29 Sep 2024
0

The $7,500 Federal Tax Credit for Buying an Electric Vehicle at a Glance

Roger Rossmeisl, CPA
Automotive, Individual Tax Briefs
The $7,500 Federal Tax Credit for Buying an Electric Vehicle at a Glance

Electric vehicles (EVs) have become increasingly popular. According to Kelly Blue Book estimates, the EV share of the vehicle market in the U.S. was 7.6% in 2023, up from 5.9% in 2022. To incentivize the purchase of EVs, there’s a federal tax credit of up to $7,500 for eligible vehicles. The tax break for EVs and fuel cell vehicles is called the Clean Vehicle Tax Credit. The current version of the credit was created under the Inflation Reduction Act. Here are answers to some frequently asked questions. Which vehicles qualify for the credit? To qualify for the full $7,500, there are several requirements. For example: The vehicle must be a new plug-in electric or fuel cell vehicle. It must have a battery capacity of at least seven kilowatt...

09 Sep 2024
0

6 Tax-Free Income Opportunities

Roger Rossmeisl, CPA
Individual Tax Briefs
6 Tax-Free Income Opportunities

Believe it or not, there are ways to collect tax-free income and gains. Here are some of the best opportunities to put money in your pocket without current federal income tax implications: Roth IRAs offer tax-free income accumulation and withdrawals. Unlike withdrawals from traditional IRAs, qualified Roth IRA withdrawals are free from federal income tax. A qualified withdrawal is one that’s taken after you’ve reached age 59½ and had at least one Roth IRA open for over five years, or you are disabled or deceased. After your death, your heirs can take federal-income-tax-free qualified Roth IRA withdrawals, with proper planning. A large amount of profit from a home sale is tax-free. In one of the best tax-saving deals, an unmarried seller of a principal residence can exclude...

09 Sep 2024
0

Are You Liable for Two Additional Taxes on Your Income?

Roger Rossmeisl, CPA
Individual Tax Briefs
Are You Liable for Two Additional Taxes on Your Income?

Having a high income may mean you owe two extra taxes: the 3.8% net investment income tax (NIIT) and a 0.9% additional Medicare tax on wage and self-employment income. Let’s take a look at these taxes and what they could mean for you. 1. The NIIT In addition to income tax, this tax applies on your net investment income. The NIIT only affects taxpayers with adjusted gross incomes (AGIs) exceeding $250,000 for joint filers, $200,000 for single taxpayers and heads of household, and $125,000 for married individuals filing separately. If your AGI is above the threshold that applies ($250,000, $200,000 or $125,000), the NIIT applies to the lesser of 1) your net investment income for the tax year, or 2) the excess of your AGI for the tax...

09 Sep 2024
0

Working Remotely May Be Convenient, But May Also Have Tax Consequences

Roger Rossmeisl, CPA
Individual Tax Briefs
Working Remotely May be Convenient, But May Also Have Tax Consequences

Many employees began working remotely during the pandemic and continue doing so today. Remote work has many advantages for employers and employees, and as a result, it’s here to stay in many industries. But it may also lead to some tax surprises, especially if workers cross state lines. Double taxation may occur It’s not unusual for employees to work remotely for an employer in another state. For some businesses, remote work has become a permanent arrangement that allows employees to live and work further away from a physical office. If you live in one state and work remotely for an employer in another state, familiarize yourself with the tax laws in both states and determine how they may affect you. For example, you may need to file income...

09 Sep 2024
0

One Spouse’s Tax Errors May Qualify the Other for Innocent Spouse Relief

Roger Rossmeisl, CPA
Individual Tax Briefs
One Spouse's Tax Errors May Qualify the Other for Innocent Spouse Relief

Navigating the complexities of tax law can be difficult, especially when faced with an unexpected tax bill due to the errors of a spouse or ex-spouse. The reason for such a bill has to do with the concept of “joint and several” liability. When a married couple files a joint tax return, each spouse is liable for the full amount of tax on the couple’s combined income. Therefore, the IRS can come after either spouse to collect the entire tax — not just the part that’s attributed to one spouse or the other. This includes any tax deficiency that the IRS assesses after an audit, as well as any penalties and interest. There may be relief In some cases, spouses are eligible for “innocent spouse relief.” This...

