07 Feb 2021
0

Multiple Taxpayer Filing Statuses

Roger Rossmeisl, CPA
Individual Tax Briefs
Multiple Taxpayer Filing Statuses

When it comes to taxes, December 31 is more than just New Year’s Eve. That date will affect the filing status box that will be checked on your 2020 tax return. When filing a return, you do so with one of five tax filing statuses. In part, they depend on whether you’re married or unmarried on December 31. More than one filing status may apply, and you can use the one that saves the most tax. It’s also possible that your status could change during the year. Here are the filing statuses and who can claim them: Single. This is generally used if you’re unmarried, divorced or legally separated under a divorce or separate maintenance decree governed by state law. Married filing jointly. If you’re married, you can...

09 Jan 2021
0

COVID-19 Relief Law: Provisions Benefiting Individuals

Roger Rossmeisl, CPA
Individual Tax Briefs
COVID-19 Relief Law: Provisions Benefiting Individuals

The new COVID-19 relief law that was signed on December 27, 2020, contains a multitude of provisions that may affect you. Here are some of the highlights of the Consolidated Appropriations Act, which also contains two other laws: the COVID-related Tax Relief Act (COVIDTRA) and the Taxpayer Certainty and Disaster Tax Relief Act (TCDTR). Direct payments The law provides for direct payments (which it calls recovery rebates) of $600 per eligible individual ($1,200 for a married couple filing a joint tax return), plus $600 per qualifying child. The U.S. Treasury Department has already started making these payments via direct bank deposits or checks in the mail and will continue to do so in the coming weeks. The credit payment amount is phased out at a rate of $5...

28 Dec 2020
0

Maximize Your 401(k) Plan to Save for Retirement

Roger Rossmeisl, CPA
Individual Tax Briefs
Maximize Your 401(k) Plan to Save for Retirement

Contributing to a tax-advantaged retirement plan can help you reduce taxes and save for retirement. If your employer offers a 401(k) or Roth 401(k) plan, a decision to maximize your 401(k) Plan can be a smart way to build a substantial sum of money. If you’re not already contributing the maximum allowed, consider increasing your contribution rate. Because of tax-deferred compounding (tax-free in the case of Roth accounts), boosting contributions can have a major impact on the size of your nest egg at retirement. With a 401(k), an employee makes an election to have a certain amount of pay deferred and contributed by an employer on his or her behalf to the plan. The contribution limit for 2020 is $19,500. Employees age 50 or older by year...

28 Dec 2020
0

Qualifying for a Medical Expense Tax Deduction

Roger Rossmeisl, CPA
Individual Tax Briefs
Qualifying for a Medical Expense Tax Deduction

You may be able to deduct some of your medical expenses, including prescription drugs, on your federal tax return. However, the rules make qualifying for a medical expense tax deduction difficult for many people to qualify. But with proper planning, you may be able to time discretionary medical expenses to your advantage for tax purposes. Itemizers must meet a threshold For 2020, the medical expense deduction can only be claimed to the extent your unreimbursed costs exceed 7.5% of your adjusted gross income (AGI). This threshold amount is scheduled to increase to 10% of AGI for 2021. You also must itemize deductions on your return in order to claim a deduction. If your total itemized deductions for 2020 will exceed your standard deduction, moving or “bunching” non-urgent medical...

28 Dec 2020
0

Avoid Wash Sales If Selling Stock by Year-End

Roger Rossmeisl, CPA
Individual Tax Briefs
Avoid Wash Sales If Selling Stock by Year-End

Are you thinking about selling stock shares at a loss to offset gains that you’ve realized during 2020? If so, it’s important to avoid wash sales if selling stock by year-end. IRS may disallow the loss Under this rule, if you sell stock or securities for a loss and buy substantially identical stock or securities back within the 30-day period before or after the sale date, the loss can’t be claimed for tax purposes. The rule is designed to prevent taxpayers from using the tax benefit of a loss without parting with ownership in any significant way. Note that the rule applies to a 30-day period before or after the sale date to prevent “buying the stock back” before it’s even sold. (If you participate in any...

