- How Are Bonuses Taxed in 2025?
Bonuses paid by employers get special tax treatment and could have a significant impact on an employee’s tax situation. In the United States, bonuses are typically considered supplemental wages, which means they are subject to different withholding rules than regular income. There are two ways bonuses can be taxed: the percentage method or the aggregate… read more…
- Straight Line Depreciation: Definition and How to Calculate
Understanding the financial health of a business involves a lot of accounting. One of the most popular methods for determining the value of a business is straight line depreciation. Investors often choose the straight line method for its simplicity and consistency. Straight line depreciation shows how an asset’s value declines over time. This method aids… read more…
- Form 6252: How to Report Installment Sale Income
Taxpayers use Form 6252 to report installment sales when at least one payment arrives after the tax year of the sale. Rather than recognizing the full gain upfront, sellers have the option to spread their tax liability over several years as they receive payments. Form 6252 helps calculate the gain portion of each payment and… read more…
- Form 2439: What Is It, Who Files It and Who Gets It?
Form 2439 is a tax document that a regulated investment company (RIC) or real estate investment trust (REIT) issues when it retains capital gains and pays taxes on behalf of its shareholders. Instead of distributing the gains, the fund provides Form 2439 to shareholders, allowing them to report the income and claim a tax credit.… read more…
- Noncash Charitable Contributions: Rules and Examples
Charitable donations are not just limited to cash contributions. Many individuals and businesses choose to make noncash charitable contributions for anything from clothing and household items to real estate and stocks. Noncash donations must be made to qualified organizations, and, in many cases, donors may need to determine and document the fair market value of… read more…
- Form 4952: How to Claim Investment Interest Expense Deduction
Form 4952 helps investors who borrow money to finance their investments deduct the interest paid on those loans. This tax deduction can offset investment interest costs but comes with specific limitations and eligibility criteria. The deduction can only be applied to interest expenses related to investments in taxable income-generating assets, such as stocks and bonds.… read more…
- Where to Find Tax-Exempt Interest Income on Your Taxes
Tax-exempt interest income is an important part of many investors’ portfolios, and knowing where to find it on your tax forms is essential when it comes to preparing your tax return. While this type of income— commonly earned from municipal bonds, certain U.S. savings bonds and other qualifying investments—is not subject to federal income tax,… read more…
- Tax-Exempt Interest Income: What It Is, How It Works, Examples
Tax-exempt interest income is earned primarily from municipal bonds and other qualifying investments that are exempt from federal, and sometimes state, income taxes. By holding these investments, taxpayers can reduce their taxable income while still earning passive returns. However, tax-exempt interest income may still be subject to other tax considerations, such as the alternative minimum… read more…
- Is There a Tax Break for Paying Your Child’s College Tuition?
Covering the cost of a child’s college tuition can be a significant financial burden. However, several tax breaks can help you reduce your overall tax liability. These include credits, deductions and tax-advantaged savings accounts, which could offset some expenses associated with higher education. Working with a financial advisor can also help you identify other tax… read more…
- 8 Tax Breaks for Independent Contractors
As an independent contractor, you have more flexibility and control over your work, but you also face specific tax obligations. Unlike traditional employees, independent contractors are responsible for self-employment taxes, income taxes and business expenses, which can add up quickly. Fortunately, here are eight tax breaks that can help you lower your taxable income and… read more…
- How Do States Tax Exempt-Interest Dividends?
Exempt-interest dividends, often paid by municipal bond funds, are generally free from federal taxes. However, they may still be taxed at the state level. How states tax exempt-interest dividends depends on factors like the investor’s residency and where the bonds were issued. Some states exclude dividends from in-state municipal bonds while taxing those from out-of-state… read more…
- Alternative Minimum Tax (AMT) Rules and Exclusions for 2025
The alternative minimum tax (AMT) is a separate way to calculate taxes that makes sure high-income earners pay at least a minimum amount, even if they claim many deductions or credits. In 2025, the AMT exemption is $88,100 for single filers and $137,000 for married couples filing jointly. These amounts start to phase out if… read more…
- Alternative Minimum Tax (AMT): What It Is and How It Works
The alternative minimum tax (AMT) is a separate tax system that makes sure people with high incomes still pay some tax, even if they have a lot of deductions. It removes some common deductions, like state and local taxes, and uses different rules to figure out what you owe. It mostly affects people with high… read more…
- Form 8379: How to File an Injured Spouse Allocation
When a married couple files a joint tax return, both spouses typically share responsibility for any tax liabilities. However, if one spouse has past-due debts — such as unpaid federal taxes, state taxes, child support or student loans — the IRS may seize the entire tax refund to satisfy those obligations. Form 8379, also known… read more…
- Form 4684: How to Claim a Casualty and Theft Loss Deduction
Form 4684 allows individuals, businesses and estates to claim deductions against any unexpected losses due to theft or disasters. These deductions can help reduce taxable income, but they come with specific eligibility requirements and limitations. In most cases, only losses caused by federally declared disasters or qualified thefts can be deducted. A financial advisor can… read more…
- How Does Tax-Exempt Interest Income Affect FAFSA?
