- Are Legal Fees You Pay Tax-Deductible?
Whether you’re hiring an attorney for personal reasons or business-related issues, legal fees can quickly add up. Many individuals and businesses wonder whether these expenses can be deducted from their tax returns. While personal legal fees are generally not tax deductible, legal fees related to business often are. To ensure compliance and maximize your deductions,… read more…
- How to Convert Rental Property to a Primary Residence
Converting a rental property into a primary residence is a significant financial move with potential tax implications that necessitate careful planning. By leveraging tools like Section 121 of the IRS code and 1031 exchanges, homeowners can navigate the complexities of this process. However, understanding the intricacies of these laws is crucial. Here’s how to convert… read more…
- What Are Section 199A Dividends?
Section 199A dividends are distributions from the profits of domestic real estate investment trusts (REITs) that qualify for a special 20% tax deduction. Investing in Section 199A dividends can provide a valuable tax deduction for investors, and income limits don’t apply to Section 199A income from REITS. Understanding the ins and outs of this tax… read more…
- Pros and Cons of Taking a Foreign Tax Credit vs. Deduction
For U.S. citizens with foreign income, knowledge of foreign tax credits and deductions is a crucial aspect of financial planning. These mechanisms are designed to prevent double taxation – when someone pays both foreign and domestic taxes on the same income. Both options have their advantages and drawbacks, and understanding them is crucial for making… read more…
- What Is the Limit on Taking the Foreign Tax Credit?
Double taxation can occur when laws from two distinct countries require the same income to be taxed. The Foreign Tax Credit (FTC) is a non-refundable tax credit designed to alleviate this burden for U.S. citizens who earn income abroad by offsetting taxes paid to foreign governments and reducing a taxpayer’s U.S. tax liability. A financial advisor… read more…
- What Is Non-Passive Income?
Non-passive income, also known as active or earned income, refers to the money that you earn through your active efforts, typically by trading your time and expertise for compensation. This is the inverse of passive income, which is earned with minimal effort or active involvement. However you earn your income, a financial advisor can help… read more…
- Is Your Retirement Income Taxable?
Understanding how retirement income from various sources like Social Security benefits, IRA distributions, and pensions are taxed can lead to smarter financial planning decisions. If you find this difficult to navigate alone, consider seeking advice from a financial advisor. Retirement income can be quite diverse, comprised of several sources, each with its own taxation rules.… read more…
- IRS to Use AI to Ramp Up Audits on Wealthy Americans: What You Should Know
Earlier this month, the IRS announced that it will begin using AI to identify tax returns for examination and audits. This is, as the agency wrote in its announcement, part of an effort to shift attention toward high-earners, large corporations and complex partnerships. Among other changes, the agency will use “improved technology as well as Artificial… read more…
- The Tax Consequences of Transferring Stock to a Trust
Considering a savvy move to bolster and shield your assets by transferring stock to a trust? There are significant tax implications associated with this strategic decision that you should keep in mind. Understanding the elements of how your finances will be impacted will empower you to plan your finances efficiently to mitigate any potential tax… read more…
- This Little Known Tax Credit Helps Low-Income Workers Catch Up on Retirement Contributions
Retirement has gotten harder for low-income Americans. In July, the Government Accountability Office studied the impact of tax-advantaged retirement accounts. In doing so, they found that the disparity in retirement savings between low-income and high-income workers between ages 51 and 64 grew significantly between 2007 and 2019. This means people nearing retirement today are in… read more…
- Definition of a Household Employee and How to Pay Them
Household employees like nannies, housekeepers and landscapers make our busy lives easier, but paying them comes with tax and additional obligations that can’t be ignored. Failure to comply can lead to IRS audits and penalties, among other problems. To avoid trouble, you need to understand who is and isn’t a household employee, decide how you’re… read more…
- Passive vs. Non-Passive Income: What’s the Difference?
