- I’m Earning $275k This Year. Can I Use a Backdoor Roth Strategy to Reduce Taxes?
If you’re making $275,000 a year, you can’t contribute to a Roth IRA due to income limits. However, a backdoor conversion can allow a high earner to sock away unlimited sums in a Roth account, enabling tax-free requirement withdrawals and a way past pesky required minimum distribution rules (RMDs) that many pretax retirement account require.… read more…
- I’m Selling My House and Netting $680k. Do I Have to Worry About Capital Gains Taxes?
A net gain on a home sale of $680k potentially could lead to having to pay capital gains taxes. But in many cases, you won’t have to pay taxes on the full amount of the gain. And you may be able to shield all of it. This is due to an exclusion that protects from… read more…
- What Is the Phantom Tax?
Phantom taxation occurs when individuals or businesses are required to pay taxes on income they haven’t actually received. Phantom income can arise with investments such as partnerships, real estate or mutual funds when taxable income is reported but not distributed to the taxpayer. Though the income is phantom, the tax liability is real and must… read more…
- IRS Collects $1.3 Billion From Wealthy Households Amid Crackdown: Are You Next?
The IRS has stepped up tax enforcement, and it has already collected more than $1.3 billion in unpaid taxes since fall, 2023. The IRS has begun catching up on a long backlog of what it calls “enforcement actions.” This is the agency’s process of review to determine if a taxpayer owes money and, if so,… read more…
- What Are Property Taxes and How Are They Calculated?
Property tax is a recurring levy imposed by local governments on property owners, based on the value of their real estate. Typically, property taxes are collected locally and fund local community services such as schools, roads, law enforcement and fire departments. The amount of the tax is usually determined by assessing the market value of… read more…
- Guide to Capital Gains Taxes on Commercial Properties
Capital gains tax on commercial property depends on several factors. Factors include how long the property was held and the taxpayer’s income level. When a commercial property is sold for more than its original cost basis, the profit, or capital gain, is subject to taxation. Knowing how these gains are calculated can help you identify… read more…
- Kamala Harris Supports Tax on Unrealized Capital Gains: What It Means for Wealthy Households
The Kamala Harris campaign has made one of its first concrete policy proposals this week with a tax plan. The centerpiece of the plan is a series of high-end tax increases on corporations and wealthy households worth approximately $5 trillion over 10 years. Specifically, Harris has proposed enacting the tax increases detailed in President Biden’s… read more…
- States With Tax Breaks for Renters: Do You Qualify?
It is rare to get meaningful tax relief as a renter. Homeowners can get significant tax advantages, most notably in the form of the mortgage interest deduction and the capital gains exemption, both of which are available to all households regardless of circumstance. This is less common for renters. There are no federal tax breaks for… read more…
- What to Know About Form 8889 for HSAs
If you’ve made contributions to or taken distributions from a health savings account (HSA), the IRS requires you to report it on your yearly taxes. That’s where Form 8889 comes in. It details contributions, distributions and potential tax deductions so you can report all HSA-related activities to remain compliant as well as optimize your tax… read more…
- What Is the 2025 Federal Solar Tax Credit?
The Federal Solar Tax Credit, also known as the Investment Tax Credit (ITC), provides an up to 30% tax credit for the costs of adopting solar energy in the United States. The credit applies to new solar photovoltaic (PV) systems and expansions of existing ones, reducing the overall installation cost by nearly a third. This… read more…
- How an Employee Stock Purchase Plan (ESPP) Is Taxed
One common question from employees with employee stock purchase plans is if there’s an employee stock purchase plan tax. While you’ll typically owe taxes based on the profits when you sell those shares later on, when and how much you’ll owe will be based on the specific nature of your plan. Under a qualified employee… read more…
- Are Employee Stock Purchase Plans (ESPP) Pre-Tax?
Employee stock purchase plans (ESPPs) are benefits offered by companies to help employees invest in company stock at a discount. These plans are designed to encourage ownership and align employee interests with those of the company. Understanding the tax treatment of ESPP contributions can help employees make the most of this benefit. Specifically, many may… read more…
- 4 Tax Benefits of Using an LLC for Your Rental Property
Forming a limited liability company (LLC) can be a smart move for real estate investors seeking both tax benefits and legal protection. LLCs offer pass-through taxation, allowing profits to flow directly to your personal tax return and potentially reducing your overall tax burden. Investors may also qualify for a special tax deduction available to LLCs.… read more…
- What Are the Tax Consequences of Inheriting a CD?
