- 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 2026 Federal Solar Tax Credit?
The Federal Solar Tax Credit, also known as the Investment Tax Credit (ITC), once provided an up to 30% tax credit for the costs of adopting solar energy in the United States. The credit applied to new solar photovoltaic (PV) systems and expansions of existing ones, reducing the overall installation cost by nearly a third.… 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) allow eligible employees to purchase shares of their employer’s stock, often at a discount through payroll deductions. But unlike contributions to some workplace retirement accounts, ESPP contributions generally aren’t made with pre-tax dollars. Instead, employees typically purchase shares using income that has already been subject to tax. Taxes can become… read more…
- 5 Tax Benefits of Using an LLC for Your Rental Property
A limited liability company (LLC) does not provide inherent federal tax benefits for rental property ownership. Rental income, deductions and depreciation are generally treated the same whether property is held personally or through an LLC. Even so, the legal structure of an LLC can influence how certain tax rules apply when you own and manage… read more…
- What Are the Tax Consequences of Inheriting a CD?
If you inherit or leave a certificate of deposit (CD), some taxes may apply. The CD’s principal passes without income tax, but any interest earned after death is taxed as ordinary income to the heir. Federal estate tax only applies if the estate exceeds the exemption, and there is no federal inheritance tax, though some… read more…
- How Capital Gains Tax on Home Sales Works
Selling a home can be a significant financial milestone, but it also carries important tax implications that homeowners must understand. One key consideration is capital gains tax on home sales, which can affect your profit from selling your property. Essentially, capital gains tax is levied on the profit realized from the sale of a non-inventory… 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?
There are tax implications that apply when 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 the taxation of withdrawals, when penalties apply and the strategic maneuvers available to minimize financial strain is essential. A financial advisor can… 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 what seems like a simple act of generosity into a taxable event. These IRS regulations require interest to be calculated and reported on certain transactions, even when no interest is formally charged. The goal is to ensure fair taxation on arrangements involving deferred payments or below-market interest rates. Because tax… 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…
- How to Set Up a Payment Plan for Taxes You Owe
When an individual or business owes taxes to the Internal Revenue Service (IRS), settling the entire amount in a single payment may not be financially feasible. In such cases, a tax payment plan can offer a viable solution. This arrangement with the IRS allows taxpayers to pay their due taxes over an agreed period, easing… read more…
- How to Report a Backdoor Roth IRA With Form 8606
A backdoor Roth IRA typically offers high-income earners a workaround to contribute directly to a Roth IRA when their earnings are above IRS income limits. This strategy could allow you to take advantage of tax-free growth and withdrawals in retirement. Reporting a backdoor Roth IRA contribution on your taxes is relatively straightforward. But doing it… read more…
- What Is Net Investment Income and How Is It Taxed?
Net investment income (NII) is defined as the profit gained from investments after deducting certain related expenses. This includes various forms of income such as interest, dividends, rental income and capital gains. It’s essential to know not just what comprises NII, but also how it’s calculated and the tax implications it carries, especially for those… read more…
- Understanding Form 8606 for IRA Taxes
If you use an IRA to save for retirement, IRS Form 8606 might be an important part of tax season. This is the form where you report nondeductible contributions to a traditional IRA. Beyond that, taxpayers may also use the form to track certain distributions, in addition to conversions from a traditional, SEP or SIMPLE… read more…
- 9 Common Tax Mistakes and How to Avoid Them
The more money you make, the higher your tax liability could be. And making a mistake in your filing can end up costing you more in fees and penalties. Here’s a roundup of common tax mistakes that could cost you money this tax season. A financial advisor who specializes in tax planning could also help… read more…
- Tax Implications for Reverse Mortgages
Reverse mortgage proceeds generally are not taxable because the IRS treats them as loan proceeds rather than income. As a result, the money you receive is not subject to federal income tax and generally does not count as income for Social Security, Medicare or most income-based benefits. However, some exceptions and related tax considerations apply:… read more…
- How to Make a Charitable Gift From Your IRA
Each year, you can make a tax-free charitable gift from your IRA known as a qualified charitable distribution (QCD). These distributions allow you to meet your annual required minimum distribution without paying taxes on that amount. To do so, you must transfer the assets from your IRA to the charity directly. The amount you can… read more…