Eligibility for federal student financial aid is primarily based on income as reported for tax purposes. However, tax-exempt interest income can impact a student’s financial aid eligibility. Interest earned from municipal bonds is an example of this type of income. Although this income is not subject to federal income tax, it is included as part… read more…
- Are There Tax Benefits of Leasing a Car vs. Buying a Car?
When deciding whether to lease or buy a car, you should look beyond monthly payments and interest rates to make a decision. One major factor that often gets overlooked is how each option impacts your taxes. Depending on your situation, leasing a car versus buying one could offer distinct tax advantages, particularly for those who… read more…
- Form 8829: How to Deduct Expenses for Home Business Uses
Form 8829 is used to claim the home office deduction by calculating the business-related portion of home expenses. Self-employed individuals and freelancers can deduct costs such as rent, utilities and depreciation if they use a designated space exclusively for work. However, the IRS sets specific guidelines for eligibility, including regular and exclusive business use of… read more…
- Are Exempt-Interest Dividends Subject to AMT?
Exempt-interest dividends, typically distributed by municipal bond funds, are generally not subject to federal income tax, but they can be impacted by the alternative minimum tax (AMT). Certain private activity bonds, which fund projects like sports stadiums or private airports, generate income that remains tax-exempt under regular tax rules but is includable in AMT calculations.… read more…
- How Does the AMT Affect Your Standard Deduction?
The alternative minimum tax (AMT) can reduce or eliminate the benefit of the standard deduction for certain taxpayers, particularly those with higher incomes or specific types of tax-preference items. Unlike the regular tax system, which allows a standard deduction to lower taxable income, the AMT calculation follows a separate set of rules that disallows this… read more…
- How to Use the Foreign Tax Credit to Offset AMT
The foreign tax credit can help mitigate the impact of the alternative minimum tax (AMT) for taxpayers with income taxed abroad. While the AMT limits certain deductions and credits, it does allow a portion of the foreign tax credit to reduce U.S. tax liability. However, specific rules govern how much of the credit applies, including… read more…
- New Jersey Corporate Tax: What It Is and How It Works
New Jersey applies a graduated corporation business tax (CBT) on corporations, with rates that vary based on income. Recent law changes have added extra fees for some corporations, affecting their total tax costs. Due to these complexities, working with a financial advisor can help businesses stay compliant and find tax-saving opportunities. What Is the New… read more…
- How Are Partnerships Taxed? Step-By-Step Guide
Partnerships are not subject to income tax at the entity level. Instead, they operate as pass-through entities, meaning the partnership’s income, deductions and credits flow directly to the individual partners. Each partner then reports their share of the partnership’s income or loss on their personal tax return. A financial advisor can help partners structure their… read more…
- Section 1250: How It Applies to Real Estate Taxes and Examples
Section 1250 of the U.S. tax code applies to gains from the sale of depreciated business real estate. If a property was depreciated beyond the straight-line method, the extra depreciation is taxed at a higher rate, known as depreciation recapture. Because real estate taxes can be complex, a financial advisor can help investors plan tax-efficient… read more…
- What Triggers the Alternative Minimum Tax (AMT)?
The alternative minimum tax (AMT) is designed to ensure that certain taxpayers who benefit from various deductions and tax preferences still pay a minimum level of tax. Several factors can trigger AMT liability, including high income, large deductions and financial activities that create differences between regular taxable income and the income calculated under the AMT… read more…