a rental property is deductible as long as the property has been held for rental at a fair rental price. However, because there was no rent, the net loss (expen...

Probably not. Once a child is 19 years or older and not a full-time student, then he/she is not a dependent unless gross income is below the exemption amount ($3,950 for 2014; $4,000 for 2015) and oth...

If the child has been placed with you as a foster child by an agency or the government, you can claim a dependency exemption as long as the child has lived with you for more than half the year and the...

As legal guardians, you are entitled to the exemption for your grandchild, but only one of you can claim it. Decide who should do this; it depends on who will save more in taxes for the family. You do...

You cannot deduct the cost of early education. However, the grandchild’s parent may be eligible for a dependent care credit (assuming you gave the funds to the parent who then paid the tuition). Pre...

There’s no simple answer. The tax treatment of the award—as ordinary income, as capital gains, or as a nontaxable return of investment—depends on the origin of the claim. The question you have t...

You have no income tax liability, but depending upon the size of the remaining balance you may face federal gift tax issues. Your son has no tax liability; your generosity in paying off his mortgage i...

The dollar limit for contributions to a medical FSA for 2015 is $2,550. Each spouse can contribute up to this limit as long as each works for an employer offering such a plan. This enables a couple to...

Home improvements for medical reasons are tax deductible, but only to the extent that they do not increase the value of the home. Consult with a realtor to make this determination. Note: Improvements ...

Deductible medical expenses include the cost of treatment for the purpose of affecting any structure or function of the body. While the IRS has not ruled on your specific condition, having a medical d...

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Your husband can total all of his IRAs and then take his annual distributions from any one or more of the accounts; you must figure your RMD separately and take it solely from your IRA....

No, filing status has no impact on eligibility for the credit. Owners of residential low-income rental buildings can claim a low-income housing credit over a 10-year period. You can learn more about t...

Each spouse who has a policy can take the deduction up to the dollar limit for his/her age. Thus, if both spouses are age 71 and they each pay premiums in 2015 of at least $4,750, they can deduct $9,5...

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...

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 ...

Once you are enrolled in Medicare, you are no longer eligible to contribute to an HSA. Your contributions must be prorated for the period in which you have a high-deductible health plan (HDHP). Thus, ...

If you bought the time share for personal use, then just as in the case of a sale of a principal residence, no loss is allowed. If you bought the time share for investment purposes, you may be able to...

It depends on whether you’re viewed under the tax law as a developer. If you hold the lot as investment property, any gain you reap is taxed as capital gain. You may also owe an additional 3.8% tax ...

Not yet, but the odds are in favor of an extension. Unfortunately, we probably won’t know for sure until later this year. If it comes very late in the year, the IRS may even give relief for rollover...

Sorry about your personal loss. The inheritance isn’t taxable, but receiving funds from the annuity is because your cousin never paid tax on this income. Sounds confusing, but it’s the same thing ...

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A donor-advised fund is a program that lets you donate cash and certain property now—and take a current charitable contribution deduction—while having funds disbursed to a charity in the future. T...

Under federal gift tax rules, you can give each person $14,000 in 2015. If you make the check out to both your granddaughter and her spouse, you can effectively give up to $28,000 without any gift tax...

If you pay the money directly to the facility, there is no dollar limit on how much you can effectively gift to benefit your mother for purposes of federal gift taxes. What’s more, this action may e...

Gain or loss is the difference between the basis of the stock and what you received for it. The basis of inherited stock used for determining gain or loss is the estate tax value, which is usually the...

You can take a tuition and fees deduction only for a dependent, so if your granddaughter is not your dependent, you’re out of luck. If she were your dependent, the deduction is capped at $4,000 (you...

On 2014 returns, taxpayers can choose to deduct state and local income taxes or state and local sales taxes. Those who opt to deduct state and local sales tax take the amount of their deduction from a...

The cost of repairs and maintenance for a rental property is deductible as long as the property has been held for rental at a fair rental price. However, because there was no rent, the net loss (expen...

Yes. If the amount you receive on the sale is more than you paid for the car, the different is taxable gain. However, as is the usual case with a personal vehicle, where the value typically declines o...

Generally no (and they are not qualified expenses for purposes of the American opportunity or lifetime learning credits). If the education is for business, you may be able to treat the cost of room an...

The payment of principal is never a deductible expense. However, check the payoff information to see whether there were any fees paid in addition to principal; the fees may be considered a selling exp...

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Group-term life insurance up to $50,000 of coverage is tax free to employees, former employees, and leased employees (there’s a $2,000 cap on coverage for spouse and dependents). Group-term life ins...

Married persons who file separately are barred from claiming certain tax credits, such as the adoption credit or education credits. However, there is no such bar for the low-income housing credit....

Income averaging for all taxpayers was a way to effectively lower the tax rate on this year’s income by spreading it over a number of prior (lower-income) years to find an average tax rate for it. T...

Sorry about your personal loss. The inheritance isn’t taxable, but receiving funds from the annuity is because your cousin never paid tax on this income. Sounds confusing, but it’s the same thing ...

Yes. While there are certain ordering rules for applying capital losses against capital gains, ultimately, long-term capital losses can offset any short-term gains....

No. It was your property that was donated, so the donation belongs to you. You could have given the items to your brother as a gift and let him make the donations....

Sorry about your personal loss. The settlement is tax free to you because it is compensation for personal physical injury. However, if any part of the settlement is for punitive damages, those are tax...

If you itemize deductions, likely the convenience fee is tax deductible. The IRS hasn’t said whether this specific convenience fee is deductible as part of your real estate taxes (which has no incom...

There’s no clear answer, and you may have to argue your position for this deduction if your return is questioned. On the one hand, the Tax Court allowed a deduction for the extra cost of organic foo...

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