24 Apr 2023
0

Gift Tax Return Basics

Roger Rossmeisl, CPA
Individual Tax Briefs
Gift Tax Return Basics

Did you make large gifts to your children, grandchildren or other heirs last year? If so, it’s important to determine whether you’re required to file a 2022 gift tax return. And in some cases, even if it’s not required to file one, you may want to do so anyway. Filing requirements The annual gift tax exclusion has increased in 2023 to $17,000 but was $16,000 for 2022. Generally, you must file a gift tax return for 2022 if, during the tax year, you made gifts: That exceeded the $16,000-per-recipient gift tax annual exclusion for 2022 (other than to your U.S. citizen spouse), That you wish to split with your spouse to take advantage of your combined $32,000 annual exclusion for 2022, That exceeded the $164,000 annual exclusion...

10 Apr 2023
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Claiming Losses on Depreciated or Worthless Stock

Roger Rossmeisl, CPA
Individual Tax Briefs
Claiming Losses on Depreciated or Worthless Stock

Have you bought stock in a company that later dropped in value? While you may prefer to forget such an ill-fated investment, at least you can claim a capital loss deduction on your tax return. Here are the rules that apply when a stock you own is sold at a loss or becomes completely worthless. Stock sales produce capital losses  Stocks are capital assets and produce capital gains or losses when they’re sold. Your capital gains and losses for the year must be netted against one another in a specific order, based on whether they’re short-term (held one year or less) or long-term (held for more than one year). If, after netting, you have short-term or long-term losses (or both), you can use them to offset up to...

30 Mar 2023
0

Awarded Money in a Lawsuit or Settlement? It’s Only Tax-Free in Certain Circumstances

Roger Rossmeisl, CPA
Individual Tax Briefs
Awarded Money in a Lawsuit or Settlement? Its Only Tax-Free in Certain Circumstances

You generally must pay federal tax on all income you receive but there are some exceptions when you can exclude it. For example, compensatory awards and judgments for “personal physical injuries or physical sickness” are free from federal income tax under the tax code. This includes amounts received in a lawsuit or a settlement and in a lump sum or in installments. But as taxpayers in two U.S. Tax Court cases learned, not all awards are tax-free. For example, punitive damages and awards for unlawful discrimination or harassment are taxable. And the tax code states that “emotional distress shall not be treated as a physical injury or physical sickness.” Here are the facts of the two cases. Case #1: Payment was for personal injuries, not physical injuries A taxpayer...

26 Feb 2023
0

There Still May be Time to Make an IRA Contribution for Last Year

Roger Rossmeisl, CPA
Individual Tax Briefs
There Still May be Time to Make an IRA Contribution for Last Year

If you’re getting ready to file your 2022 tax return, and your tax bill is higher than you’d like, there may still be an opportunity to lower it. If you’re eligible, you can make a deductible contribution to a traditional IRA right up until this year’s April 18 filing deadline and benefit from the tax savings on your 2022 return. Rules for eligibility You can make a deductible contribution to a traditional IRA if: You (and your spouse) aren’t an active participant in an employer-sponsored retirement plan, or You (or your spouse) are an active participant in an employer plan, but your modified adjusted gross income (MAGI) doesn’t exceed certain levels that vary from year-to-year by filing status. For 2022, if you’re a married joint tax return filer...

26 Feb 2023
0

May 15 Tax Deadline Extended to October 16 for California Disaster Area Taxpayers

Roger Rossmeisl, CPA
Automotive, Current Events, Individual Tax Briefs, Small Business Tax Briefs
May 15 Tax Deadline Extended to October 15 for California Disaster Area Taxpayers

As reported in IR-2023-33 on 2/24/2023 Disaster-area taxpayers in most of California now have until October 16, 2023, to file various federal individual and business tax returns and make tax payments, the Internal Revenue Service announced last Friday. Previously, the deadline had been postponed to May 15, 2023 for these areas. The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA) in on the page entitled California Severe Winter Storms, Flooding, Landslides, and Mudslides. There are four different eligible FEMA declarations, and the start dates and other details vary for each of these disasters. The current list of eligible localities and other details for each disaster are always available on the Tax Relief in Disaster Situations page on IRS.gov. The additional relief postpones...

