28 Apr 2024
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Keep These 3 Issues in Mind After You File Your Tax Return

Roger Rossmeisl, CPA
Individual Tax Briefs
Keep These 3 Issues in Mind After you File your Return

You may have filed your tax return by the due date (4/15/2024), or you may have filed an extension until 10/15/2024.  In either case, once your 2023 tax return has been successfully filed with the IRS, there may still be some issues to bear in mind. Here are three considerations. 1. Waiting for your refund? You can check on it The IRS has an online tool that can tell you the status of your refund. Go to irs.gov and click on “Get your refund status” to find out about yours. You’ll need your Social Security number or Individual Taxpayer Identification Number, filing status, and the exact refund amount. 2. Throwing away tax records You should hold on to tax records related to your return for as long as the...

17 Apr 2024
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Update on Retirement Account Required Minimum Distributions

Roger Rossmeisl, CPA
Individual Tax Briefs
Update on Retirement Account Required Minimum Distributions

If you have a tax-favored retirement account, including a traditional IRA, you’ll become exposed to the federal income tax required minimum distribution (RMD) rules after reaching a certain age. If you inherit a tax-favored retirement account, including a traditional or Roth IRA, you’ll also have to deal with these rules. Specifically, you’ll have to: 1) take annual withdrawals from the accounts and pay the resulting income tax and/or 2) reduce the balance in your inherited Roth IRA sooner than you might like. Let’s take a look at the current rules after some recent tax-law changes. RMD basics  The RMD rules require affected individuals to take annual withdrawals from tax-favored accounts. Except for RMDs that meet the definition of tax-free Roth IRA distributions, RMDs will generally trigger a federal income...

17 Apr 2024
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How Renting Out a Vacation Property Will Affect Your Taxes

Roger Rossmeisl, CPA
Individual Tax Briefs
How Renting Out a Vacation Property Will Affect Your Taxes

Are you dreaming of buying a vacation beach home, lakefront cottage or ski chalet? Or perhaps you’re fortunate enough to already own a vacation home. In either case, you may wonder about the tax implications of renting it out for part of the year. Count the days The tax treatment depends on how many days it’s rented and your level of personal use. Personal use includes vacation use by your relatives (even if you charge them market rate rent) and use by nonrelatives if a market rate rent isn’t charged. If you rent the property out for less than 15 days during the year, it’s not treated as “rental property” at all. In the right circumstances, this can produce significant tax benefits. Any rent you receive isn’t included...

17 Apr 2024
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Beware of a Stealth Tax on Social Security Benefits

Roger Rossmeisl, CPA
Individual Tax Briefs
Beware of a Stealth Tax on Social Security Benefits

Some people mistakenly believe that Social Security benefits are always free from federal income tax. Unfortunately, that’s often not the case. In fact, depending on how much overall income you have, up to 85% of your benefits could be hit with federal income tax. While the truth about the federal income tax bite on Social Security benefits may be painful, it’s better to understand it. Here are the rules. Calculate provisional income The amount of Social Security benefits that must be reported as taxable income on your tax return depends on your “provisional income.” To arrive at provisional income, start with your adjusted gross income (AGI), which is the number that appears on Page 1, Line 11 of Form 1040. Then, subtract your Social Security benefits to arrive at your adjusted...

17 Apr 2024
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A Job Loss is Bad But the Tax Implications Could Make it Worse

Roger Rossmeisl, CPA
Individual Tax Briefs
A Job Loss is Bad But the Tax Implications Could Make it Worse

Unemployment has been holding steady recently at 3.7%. But there are still some people losing their jobs — particularly in certain industries including technology and media. If you’re laid off or terminated from employment, taxes are likely the last thing on your mind. However, there are tax implications due to your altered employment circumstances. Depending on your situation, the tax aspects can be complex and require you to make decisions that may affect your tax bill for this year and for years to come. Be aware of these three areas. (1) Unemployment and payments from your former employer Many people are surprised to find out that federal unemployment compensation is taxable. (Some states exempt unemployment comp from state tax.) In addition, payments from a former employer for any...

