Capital Gains

Who Claims The Kids On Their Taxes, And Other Ways Divorce May Affect Your Taxes

Divorcing couples often wonder who claims the children on their taxes, and in what other ways divorce will affect their taxes. Questions may include which filing status to use after the divorce, and how payments for spousal maintenance and child support to an ex-spouse are treated for tax purposes. Also, inquiries about what happens to assets like the family residence are obviously frequently common.

Filing Status

The Alternative Minimum Tax, Explained

The Alternative Minimum Tax, ExplainedUnder the Internal Revenue Code and the vast body of rules and regulations related thereto, certain tax benefits can significantly reduce the amount of taxes that a taxpayer may owe. The alternative minimum tax (AMT) applies to those taxpayers with high levels of income by limiting these benefits and ensuring that these taxpayers pay at least a minimum amount of tax. If the AMT applies to you, you may lose many credits or deductions you would normally receive if you didn’t have to pay the AMT.

You’ve filed your tax return, how long does the IRS have to audit you?

You’ve filed your tax return, how long does the IRS have to audit you?You’ve filed all of your tax returns, and because of your level of income you find yourself in the class of taxpayers whose return is more likely to trigger an IRS audit. So you wonder, how long does the IRS now have to audit you?

Due to disclosure requirements, the IRS makes contact with a taxpayer selected for an audit by telephone or mail only.  When returns are filed, they are compared against norms for similar returns. These norms are developed from audits of a statistically valid random sample of returns, selected as part of the National Research Program conducted by the IRS to update return selection information.

Congratulations on your New Home Purchase…Oops! You’re liable for Seller’s Taxes!

Congratulations on your New Home Purchase…Oops!  You’re liable for Seller’s Taxes!

 

As a buyer, no more rude shock can intrude on your new home celebration than finding out you are liable for Seller’s taxes.  Understandably, by the time of your closing, you may have nearly depleted your bank account, paying the purchase price plus the myriad fees and charges for your new home.  When the IRS comes calling soon afterwards, asking you to also pay Seller’s taxes, you can be excused for being very astonished.  Yes, this can happen; this scenario is not as far-fetched as it may sound.

TOP TEN TAX FACTS ABOUT HOME SALES

Selling a home is a stressful experiences, but when you consider all of the tax issues related to such a sale, it may be an overwhelming one. In most cases, gains from the sale of property, both personal and real, are taxable. However, the seller of a home may not always have to pay taxes. if you sell your home this year, here are ten facts to know.

TOP TEN TAX BREAKS FOR MILITARY PERSONNEL

The IRS has made available several tax breaks for military personnel, especially over the last few decades. For federal tax purposes, the U.S. Armed Forces includes officers and enlisted personnel in all regular and reserve units controlled by the Secretaries of Defense, the Army, Navy and Air Force. The Coast Guard is also included, but not the U.S. Merchant Marine or the American Red Cross. Some of these tax breaks are retroactive, and thus require the filing of an amended return by the affected taxpayer. Remember that if you away from home because of duty in the military, your spouse can use a power of attorney to file a joint return on your behalf. Here are ten tax breaks worth noting for military personnel.

Is Your Income Taxable

Is Your Income Taxable?
Generally, under IRS rules, all incomes are taxable, except if they are specifically excluded from income. Taxable income includes money earned, like wages and tips. It also includes bartering, an exchange of property or services
Certain incomes are usually excluded from income, such as
• Gifts and inheritances
• Child support payments
• Welfare benefits
• Damage awards for physical injury or sickness
• Cash rebates from a dealer or manufacturer for an item you buy
• Reimbursements for qualified adoption expenses
Under certain conditions, the following income may not be taxable::
• Life insurance. Proceeds paid to you because of the death of the insured person are usually not taxable. However, if you redeem a life insurance policy for cash, any amount that you get that is more than the cost of the policy is taxable.
• Qualified scholarship. In most cases, income from this type of scholarship is not taxable. This means that amounts you use for certain costs, such as tuition and required books, are not taxable. On the other hand, amounts you use for room and board are taxable.
• State income tax refund. If you got a state or local income tax refund, the amount may be taxable. You should have received a 2014 Form 1099-G from the agency that made the payment to you. If you didn’t get it by mail, the agency may have provided the form electronically. Contact them to find out how to get the form. Report any taxable refund you got even if you did not receive Form 1099-G.

Mayor of London pays US taxes for selling London Home

One would not normally think that the US could impose taxes on a home that was sold in London, especially when the home was sold by the Mayor of London. However, this is exactly what happened late last year.

Originally, London Mayer Boris Johnson said that he would not be paying the tax lien that was placed on him by the United States, but earlier this year changed his mind. Now, reports say that he plans to pay the fee just before he takes a planned trip to the Boston area.

Top Ten Biggest Tax Breaks

A lot of speeches have been given of late about tax cuts,  tax breaks, deductions, etc.  So, who gets  the biggest tax breaks?  According to New  York Tax Attorney at Thorgood Law Firm, the Top Ten tax breaks are:

  1. $181 billion – Employer contributions towards workers’ medical insurance premiums and medical care
  2. $165 billion – Various retirement plan contributions and earning not taxed
  3. $101 billion – Mortgage Interest deduction
  4. $84 billion – Lower tax rates on long-term capital gains and qualified dividends
  5. $69 billion – Deduction for state and local taxes
  6. $46 billion – Deduction for charitable contributions

TIPS FOR YEAR-END GIVING

With the year about to come to an end, taxpayers may want to make charitable contributions, including clothing and household items, to good causes, and take deductions on their tax returns in the process.  It is helpful to keep in mind IRS requirement in making these contributions, to avoid audit problems along the way.

To deduct clothing and household items, they generally must be in good used condition or better. If you think the item is worth more than $500, you should get an appraisal and keep records.

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