Watch out for potential tax pitfalls of donating real estate to charity

| Tax Briefs

Charitable giving allows you to help an organization you care about and, in most cases, enjoy a valuable income tax deduction. If you’re considering a large gift, a noncash donation such as appreciated real estate can provide additional benefits. For example, if you’ve held the property for more than one year, you generally will be able to deduct its full fair market value and avoid any capital gains tax you’d owe if you sold the property. There are, however, potential tax pitfalls you must Read more [...]

The ABCs of the tax deduction for educator expenses

| Tax Briefs

At back-to-school time, much of the focus is on the students returning to the classroom — and on their parents buying them school supplies, backpacks, clothes, etc., for the new school year. But let’s not forget about the teachers. It’s common for teachers to pay for some classroom supplies out-of-pocket, and the tax code provides a special break that makes it a little easier for these educators to deduct some of their expenses.   The miscellaneous itemized deduction   Generally, your Read more [...]

Yes, you can undo a Roth IRA conversion

| Tax Briefs

Converting a traditional IRA to a Roth IRA can provide tax-free growth and the ability to withdraw funds tax-free in retirement. But what if you convert a traditional IRA — subject to income taxes on all earnings and deductible contributions — and then discover that you would have been better off if you hadn’t converted it? Fortunately, it’s possible to undo a Roth IRA conversion, using a “recharacterization.” Reasons to “recharacterize” There are several possible reasons to Read more [...]

Will Congress revive expired tax breaks?

| Tax Briefs

By Lou Ann Taylor     Most of the talk about possible tax legislation this year has focused on either wide-sweeping tax reform or taxes that are part of the Affordable Care Act. But there are a few other potential tax developments for individuals to keep an eye on. Back in December of 2015, Congress passed the PATH Act, which made a multitude of tax breaks permanent. However, there were a few valuable breaks for individuals that it extended only through 2016. The question now is whether Congress Read more [...]

3 midyear tax planning strategies for individuals

| Tax Briefs

In the quest to reduce your tax bill, year-end planning can only go so far. Tax-saving strategies take time to implement, so review your options now. Here are three strategies that can be more effective if you begin executing them midyear:   1. Consider your bracket The top income tax rate is 39.6% for taxpayers with taxable income over $418,400 (singles), $444,550 (heads of households) and $470,700 (married filing jointly; half that amount for married filing separately). If you expect this Read more [...]

Own a vacation home? Adjusting rental vs. personal use might save taxes

| Tax Briefs

Now that we’ve hit midsummer, if you own a vacation home that you both rent out and use personally, it’s a good time to review the potential tax consequences: If you rent it out for less than 15 days: You don’t have to report the income. But expenses associated with the rental (such as advertising and cleaning) won’t be deductible. If you rent it out for 15 days or more: You must report the income. But what expenses you can deduct depends on how the home is classified for tax purposes, Read more [...]

Claiming a federal tax deduction for moving costs

| Tax Briefs

Summer is a popular time to move, whether it’s so the kids don’t have to change schools mid-school-year, to avoid having to move in bad weather or simply because it can be an easier time to sell a home. Unfortunately, moving can be expensive. The good news is that you might be eligible for a federal tax deduction for your moving costs.   Pass the tests   The first requirement is that the move be work-related. You don’t have to be an employee; the self-employed can also be eligible for Read more [...]

Pay attention to the details when selling investments

| Tax Briefs

The tax consequences of the sale of an investment, as well as your net return, can be affected by a variety of factors. You’re probably focused on factors such as how much you paid for the investment vs. how much you’re selling it for, whether you held the investment long-term (more than one year) and the tax rate that will apply.   But there are additional details you should pay attention to. If you don’t, the tax consequences of a sale may be different from what you expect. Here are a Read more [...]

Donating a vehicle might not provide the tax deduction you expect

| Tax Briefs

All charitable donations aren’t created equal — some provide larger deductions than others. And it isn’t necessarily just how much or even what you donate that matters. How the charity uses your donation might also affect your deduction. Take vehicle donations, for example. If you donate your vehicle, the value of your deduction can vary greatly depending on what the charity does with it. Determining your deduction You can deduct the vehicle’s fair market value (FMV) if the charity: Read more [...]

Do you know the tax implications of your C corp.’s buy-sell agreement?

| Tax Briefs

Private companies with more than one owner should have a buy-sell agreement to spell out how ownership shares will change hands should an owner depart. For businesses structured as C corporations, the agreement also has significant tax implications that are important to understand.   Buy-sell basics   A buy-sell agreement sets up parameters for the transfer of ownership interests following stated “triggering events,” such as an owner’s death or long-term disability, loss of license or Read more [...]