- What Is Imputed Income?
Imputed income refers to the value of non-cash benefits or perks that an employee receives from their employer, which are considered a form of compensation. These benefits, while not directly paid as wages, still have monetary value and are subject to taxation. Understanding imputed income is crucial because it can significantly affect your taxable income… read more…
- Can the IRS Take Money Out of Your Bank Account?
When someone owes back taxes, the Internal Revenue Service has a few tools at its disposal to compel this person to pay. Wage garnishments are one option; bank account levies are another. Can the IRS take money out of your bank account? Yes, and it’s perfectly legal to do so. Bank account levies are avoidable,… read more…
- Tax Strategies for Short-Term Rental Properties
Renting out properties on a short-term basis can be a good way to generate an additional income stream without a significant investment of time. You can also take advantage of the short-term rental tax loophole if you meet certain requirements. This loophole is designed to extend tax benefits to investors who rent out property on… read more…
- How to Calculate Cost Basis on the Sale of Rental Property
Understanding the cost basis and how to calculate it is important for rental real estate investors. That’s because your cost basis on a property determines how much taxable profit you make when selling a profit, which can directly affect your tax liability. Calculating the cost basis starts with figuring out the cost to acquire your… read more…
- Differences Between Ordinary Income and Capital Gains Tax
The U.S. tax system distinguishes between various types of income. But the two primary categories are ordinary income tax and capital gains tax. Ordinary income tax is applied to earnings from routine activities, including wages, salaries and commissions, as well as interest from bank deposits. On the other hand, capital gains tax is levied when… read more…
- 529 Plan Tax Deductions for Every State
Opening a 529 plan is a tax-advantaged way to set aside money for college. The money you contribute can grow tax-deferred and qualified withdrawals are tax-free. While there is no federal tax break for making 529 plan contributions, you may… read more…
- Temporary Tax Plan Could Boost Your Standard Deduction By Up to $4,000
A House panel has passed a bill that would temporarily expand the standard tax deduction used by the majority of taxpayers by $2,000 per person for the next two years. The Tax Cuts for Working Families Act (H.R.3936) recently approved by… read more…
- Who Pays the Most Taxes in the U.S.?
Most income taxes in the United States are paid by the people with the most income. That is in keeping with the generally progressive nature of the individual federal income tax, the primary source of government revenues, which applies higher… read more…
- Understanding Pretax vs. After-Tax Investment Benefits
Pretax money is invested before any taxes have been deducted, while after-tax money is invested after taxes have been deducted. Investments in tax-deferred retirement accounts such as IRAs and 401(k)s are made pretax, which means there is a larger sum… read more…
- What Is an Incomplete Non-Grantor (ING) Trust?
California would like to crack down on a type of trust that lets the very wealthy avoid state income and federal gift taxes. And the Golden State is not alone: A number of state officials have taken aim at the… read more…
- Who’s Responsible for Paying Property Taxes When the Owner Dies?
When someone passes away, there can be plenty of questions over who gets what, especially if there’s a home in the mix. An often-overlooked question centers on who is responsible for paying property taxes when the owner dies. A delinquent… read more…
- IRS Fresh Start: Tax Repayment Options
If you owe federal income tax and can’t pay in full, the IRS Fresh Start program can help you get caught up. Fresh Start was established by the federal government in 2011 to offer some relief to taxpayers and curb… read more…
- What Happens To Your Tax Liability With Proper Financial Planning?
Taxes are unavoidable but that doesn’t mean you have to pay more than you owe. What happens to your tax liability with proper financial planning? The simple answer is that it can allow you to minimize what you owe while… read more…
- Schwab Says Lower Your Tax Bill By ‘Bunching’ Your Charitable Deductions
Donating to charity isn’t just a way to have a positive impact on society – it’s also a savvy approach to reducing your tax liability. Schwab suggests people who donate to charity on an annual basis may want to consider… read more…
- Passive Income: How Is It Taxed?
Most people’s income comes as the direct result of work — you get a job, show up, hopefully perform decently well and then money shows up in your bank account. Some people, though, look to set up streams of passive… read more…
- TurboTax Deluxe vs. TurboTax Premier
Doing taxes by hand is often tedious and confusing, and it can open you up to making costly mistakes. Using commercially available tax software will ease tax preparation for many Americans. If you’re an individual looking to file your taxes… read more…
- FreeTaxUSA vs. TurboTax
TurboTax and FreeTaxUSA are online tax preparation services that can be used by individuals and businesses. TurboTax is more full-featured and has lots of built-in guidance, as well as helpful support delivered by phone or chat. However, it’s significantly more… read more…
- How Much Do You Have to Make to File Taxes?
While taxes are inevitable for most Americans, the government doesn’t require those with sufficiently low incomes to file. However, choosing not to file usually means forfeiting profitable tax breaks and other financial advantages. Plus, you’ll be penalized if it turns… read more…
- TaxAct vs. TurboTax
As you prepare for Tax Day, you might be overwhelmed by the options available for filing your taxes online. You’ve probably heard of TaxAct and TurboTax, two of the most popular tax-filing services on the market. But which is right… read more…
- Jackson Hewitt vs. H&R Block
When tax time rolls around, one thing you’ll have to decide is whether you’ll do your taxes yourself or hire a pro. If you’re leaning toward letting someone else do your taxes, some of the top options include Jackson Hewitt… read more…
- What Is the Investment Interest Expense Deduction?
If you borrow money to buy investment assets, the IRS will sometimes allow you to deduct the loan’s interest from the taxable income the investments generate. This is called the investment interest expense deduction. While it applies only to income –… read more…
- Understanding a Private Letter Ruling (PLR)
Private letter rulings, commonly known as “guidances,” are the bane of tax attorneys everywhere. They are very specific, vast in number and essential to understanding how tax law works. In brief, it’s a written answer issued by the IRS to a… read more…
- What Is a 1099-R Form?
When tax season rolls around, your mailbox might fill up with W-2s and other forms that you’ll need to file your return. An Internal Revenue Service (IRS) Form 1099-R might be in the mix if you received certain types of… read more…
- How FSAs Save You Money on Taxes
Contributing to a flexible spending account (FSA) could save you several hundred dollars in taxes. FSAs do this by exempting contributions from federal and state income taxes, as well as payroll taxes. FSAs do have some limitations, including a cap… read more…
- How to Avoid AMT on Incentive Stock Options (ISOs)
Incentive stock options, or ISOs, can be a lucrative employee benefit. This is particularly true at startup companies, which frequently offer stock options as a form of alternative compensation to make up for under-market salaries. However, when you exercise your stock… read more…