12 Dec 2020
0

Taking a Traditional IRA Distribution

Roger Rossmeisl, CPA
Individual Tax Briefs
Taking a Traditional IRA Distribution

Although planning is needed to help build the biggest possible nest egg in your traditional IRA (including a SEP-IRA and SIMPLE-IRA), it’s even more critical that you plan for withdrawals from these tax-deferred retirement vehicles. There are three areas where knowing the fine points of the IRA distribution rules can make a big difference in how much you and your family will keep after taxes.  Here are some things to know when taking a traditional IRA distribution. Early distributions What if you need to take money out of a traditional IRA before age 59½? For example, you may need money to pay your child’s education expenses, make a down payment on a new home or meet necessary living expenses if you retire early. In these cases, any...

07 Dec 2020
0

How Series EE Savings Bonds are Taxed

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

Many people have Series EE savings bonds that were purchased many years ago. Perhaps they were given to your children as gifts or maybe you bought them yourself and put them away in a file cabinet or safe deposit box. You may wonder: How is the interest you earn on EE bonds taxed? And if they reach final maturity, what action do you need to take to ensure there’s no loss of interest or unanticipated tax consequences? Fixed or variable interest Series EE Bonds dated May 2005, and after, earn a fixed rate of interest. Bonds purchased between May 1997 and April 30, 2005, earn a variable market-based rate of return. Paper Series EE bonds were sold at half their face value. For example, if you own a...

27 Nov 2020
0

How is Disability Income Taxed?

Roger Rossmeisl, CPA
Individual Tax Briefs
How is Disability Income Taxed?

Many Americans receive disability income. You may wonder . . . if, and how is disability income taxed? As is often the case with tax questions, the answer is … it depends. The key factor is who paid for the benefit. If the income is paid directly to you by your employer, it’s taxable to you as ordinary salary would be. (Taxable benefits are also subject to federal income tax withholding, although depending on the employer’s disability plan, in some cases aren’t subject to the Social Security tax.) Frequently, the payments aren’t made by the employer but by an insurance company under a policy providing disability coverage or, under an arrangement having the effect of accident or health insurance. If this is the case, the tax treatment...

27 Nov 2020
0

Tax Issues Divorcing Couples Should Understand

Roger Rossmeisl, CPA
Individual Tax Briefs
Tax Issues Divorcing Couples Should Understand

When a couple is going through a divorce, taxes are probably not foremost in their minds. But without proper planning and advice, some people find divorce to be an even more taxing experience. Several tax concerns need to be addressed to ensure that taxes are kept to a minimum and that important tax-related decisions are properly made. Here are four tax issues divorcing couples should understand if they're in the midst of a divorce. Issue 1: Alimony or support payments For alimony under divorce or separation agreements that are executed after 2018, there’s no deduction for alimony and separation support payments for the spouse making them. And the alimony payments aren’t included in the gross income of the spouse receiving them. (The rules are different for divorce...

07 Nov 2020
0

Mutual Fund Buy-Sell Tax Pitfalls

Roger Rossmeisl, CPA
Individual Tax Briefs
Mutual Fund Buy-Sell Tax Pitfalls

If you invest in mutual funds, be aware of some potential mutual fund buy-sell tax pitfalls that can surprise the unwary. Surprise sales  You may already have made taxable “sales” of part of your mutual fund investment without knowing it. One way this can happen is if your mutual fund allows you to write checks against your fund investment. Every time you write a check against your mutual fund account, you’ve made a partial sale of your interest in the fund. Thus, except for funds such as money market funds, for which share value remains constant, you may have taxable gain (or a deductible loss) when you write a check. And each such sale is a separate transaction that must be reported on your tax return. Here’s another way...

ROGER ROSSMEISL, CPA

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

(714) 325-0442
roger@khopatel.com

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