If you inherit or plan to bequeath a certificate of deposit (CD) as part of your estate, there may be tax consequences to consider. Three kinds of taxes could apply: income, estate and inheritance. While the principal amount of the CD transfers without income tax issues, any interest earned after death and before transfer will… read more…
- How Capital Gains Tax on Home Sales Works
Selling a home can be a significant financial milestone, but it also comes with important tax implications that homeowners need to understand. One of the key considerations is the capital gains tax on home sales, which can affect the profit you make from selling your property. Essentially, capital gains tax is levied on the profit… read more…
- Can Short-Term Capital Losses Offset Long-Term Capital Gains?
Understanding this aspect of tax strategy is crucial for investors looking to optimize their financial outcomes. In essence, the IRS allows taxpayers to use capital losses to offset capital gains, which can potentially reduce the amount of tax owed. Short-term capital losses, which occur when an asset is sold at a loss within a year… read more…
- Are Health Insurance Premiums Tax Deductible When You Retire?
As you transition into retirement, understanding the financial implications of your health insurance premiums becomes increasingly important. One common question that arises is whether these premiums are tax deductible. The answer can significantly impact your financial planning and tax strategy during your golden years. Generally, health insurance premiums can be deductible if you itemize your… read more…
- I’m Going to Get $3,300 per Month From Social Security. How Can I Reduce My Taxes?
Approximately 40% of households pay taxes on their Social Security benefits, according to the Social Security Administration. If you do owe taxes on your benefits, managing them effectively could save you a lot of money. If you need help planning for Social Security or taxes in retirement, consider working with a financial advisor. However, there… read more…
- What Are the Tax Implications for Withdrawing From Your IRA?
Managing your retirement savings effectively requires understanding the tax implications of withdrawing money from an individual retirement account (IRA). IRAs, whether traditional or Roth, offer unique tax advantages that can significantly impact long-term savings. However, understanding how withdrawals are taxed, the conditions under which penalties apply and the strategic maneuvers available to minimize financial strain… read more…
- How to Report Foreign Gifts With Form 3520
The IRS has clear guidelines and specific thresholds that dictate when and how U.S. persons (citizens, resident aliens or domestic trusts) must report gifts from foreign entities. With penalties for non-compliance potentially reaching staggering amounts, understanding these rules is not just a matter of financial literacy but of fiscal responsibility. If you receive a gift… read more…
- I’m Selling My House and Netting $480k. Can I Avoid Taxes While Downsizing for Retirement?
In most cases, when selling your primary residence you can exclude $500,000 of the gain if you file as a married couple. If that’s your situation, and you meet conditions to have the gain qualify as a long-term capital gain, you likely won’t owe any tax. If you file singly while still meeting long-term capital… read more…
- How to Avoid Overpaying Your Taxes
Getting a tax refund can seem like a financial windfall, but it means you’ve overpaid your taxes and given the government an interest-free loan. While some taxpayers prefer to receive a lump sum refund, others view tax overpayments as a missed opportunity to have their money work for them. That’s because the extra money paid… read more…
- What Are the Imputed Interest Tax Rules?
Imputed interest rules can turn even a simple act of generosity into a taxable event. This IRS regulation requires interest to be calculated and reported on certain transactions, even if no interest is explicitly stated. The regulation aims to ensure fair taxation on transactions involving deferred payments or below-market interest rates. As tax laws continue… read more…
- 1031 Exchange Rules in California
Selling an underperforming asset and buying a similarly priced, more promising investment is a logical business move – but what about the taxes on the sale? If you’re an investor in California, concerns might arise over the taxes you’ll owe for selling an investment property. Fortunately, the 1031 exchange rules from the federal government allow… read more…
- What Is a Gift Loan and How Does It Work?
A gift loan is essentially a loan with an interest rate well below the market average, or even no interest at all, which can be a strategic way to support family members financially or for estate planning purposes. As beneficial as these loans may appear, with their potential tax benefits and flexible repayment options, they… read more…