Taking care of an elderly parent or relative may provide more than just satisfaction. You could also be eligible for tax breaks. For example, if the individual qualifies as your “medical dependent,” and you itemize deductions on your return, you can include any medical expenses you incur for the relative along with your own when […]
Author Archive | James B. Reynolds
Valuable gifts to charity may require an appraisal
If you donate valuable items to charity, you may be required to get an appraisal. The IRS requires donors and charitable organizations to supply certain information to prove their right to deduct charitable contributions. If you donate an item of property (or a group of similar items) worth more than $5,000, certain appraisal requirements apply. […]
Want to turn a hobby into a business? Watch out for the tax rules
You may dream of turning a hobby into a business. You won’t have any tax headaches if your new business is profitable. But what if the enterprise consistently generates losses (deductions exceed income) and you claim them on your tax return? The IRS may step in and say it’s a hobby (an activity not engaged […]
Thinking about converting your home into a rental property?
Some taxpayers move to new homes but rent out their present homes. Renting out a home carries potential tax benefits and pitfalls. You’re generally treated as a landlord once you begin renting your home. That means you must report rental income on your tax return but are entitled to deductions for utilities, incidental repairs, depreciation […]
Once you file your tax return, consider these 3 issues
After filing a 2021 tax return, keep these three issues in mind: 1) You can check on your refund by going to irs.gov. Click on “Get Your Refund Status.” 2) Some tax records can now be thrown out. You should generally save statements, receipts, etc. for three years after filing (those related to the 2018 […]
Selling mutual fund shares: What are the tax implications?
For tax purposes, the rules involved in selling mutual fund shares can be complex. If you sell appreciated fund shares that you’ve owned for more than one year, the profit will be a long-term capital gain. The top federal income tax rate will be 20% and you may also owe the 3.8% net investment income […]
It’s almost that time of year again! If you’re not ready, file for an extension
The clock is ticking down to the April 18 tax filing deadline. Sometimes, it’s not possible to gather your tax information and file by the due date. If you need more time, you should file for an extension on Form 4868. An extension will give you until October 17 to file and allows you to […]
The tax rules of renting out a vacation property
What are the tax consequences of renting out a vacation home part of the year? It depends on how many days it’s rented and your level of personal use. Personal use includes vacation use by your relatives and use by nonrelatives if market rate rent isn’t charged. If you rent the property for less than […]
When inheriting money, be aware of “income in respect of a decedent” issues
“Income in respect of a decedent” (IRD) may create a surprise tax bill for those who inherit certain types of property. Fortunately, there may be ways to minimize or even eliminate the IRD tax bite. For the most part, property you inherit isn’t included in your income for tax purposes. Items that are IRD, however, […]
Lost your job? Here are the tax aspects of an employee termination
If you’re laid off or terminated, taxes are probably the last thing on your mind. However, there may be tax implications. For example, what’s the best option for amounts you’ve accumulated in a retirement plan sponsored by a former employer? For most, a tax-free rollover to an IRA is the best move. You may continue […]
