Income

What Can Voters Really Learn From Donald Trump’s Tax Returns (if they are ever released)

What will we really learn If Donald Trump ever releases his tax returns? While no technical, legal requirement compels him to do so, it is but a time-honored tradition among presidential candidates acting in the spirit of full disclosure. Trump has acted like it’s not a big deal and that little, if anything, will be revealed by any divulgence. If it’s not such a big deal, why doesn’t he simply disclose them like other candidates? What might he be concerned that voters will really learn from the release of his tax returns?

  1. Trump pays little or nothing in taxes

Taxes And Medical Expenses

Taxpayers that itemize​ personal deductions instead of claiming the standard deduction may deduct qualifying medical expenses to the extent that such expenses exceed 10 percent of adjusted gross income (“AGI”). Taxpayers that are 65 years or older, or turned 65 during the tax year, may deduct unreimbursed medical care expenses that exceed 7.5% of AGI. This threshold amount remains at 7.5% of adjusted gross income for these taxpayers until Dec. 31, 2016. I.R.C. §213(f).

Misconceptions And Truths About W-2s, 1099s, and 1095s

There are many misconceptions about IRS tax forms, especially W-2s, 1099s, and of course the new 1095 forms introduced by the Affordable Care Act. This blog will attempt to clarify the misconceptions and truths about these forms but first, some background information.

The IRS requires employers to report wage and salary information for employees on Form W-2, which also reports the amount of federal, state and other taxes withheld from an employee’s paycheck. Another well-known IRS form used to report income is the 1099-MISC (Miscellaneous Income), which reports payments made in the course of business to individuals that are independent contractors, as well as similar payments to sole proprietorships.

Using The Gift Tax Exclusion To Protect Your Estate

Most of us don’t have to worry about the federal estate tax or gift tax. In 2016, the lifetime gift and estate tax exemption is $5.45 million. Thus, any taxpayer while alive may give, and at death, devise, or bequeath, up to $5.45 million before any federal tax liability is created. This exemption is double for married couples, which means that a married couple can gift or leave a total of $10.9 million that will be exempt from federal estate and gift taxes.

Supreme Court Tax Cases: Comptroller of the Treasury of Maryland v. Brian Wynne

For a significant period of time, since 1873 in fact, the Supreme Court has held that the taxing power of the states is limited by the dormant commerce clause. State taxes on interstate activity must be “fairly apportioned,” meaning that if more than one state may legitimately tax the same income, each state may only tax its fair share. This flows from the Commerce Clause’s negative converse, i.e. its restriction prohibiting states from enacting legislation that overly burdens or discriminates against interstate commerce. In many cases dealing with the taxation of multi-state businesses, courts have enforced the requirement that state taxes be fairly apportioned.

Excluding Self-Employment Income Under I.R.C. §1402(a)(3)(C)

Taxpayers earn self-employment income which is net income “from any trade or business carried on by such individual” under I.R.C. §1402. The meaning of “trade or business” is the same as it is under I.R.C. §162. The Supreme Court has “defined a trade or business as an activity engaged in for income or profit and performed with continuity and regularity. Commissioner v. Groetzinger, 480 U.S. 23, 35 (1987).”

There is an exclusion from inclusion of income from the sale of property in self-employment income under IRC §1402(a)(3)(C) which provides:

(3) there shall be excluded any gain or loss—

Taxes And Winning The Lottery

Hopefully, if one of us is ever lucky enough to win a big lottery jackpot, we won’t care about how much of it we have to “share” with Uncle Sam as taxes. But winning any immense lottery jackpot, especially some of the recent Powerball or Mega-Million grand prizes, is likely to result in a considerable share for the Department of the Treasury. How much in tax would the IRS receive from a $500 million lotto winner?

Taking A Short-Term Loan From Your IRA

When strapped for cash, IRA owners have traditionally been able to take a short-term loan from their IRA, although this has been limited in recent years. Taxpayers may withdraw money from an IRA, without penalty or any tax liability, for up to sixty (60) days. The borrowed monies must be “rolled back” into an IRA within 60 days from the day after the date of the withdrawal, or income tax and penalties apply to the amount withdrawn and unreturned. Similar rules exist for rolling over one Roth IRA to another Roth IRA. The sixty day count involves calendar days, not business days. Keep in mind there is no extension for the sixtieth day falling on a weekend or holiday.

Children And Tax Credits: The Child Tax Credit

The popular $1,000-per-child tax credit was made a permanent part of the tax code by the American Taxpayer Relief Act. Depending upon a parent’s income, the Child Tax Credit is an important and useful tax credit that may be worth as much as $1,000 per qualifying child under the age of seventeen (17). A qualifying child for this credit is someone who meets the criteria of six tests: age, relationship, support, dependent, citizenship, and residence.

Age Test – To qualify, a child must have been age 16 or younger at the end of the applicable tax year.

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