11 Aug 2024
0

Do You Owe Estimated Taxes? If So, When is the Next One Due?

Roger Rossmeisl, CPA
Individual Tax Briefs
Do You Owe Estimated Taxes? If So, When is the Next One Due?

Federal estimated tax payments are designed to ensure that certain individuals pay their fair share of taxes throughout the year. If you don’t have enough federal tax withheld from your paychecks and other payments, you may have to make estimated tax payments. This is the case if you receive interest, dividends, self-employment income, capital gains, a pension or other income that’s not covered by withholding. Individuals must pay 25% of a “required annual payment” by April 15, June 15, September 15, and January 15 of the following year, to avoid an underpayment penalty. If one of those dates falls on a weekend or holiday, the payment is due on the next business day. So the third installment for 2024 is due on Monday, September 16 because the...

11 Aug 2024
0

The Tax Implications of Disability Income Benefits

Roger Rossmeisl, CPA
Individual Tax Briefs
The Tax Implications of Disability Income Benefits

Many Americans receive disability income. Are you one of them, or will you soon be? If so, you may ask: Is the income taxed and if it is, how? It depends on the type of disability benefit and your overall income. The key issue is: Who paid for the benefit? If the income is paid directly to you by your employer, it’s taxable to you just as your ordinary salary would be. (Taxable benefits are also subject to federal income tax withholding. However, depending on the employer’s disability plan, in some cases they aren’t subject to Social Security tax.) Frequently, the payments aren’t made by an employer but by an insurance company under a policy providing disability coverage. In other cases, they’re made under an arrangement having...

11 Aug 2024
0

How Are Series EE Savings Bonds Taxed?

Roger Rossmeisl, CPA
Individual Tax Briefs
How are Series EE Savings Bonds Taxed?

Savings bonds are purchased by many Americans, often as a way to help fund college or show their patriotism. Series EE bonds, which replaced Series E bonds, were first issued in 1980. From 2001 to 2011, they were designated as “Patriot Bonds” as a way for Americans “to express support for our nation’s anti-terrorism efforts,” according to the U.S. Treasury Department. Perhaps you purchased some Series EE bonds many years ago and put them in a file cabinet or safe deposit box. Or maybe you bought them electronically and don’t think about them often. You may wonder: How is the interest you earn on EE bonds taxed? And if they reach final maturity, what steps do you need to take to ensure there’s no loss of...

05 Aug 2024
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Six Tax Issues to Consider If You’re Getting Divorced

Roger Rossmeisl, CPA
Individual Tax Briefs
Six Tax Issues to Consider If You're Getting Divorced

Divorce entails difficult personal issues, and taxes are probably the farthest thing from your mind. However, several tax concerns may need to be addressed to ensure that taxes are kept to a minimum and that important tax-related decisions are properly made. Here are six issues to be aware of if you’re in the process of getting a divorce. 1. Personal residence sale  In general, if a couple sells their home in connection with a divorce or legal separation, they should be able to avoid tax on up to $500,000 of gain (as long as they’ve owned and used the home as their principal residence for two of the previous five years). If one former spouse continues to live in the home and the other moves out (but...

21 Jul 2024
0

Planning Your Estate? Don’t Overlook Income Taxes

Roger Rossmeisl, CPA
Individual Tax Briefs
Planning Your Estate? Don't Overlook Income Taxes

The current estate tax exemption amount ($13.61 million in 2024) has led many people to feel they no longer need to be concerned about federal estate tax. Before 2011, a much smaller exemption resulted in many people with more modest estates attempting to avoid it. But since many estates won’t currently be subject to estate tax, it’s a good time to devote more planning to income tax saving for your heirs. Important: Keep in mind that the federal estate tax exclusion amount is scheduled to sunset at the end of 2025. Beginning on January 1, 2026, the amount is due to be reduced to $5 million, adjusted for inflation. Of course, Congress could act to extend the higher amount or institute a new amount. Here are some strategies...

ROGER ROSSMEISL, CPA

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

(714) 325-0442
roger@khopatel.com

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