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March 1, 2021 9:03 pm

Refunds of federal income taxes are never taxable because the taxes were not deductible. Refunds of state income taxes may or may not be deductible. It depends on whether the taxpayer itemized deducti...

March 1, 2021 9:02 pm

Seniors generally are subject to the same tax rules as other individuals when it comes to reporting income and claiming deductions and credits. However, those age 65 and older can claim an additional ...

March 1, 2021 9:00 pm

Yes. The Consolidated Appropriations Act, 2021, created a one-year opportunity. Use the prior year’s income if it results in a larger earned income tax credit. But don’t if it results in reducing ...

January 17, 2021 8:12 pm

Taxation of the payment depends on various factors. If, for example, the settlement was the result of accounting errors erroneously inflating the price of the stock, then the payment is a refund of yo...

January 17, 2021 8:11 pm

The Consolidated Appropriations Act, 2021, specifically allows businesses to deduct all of their expenses to the extent otherwise allowed under tax law. This includes expenses covered by PPP loans tha...

January 17, 2021 8:10 pm

Distribution of the second round of stimulus payments to individuals began early in 2021. The payment amounts were based on 2019 AGI (obviously the IRS does not yet know 2020 AGI because 2020 returns ...

January 17, 2021 8:08 pm

The additional standard deduction amount for blindness applies per person. If one spouse is blind, the couple’s standard deduction is increased by one additional amount for a married person ($1,300 ...

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 ...

Refunds of federal income taxes are never taxable because the taxes were not deductible. Refunds of state income taxes may or may not be deductible. It depends on whether the taxpayer itemized deducti...

Seniors generally are subject to the same tax rules as other individuals when it comes to reporting income and claiming deductions and credits. However, those age 65 and older can claim an additional ...

Yes. The Consolidated Appropriations Act, 2021, created a one-year opportunity. Use the prior year’s income if it results in a larger earned income tax credit. But don’t if it results in reducing ...

Taxation of the payment depends on various factors. If, for example, the settlement was the result of accounting errors erroneously inflating the price of the stock, then the payment is a refund of yo...

The Consolidated Appropriations Act, 2021, specifically allows businesses to deduct all of their expenses to the extent otherwise allowed under tax law. This includes expenses covered by PPP loans tha...

Distribution of the second round of stimulus payments to individuals began early in 2021. The payment amounts were based on 2019 AGI (obviously the IRS does not yet know 2020 AGI because 2020 returns ...

The additional standard deduction amount for blindness applies per person. If one spouse is blind, the couple’s standard deduction is increased by one additional amount for a married person ($1,300 ...

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...

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...

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 ...

If the CD is in a tax-deferred or tax-free account, such as an IRA or Roth IRA, interest on the CD is not currently taxed; the rollover of the CD when it matures is not a taxable event. If the CD is i...

There are only 2 ways to put money into a Roth IRA: (1) an annual contribution, which must be based on earned income and can only be made up to a set dollar amount annually; and (2) a conversion from ...

Probably not. An IRA contribution can be based only on earned income. A fellowship or grant type of payment is different from income for services provided. Grant recipients at the NIH are not consider...

The favorable rule allowing debt forgiveness on a principal residence mortgage up to $2 million expired at the end of 2013. It could be extended, but given the resurgence in the housing market, it may...

Yes. Even though there is an age limit for making deductible IRA contributions, there is no age limit for making a conversion from a traditional IRA to a Roth IRA. There is no need to have earned inco...

The IRS says: “For the year of the account owner’s death, use the RMD the account owner would have received. For the year following the owner’s death, the RMD will depend on the identity of the ...

The special capital gain rates are supposed to allow taxpayers to pay less tax on these gains than on ordinary income. Thus, the special 28% capital gains rate for collectibles applies for taxpayers i...

Yes. The deductions for mortgage interest and real estate taxes are separate items. Claiming one has no impact on claiming the other. The only limitation on the deduction for property taxes is the app...

If you take a deduction for a bond premium, you must reduce the basis of the bond by this amount. If you sell the bond before maturity, you’ll have a capital gain if the selling price exceeds your b...

Check with the plan administrator of your current employer to see whether the plan allows you to postpone RMDs until you retire. (This assumes you don’t own more than 5% of the company.) If the plan...

There is no tax deduction for gifts directly to or on behalf of individuals. Just be glad in knowing you saved your daughter future interest costs and enabled her to start off debt free....

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...

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...

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...

The tax law gives the custodial parent the right to claim the exemption for a child as long as the child does not provide more than half of his/her own support. However, that parent can waive the righ...

The fee can be deductible as an itemized medical expense (in excess of 7.5% of adjusted gross income if your mother is 65 or older) as long as entry into the facility is on the direction or suggestion...

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, but you need to consider how to make the child a beneficiary. Being a minor means the child can’t inherit the account outright; you’ll need to name a custodian who manages the account until t...

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...

A capital loss must be applied in a set order at a set time. In the year in which it is realized, it offsets capital gains and, if there is any excess loss, up to $3,000 of ordinary income (such as sa...

If the CD is in a tax-deferred or tax-free account, such as an IRA or Roth IRA, interest on the CD is not currently taxed; the rollover of the CD when it matures is not a taxable event. If the CD is i...

Uniform Transfers to Minors Act (UTMA) accounts are owned by a minor, even though a parent or other adult acts as custodian. Once the minor reaches the age of majority (18 in most states), the funds b...

The above-the-line deduction for tuition and fees for higher education can be claimed by a taxpayer only for him/herself, spouse, or dependent. If your grandchild is your dependent, then you qualify f...

Probably not. An IRA contribution can be based only on earned income. A fellowship or grant type of payment is different from income for services provided. Grant recipients at the NIH are not consider...

No. The value of employer-paid health insurance for an employee, spouse, and dependent is a tax-free fringe benefit. However, under the Affordable Care Act, employers (other than small employers curre...

While Medicare does not cover the cost of long-term care services, they may qualify as a deductible medical expense. Since your spouse is chronically ill and requires personal care services, the cost ...

Capital losses can be carried forward only to offset capital gains (and up to $3,000 of ordinary income) in future years. The capital losses of a deceased spouse can be used on the final joint return,...

The favorable rule allowing debt forgiveness on a principal residence mortgage up to $2 million expired at the end of 2013. It could be extended, but given the resurgence in the housing market, it may...

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