Category: Taxation-Individuals

  The individual alternative minimum tax (AMT) rules were made more taxpayer-friendly for 2018 through 2025 by the Tax Cuts and Jobs Act (TCJA). The odds that you’ll owe the AMT for those years have been significantly reduced — and, if you still owe the AMT, you’ll probably owe less than under prior law. Are you at risk for this dreaded tax? Various factors make it difficult to pinpoint exactly who will be hit by the AMT. Here’s a summary… Read more ›

  Did You Know There Are 5 Filing Statuses for Federal Tax Returns? Your status for filing a federal tax return generally depends on your marital status as of December 31. However, more than one filing status may apply in certain situations. If this is the case, taxpayers can usually choose the filing status that allows them to pay the least amount of tax. The statuses are single, married filing jointly, married filing separately, head of household and qualifying widow… Read more ›

Are you feeling generous? Qualified charitable contributions can be rewarded with sizeable tax breaks during the second calendar year of the COVID-19 pandemic. Recent legislation includes the following four temporary tax law changes that are designed to help individuals and businesses that donate to charities through the end of 2021. 1. Deductions for Non-Itemizers In the past, you could claim significant itemized deductions on your federal income tax return for contributing money or property (or both) to qualified charitable organizations… Read more ›

  Dear valued client, As we wrap up 2021, it’s important to take a closer look at your tax and financial plans. This year likely brought challenges and disruptions that significantly impacted your personal and financial situation –– a continued global pandemic, several significant natural disasters, new tax laws and political shifts. Now is the time to take a closer look at your current tax strategies to make sure they are still meeting your needs and take any last-minute steps… Read more ›

  Real estate investors often unload one property and replace it with another. But making an outright sale of an appreciated property results in a current tax hit. That’s unfortunate if you intend to use the sales proceeds to buy replacement property. The good news: Section 1031 of the Internal Revenue Code allows you to postpone your tax bill by arranging for a property exchange. With real estate prices up dramatically in many markets, the Section 1031 exchange strategy is… Read more ›

  It might be advantageous from a tax standpoint to run a business through multiple entities. For example, a construction company might form a separate company to own and lease its trucks and equipment back to its related entities. Or a corporation might transfer appreciated property to an affiliated corporation in order to limit risk in case it is sued. However, the IRS may look twice at an operation if it includes multiple business entities — especially if recordkeeping and… Read more ›

  Many companies choose not to combine real estate and other assets into a single entity. Perhaps the business fears liability for injuries suffered on the property. Or legal liabilities encountered by the company could affect property ownership. But there are valid and potentially beneficial tax reasons for holding real estate in a separate entity as well. Avoiding Costly Mistakes Many businesses operate as C corporations so they can buy and hold real estate just as they do equipment, inventory,… Read more ›

Payments made to liquidate a retired partner’s ownership interest in the partnership (other than payments for his or her share of certain partnership assets) are usually subject to the federal self-employment tax (also known as SE tax). That can amount to a large tax bite. Fortunately, there is a taxpayer-friendly exception. When it applies, this exception can exempt partner retirement payments from SE tax. If the retirement plan is properly structured, even large payments made in the years just after… Read more ›

  How does the Tax Cuts and Jobs Act (TCJA) affect divorce settlements? Changes in the new law may require divorcing individuals — especially those who own businesses and other investments — to take a different approach to splitting assets and setting maintenance payments than under prior law. To illustrate, consider Pat and Chris, a hypothetical married couple who decided to file for divorce on Valentine’s Day 2019. Here’s an overview of several key issues they face. Business Tax Issues… Read more ›

  For purposes of the Child Tax Credit for the 2021 tax year, a qualifying child is one who doesn’t turn 18 before January 1, 2022, and who satisfies certain other conditions. Taxpayers who don’t qualify for the Child Tax Credit because their children are too old may have an alternative. The Credit for Other Dependents maxes out at $500 per dependent if certain conditions are met. To qualify, a dependent must: Be age 17 or older; Have an individual… Read more ›