The key to effective financial planning are two primary types of income: Passive and non-passive. It’s important to understand both passive and non-passive income types that you may have and how each type affects tax planning for improved overall financial management. By mastering these, you will be better informed to strategically plan your finances and… read more…
- What Are the Tax Consequences of Being Added to a Deed?
Property deeds are not just pieces of paper – they hold the power to impact your fiscal situation considerably. Property deeds are legal documents that provide proof of ownership. When you extend ownership rights by adding someone to your property deed, there are tax implications and potential risks associated with the transaction. A financial advisor… read more…
- The IRS Is Cracking Down on These High-Income Earners. Are You One of Them?
The IRS recently announced a major tax enforcement initiative that will increase scrutiny on high-income earners, partnerships and people with foreign bank accounts. The agency said the effort would “restore fairness to [the] tax system” by focusing on wealthy taxpayers who have seen sharp declines in audit rates over the past decade. A financial advisor… read more…
- How to Report 401(k) and IRA Rollovers on Your Taxes
Understanding the ins and outs of 401(k) and IRA rollovers isn’t a walk in the park. The maze of tax implications surrounding these rollovers might seem intimidating to many. However, deciphering the process of reporting these rollovers on your taxes is critical to maintaining the tax-deferred status of your retirement savings and steering clear of… read more…
- How Foreign Dividends Are Taxed
In today’s globalized economy, investing in foreign stocks and companies has become increasingly common for investors seeking diversification and higher returns. While these international investments can offer lucrative opportunities, they also come with a complex web of tax implications, particularly when it comes to foreign dividends. Understanding how foreign dividends are taxed is crucial for… read more…
- How Much Are Taxes on $1 Million?
Acquiring $1 million in a lump sum is no simple matter and figuring out the amount of taxes due on it is also complicated. The answer depends on several factors, including the source of the money, where you live and whether Social Security and other FICA taxes apply. Individual circumstances make all the difference. The… read more…
- Tax Planning for Ultra-High-Net-Worth Individuals and Families
Proper tax planning is essential for managing and preserving wealth. For ultra-high-net-worth individuals and their families – people with $30 million in investable assets – efficient tax management requires an in-depth understanding of tax laws, methodical utilization of tax benefits and strategic planning. The support of a specialized financial advisor is often beneficial in ultra-high-net-worth… read more…
- Do You Pay Taxes on Dividends Reinvested?
Investing in dividend stocks can create a nice stream of passive income. Instead of receiving payouts as cash, you can also use dividends to increase your holdings by reinvesting them to purchase additional shares of stock. Among other benefits, reinvesting dividends can help you avoid brokerage fees. However, even when you don’t receive dividends as… read more…
- What High Earners Need to Know for Trump-Era Tax Expirations
In 2017, the Trump administration spearheaded a comprehensive series of tax cuts. Called the Tax Cuts and Jobs Act (TCJA), the law reduced corporate taxes by about 40% and household taxes by varying degrees for most individuals. While the corporate tax cut is permanent, most of the individual tax reductions will end in 2025 or… read more…
- How Is Net Unrealized Appreciation (NUA) Taxed?
Net unrealized appreciation (NUA) tax treatment refers to the taxation of gains on employer stock within a retirement plan when the stock is moved to a taxable account or distributed as a lump sum. Rather than taxing the entire value of the stock as ordinary income, only the original cost basis is subject to income… read more…
- Common Types of Income
Have you ever wondered why some types of income are taxed more than others? Understanding the different types of income and their tax implications is key to managing your finances effectively. Whether you’re a high-earning professional or just starting your financial journey, this comprehensive guide will empower you to make more informed decisions about your… read more…
- Are You a High Earner? You Could Pay a Lot More in Taxes Under This Proposed Law
High earners could see a significant tax increase under a Democratic proposal to bolster Social Security and Medicare. A financial advisor can help you respond to potential changes to tax laws and regulations. Find a fiduciary advisor today. The proposed legislation – called the “Medicare and Social Security Fair Share Act” – would require taxpayers… read more…
- 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…