05 Mar 2024
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New Option for Unused Funds in a 529 College Savings Plan

Roger Rossmeisl, CPA
Individual Tax Briefs
New Option for Unused Funds in a 529 College Savings Plan

With the high cost of college, many parents begin saving with 529 plans when their children are babies. Contributions to these plans aren’t tax deductible, but they grow tax deferred. Earnings used to pay qualified education expenses can be withdrawn tax-free. However, earnings used for other purposes may be subject to income tax plus a 10% penalty. What if you have a substantial balance in a 529 plan but your child doesn’t need all the money for college? Perhaps your child decided not to attend college or received a scholarship. Or maybe you saved for private college, but your child attended a lower-priced state university. What should you do with unused funds? One option is to pay the tax and penalties and spend the money on whatever...

05 Mar 2024
0

If You Didn’t Contribute to an IRA Last Year, There’s Still Time

Roger Rossmeisl, CPA
Individual Tax Briefs
If You Didn't Contribute to an IRA Last Year, There's Still Time

If you’re gathering documents to file your 2023 tax return and you’re concerned that your tax bill may be higher than you’d like, there might still be an opportunity to lower it. If you qualify, you can make a deductible contribution to a traditional IRA right up until the April 15, 2024, filing date and benefit from the tax savings on your 2023 return. Who is eligible? You can make a deductible contribution to a traditional IRA if: You and your spouse aren’t active participants 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 (AGI) doesn’t exceed certain levels that vary from year to year by filing status. For 2023, if you’re a...

25 Feb 2024
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Get Ready for the 2023 Gift Tax Return Deadline

Roger Rossmeisl, CPA
Individual Tax Briefs
Get Ready for the 2023 Gift Tax Return Deadline

Did you make large gifts to your children, grandchildren or others last year? If so, it’s important to determine if you’re required to file a 2023 gift tax return. In some cases, it might be beneficial to file one — even if it’s not required. Who must file? The annual gift tax exclusion has increased in 2024 to $18,000 but was $17,000 for 2023. Generally, you must file a gift tax return for 2023 if, during the tax year, you made gifts: That exceeded the $17,000-per-recipient gift tax annual exclusion for 2023 (other than to your U.S. citizen spouse), That you wish to split with your spouse to take advantage of your combined $34,000 annual exclusion for 2023, That exceeded the $175,000 annual exclusion in 2023 for...

25 Feb 2024
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Filing Jointly or Separately as a Married Couple: What’s the Difference?

Roger Rossmeisl, CPA
Individual Tax Briefs
Filing Jointly or Separately as a Married Couple: What's the Difference?

When you file your tax return, a tax filing status must be chosen. This status is used to determine your standard deduction, tax rates, eligibility for certain tax breaks and your correct tax. The five filing statuses are: Single Married filing jointly, Married filing separately, Head of household, and Qualifying surviving spouse. If you’re married, you may wonder if you should file joint or separate tax returns. It depends on your individual tax situation. In general, you should choose the filing status that results in the lowest tax. But keep in mind that, if you and your spouse file a joint return, each of you is “jointly and severally” liable for the tax on your combined income. And you’re both equally liable for any additional tax the IRS...

18 Feb 2024
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If You Gave to Charity in 2023, Check to See That Your Have Substantiation

Roger Rossmeisl, CPA
Individual Tax Briefs
If Your Gave to Charity in 2023, Check to See That You Have Substantiation

Did you donate to charity last year? Acknowledgment letters from the charities you gave to may have already shown up in your mailbox. But if you don’t receive such a letter, can you still claim a deduction for the gift on your 2023 income tax return? It depends. What the law requires To prove a charitable donation for which you claim a tax deduction, you must comply with IRS substantiation requirements. For a donation of $250 or more, this includes obtaining a contemporaneous written acknowledgment from the charitable organization stating the amount of the donation, whether you received any goods or services in consideration for the donation and the value of any such goods or services. “Contemporaneous” means the earlier of: The date you file your tax return, or ...

ROGER ROSSMEISL, CPA

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

(714) 325-0442
roger@khopatel.com

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