20 Feb 2023
0

Child Tax Credit: The Rules Keep Changing But It’s Still Valuable

Roger Rossmeisl, CPA
Individual Tax Briefs
Child Tax Credit: The Rules Keep Changing But It's Still Valuable

If you’re a parent, you may be confused about the rules for claiming the Child Tax Credit (CTC). The rules and credit amounts have changed significantly over the last six years. This tax break became more generous in 2018 than it was under prior law — and it became even better in 2021 for eligible parents. Even though the enhancements that were available for 2021 have expired, the CTC is still valuable for parents. Here are the current rules. For tax years 2022 and 2023, the CTC applies to taxpayers with children under the age of 17 (who meet CTC requirements to be ‘’qualifying children’’). A $500 credit for other dependents is available for dependents other than qualifying children. CTC amount The CTC is currently $2,000 for each...

20 Feb 2023
0

Answers to Your Questions About 2023 Limits on Individual Taxes

Roger Rossmeisl, CPA
Individual Tax Briefs
Answers to Your Questions About 2023 Limits on Individual Taxes

Many people are more concerned about their 2022 tax bills right now than they are about their 2023 tax situations. That’s understandable because your 2022 individual tax return is due to be filed in 10 weeks (unless you file an extension). However, it’s a good time to familiarize yourself with tax amounts that may have changed for 2023. Due to inflation, many amounts have been raised more than in past years. Below are some Q&As about tax limits for this year. Note: Not all tax figures are adjusted annually for inflation and some amounts only change when new laws are enacted. I didn’t qualify to itemize deductions on my last tax return. Will I qualify for 2023? In 2017, a law was enacted that eliminated the tax benefit of...

20 Feb 2023
0

Retirement Plan Early Withdrawals: Make Sure You Meet the Requirements to Avoid a Penalty

Roger Rossmeisl, CPA
Individual Tax Briefs
Retirement Plan Early Withdrawals: Make Sure You Meet the Requirements to Avoid a Penalty

Most retirement plan distributions are subject to income tax and may be subject to an additional penalty if you take an early withdrawal. What’s considered early? In general, it’s when participants take money out of a traditional IRA or other qualified retirement plan before age 59½. Such distributions are generally taxable and may be subject to a 10% penalty tax. Note: The additional penalty tax is 25% if you take a distribution from a SIMPLE IRA in the first two years you participate in the SIMPLE IRA plan. Fortunately, there are several ways that the penalty tax (but not the regular income tax) can be avoided. However, the rules are complex. As the taxpayer in one new court case found, if you don’t meet the requirements, you’ll...

20 Feb 2023
0

Why You Might Want to File Early and Answers to Other Tax Season Questions

Roger Rossmeisl, CPA
Individual Tax Briefs
Why You Might Want to File Early and Answers to Other Tax Season Questions

The IRS announced it opened the 2023 individual income tax return filing season on January 23. That’s when the agency began accepting and processing 2022 tax year returns. Even if you typically don’t file until much closer to the mid-April deadline (or you file for an extension), consider filing earlier this year. The reason is you can potentially protect yourself from tax identity theft. Here are some answers to questions taxpayers may have about filing. How can your tax identity be stolen? In a typical tax identity theft scam, a thief uses another individual’s personal information to file a fraudulent tax return early in the filing season and claim a bogus refund. The actual taxpayer discovers the fraud when he or she files a return and is told by...

20 Feb 2023
0

Tax-Saving Ways to Help Pay for College – Once Your Child Starts Attending

Roger Rossmeisl, CPA
Individual Tax Briefs
Tax-Saving Ways to Help Pay for College - Once Your Child Starts Attending

If you have a child or grandchild in college — congratulations! To help pay for the expenses, many parents and grandparents saved for years in tax-favored accounts, such as 529 plans. But there are also a number of tax breaks that you may be able to claim once your child begins attending college or post-secondary school. Tuition tax credits  You can take the American Opportunity Tax Credit (AOTC) of up to $2,500 per student for the first four years of college — a 100% credit for the first $2,000 in tuition, fees, and books, and a 25% credit for the second $2,000. You can take a Lifetime Learning Credit (LLC) of up to $2,000 per family for every additional year of college or graduate school — a...

ROGER ROSSMEISL, CPA

Kho & Patel CPAs
160 E. Arrow Highway
San Dimas, CA 91773

(714) 325-0442
roger@khopatel.com

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