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April 29, 2020 11:01 pm

The IRS has not yet provided guidance on what to do if checks are mailed to the wrong address or deposited into the wrong accounts. Eventually everything will be straightened out. This problem illustr...

April 29, 2020 11:00 pm

It depends on whether you itemized medical deductions for the year in which you pay the premiums on the policy you purchased on the individual market. If you took the standard deduction, you don’t r...

April 29, 2020 10:58 pm

Tax-exempt dividends represent interest earned by ETFs or mutual funds holding tax-exempt bonds. Thus, the dividends are reported as tax-exempt interest on the federal income tax return (line 2a of Fo...

March 25, 2020 2:48 am

For income tax purposes, you cannot deduct funeral and burial expenses. If the decedent’s estate was large enough to be subject to federal estate tax, then these costs are deductible on the estate t...

March 25, 2020 2:47 am

If you use a dwelling unit as a residence and rent it for fewer than 15 days during the year, you don’t report any of the rental income; it’s tax free. But you can’t deduct any expenses as renta...

March 25, 2020 2:46 am

No. While the SECURE Act raised the age from 70-1/2 to 72 for commencing RMDs for those who attain age 70-1/2 after 2019, the age for qualified charitable distributions (QCDs) has not changed. It is s...

March 2, 2020 9:07 pm

Because the stock loss produced a tax benefit to you, the recovery is taxable. The question is whether you report the recovery as a capital gain (since you took a capital loss) or as ordinary income. ...

March 2, 2020 9:04 pm

If you failed to claim the QBI deduction on your 2018 return but were eligible to do so, you’re not alone. The Treasury Inspector General for Tax Administration identified nearly 900,000 2018 return...

March 2, 2020 9:01 pm

No. There’s a new question on the 2019 Schedule 1 asking: “At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?” (...

January 20, 2020 9:32 pm

You cannot simply net your gambling losses against your winnings. You must report all of the lottery money as income. Then, if you itemize personal deductions (using Schedule A) instead of claiming th...

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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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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 ...

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....

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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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