Individual Tax Briefs Archives - Page 30 of 32

06 Oct 2019

Innocent Spouses May Get Tax Relief

When a married couple files a joint tax return, each spouse is “jointly and severally” 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. (However, the civil fraud penalty can be imposed only on spouses who’ve actually committed fraud.) So, if you’re married and file a joint return, what happens if your spouse doesn’t disclose all of his or her income or otherwise doesn’t pay the correct tax owed? You’re generally liable for the full amount, but...

26 Sep 2019

“Kiddie Tax” Hurts Families More Than Ever

Roger Rossmeisl, CPA

Individual Tax Briefs

Kiddie Tax Hurts Families More Than Ever

Years ago, Congress enacted the “kiddie tax” rules to prevent parents and grandparents in high tax brackets from shifting income (especially from investments) to children in lower tax brackets. And while the tax caused some families pain in the past, it has gotten worse today. That’s because the Tax Cuts and Jobs Act (TCJA) made changes to the tax rate structure. These changes may mean the "kiddie tax" hurts families more than ever. History of the tax The kiddie tax used to apply only to children under age 14. This provided families with plenty of opportunity to enjoy significant tax savings from income shifting. In 2006, the tax was expanded to children under age 18. And since 2008, the kiddie tax has generally applied to children under...

26 Sep 2019

Tax Implications of Gambling Winnings

Roger Rossmeisl, CPA

Individual Tax Briefs

If you’re lucky enough to be a winner at gambling or the lottery, congratulations! After you celebrate, be ready to deal with the tax consequences of your good fortune. So, what are the tax implications of gambling winnings? TAX IMPLICATIONS OF GAMBLING WINNINGS: WINNING AT GAMBLING Whether you win at the casino, a bingo hall, or elsewhere, you must report 100% of your winnings as taxable income. They’re reported on the “Other income” line on Schedule 1 of your 1040 tax return. To measure your winnings on a particular wager, use the net gain. For example, if a $30 bet at the race track turns into a $110 win, you’ve won $80, not $110. You must separately keep track of losses. They’re deductible, but only as itemized deductions....

09 Sep 2019

“Nanny Tax” Applies to More Than Nannies

Roger Rossmeisl, CPA

Individual Tax Briefs

You may have heard of the “nanny tax.” But even if you don’t employ a nanny, it may apply to you. You see, the "nanny tax" applies to more than nannies. Hiring a housekeeper, gardener or other household employee (who isn’t an independent contractor) may make you liable for federal income and other taxes. You may also have state tax obligations. If you employ a household worker, you aren’t required to withhold federal income taxes from pay. But you may choose to withhold if the worker requests it. In that case, ask the worker to fill out a Form W-4. However, you may be required to withhold Social Security and Medicare (FICA) taxes and to pay federal unemployment (FUTA) tax. FICA and FUTA tax In 2019, you must...

25 Aug 2019

Good Time to Review Your Investments

Roger Rossmeisl, CPA

Individual Tax Briefs

You may have heard about a proposal in Washington to cut the taxes paid on investments by indexing capital gains to inflation. Under the proposal, the purchase price of assets would be adjusted so that no tax is paid on the appreciation due to inflation. While the fate of such a proposal is unknown, the long-term capital gains tax rate is still historically low on appreciated securities that have been held for more than 12 months. And since we’re already in the second half of the year, it’s a good time to review your investments for possible tax-saving strategies. The federal income tax rate on long-term capital gains recognized in 2019 is 15% for most taxpayers. However, the maximum rate of 20% plus the 3.8% net investment...

19 Aug 2019

Does Charitable Volunteering Yield Tax Breaks?

Roger Rossmeisl, CPA

Individual Tax Briefs

If you’re a volunteer who works for charity, you may be wondering . . . does charitable volunteering yield tax breaks? Yes, you may be entitled to some tax breaks if you itemize deductions on your tax return. Unfortunately, they may not amount to as much as you think your generosity is worth. Donations to charity of cash or property generally are tax deductible for itemizers. As such, it may seem like donations of something more valuable for many people — their time — would also be deductible. As it turns out, that's not the case. It doesn’t matter if the services you provide require significant skills and experience, such as construction, which a charity would have to pay dearly for if it went out and obtained...

19 Aug 2019

Taxability of Non-Resident Pensions

Roger Rossmeisl, CPA

Individual Tax Briefs

In the attached audio clip (click on photo above to listen), Spidell Publishing's "California Minute" discusses a questions that comes up a lot. What is that taxability of non-resident pensions? These are situations in which you earn a pension in one state, and then retire in another. Under both federal law and California R&TC §17952.5, qualified pension payments paid to former California residents are not taxable by California. (This is Blog Post #595) Spidell Publishing, Inc. has been a critical source of California tax information for tax professionals since 1975, promoting ideas, references, solutions, and guidance, plus news and commentary covering all aspects of tax and its administration....

16 Aug 2019

Summer Camp May Yield a Tax Break

Roger Rossmeisl, CPA

Individual Tax Briefs

When schools were out for the summer, you might have sent your children to day camp. It’s often a significant expense. The good news: Summer camp may yield a tax break for the cost. The value of a credit Day camp is a qualified expense under the child and dependent care credit, which is worth 20% to 35% of qualifying expenses, subject to a cap. Note: Sleep-away camp does not qualify. For 2019, the maximum expenses allowed for the credit are $3,000 for one qualifying child and $6,000 for two or more. Other expenses eligible for the credit include payments to a daycare center, nanny, or nursery school. Keep in mind that tax credits are especially valuable because they reduce your tax liability dollar-for-dollar — $1 of tax credit...

25 Jul 2019

Is a Health Savings Account Right for You?

Roger Rossmeisl, CPA

Individual Tax Briefs

Is a Helath Savings Account Right for You?

To help defray health care costs, many people now contribute to, or are thinking about setting up, Health Savings Accounts (HSAs). With these accounts, individuals can pay for certain medical expenses on a tax advantaged basis. But, is a Health Savings Account right for you? Is a Health Savings Account right for you: The basics With HSAs, you take more responsibility for your health care costs. If you’re covered by a qualified high-deductible health plan, you can contribute pretax income to an employer-sponsored HSA — or make deductible contributions to an HSA you set up yourself. You own the account, which can bear interest or be invested. It can grow tax-deferred, similar to an IRA. Withdrawals for qualified medical expenses are tax-free, and you can carry over a...

Innocent Spouses May Get Tax Relief

“Kiddie Tax” Hurts Families More Than Ever

Tax Implications of Gambling Winnings

“Nanny Tax” Applies to More Than Nannies

Good Time to Review Your Investments

Does Charitable Volunteering Yield Tax Breaks?

Taxability of Non-Resident Pensions

Summer Camp May Yield a Tax Break

Is a Health Savings Account Right for You?

ROGER ROSSMEISL, CPA

RECENT BLOG ENTRIES

Your Guide to Medicare Premiums and Taxes

Beware of Overly Optimistic Projections Used to Value a Business

JOIN OUR E-NEWS

LET’S GET SOCIAL