Category: Taxation-Individuals

If your company has a qualified retirement plan or you have set one up in self-employment — such as a 401(k), profit-sharing, or Keogh plan — the participants might be allowed to borrow from their accounts. (This option is not available for traditional IRAs, Roth IRAs, SEPs, or SIMPLE-IRAs.) In the right circumstances, taking out a plan loan can be a smart financial move because a participant gains access (within limits) to his or her retirement account money without having… Read more ›

  There’s a world of tax difference between repairs to real estate property and capital improvements. And it’s not just semantics. The characterization could result in an increase or decrease of thousands of dollars on your tax return. Basic premise: Repairs are currently deductible in full and can be used to offset the tax from rental income. On the other hand, improvements must be written off over a period of years. It takes 27.5 years to write off improvements for… Read more ›

  If you own a small business, you may have set up a defined benefit pension plan for you and your employees that will provide a specific amount of retirement income based on salary history and years of service. For 2022, the maximum annual benefit of a defined pension plan is $245,000 (up from $230,000 in 2021). In future years, it will be subject to cost-of-living adjustments. But retirement tends to be a time when medical expenses grow. Those expenses… Read more ›

  For one reason or another, you may need to take some money out of an IRA before reaching retirement.* You can withdraw money from an IRA at any time and for any reason, but it’s important to keep in mind that most IRA withdrawals are at least partially taxable. In other words, you’ll owe regular income tax on the amount. In addition, the taxable portion of a withdrawal taken before age 59 1/2, which is called an “early withdrawal,”… Read more ›

  If rising health care costs have sent your company searching for ways to reduce expenses, you should know there are alternatives to standard medical insurance plans. Your choices are not limited to either paying the higher costs yourself or transferring the burden to your employees. Tax-advantaged strategies are available which can mitigate the effect of rising costs for you and your staff members. Here are three ideas to consider. 1. Establish a Health Insurance Premium-Only Plan (POP) This super-simple… Read more ›

The federal income tax rules for depreciating vehicles used for business are complicated. And different rules apply to different categories of vehicles. Special limitations apply to vehicles that are classified as passenger autos, including many pickups and SUVs. As a result of these limitations, depreciating an expensive vehicle may take longer than you’d expect. Here’s what you need to know about depreciation write-offs for vehicles used for business purposes. Cents-Per-Mile Method vs. Actual Expense Method Depreciation calculations only come into… Read more ›

Contrary to popular belief, there’s nothing in the U.S. Constitution or federal law that prohibits multiple states from collecting tax on the same income. Although many states provide tax credits to prevent double taxation, those credits are sometimes unavailable. If you maintain residences in more than one state, here are some points to keep in mind. Domicile vs. Residence Generally, if you’re “domiciled” in a state, you’re subject to that state’s income tax on your worldwide income. Your domicile isn’t… Read more ›

If you operate a business that collects payroll taxes from employees, here’s a warning: Regardless of what your corporate financial situation is, don’t borrow from the withholding tax fund. If that money isn’t there when it’s due, Uncle Sam will crack down hard. All businesses face downturns when cash flow dries up. It may be tempting to look at payroll tax money as an easy fix to a cash crunch. “I’ll send it in later,” you may think. But when… Read more ›

  For years, people have questioned the long-term viability of the Social Security system. While you can’t do much about that, you can start planning how to maximize your Social Security benefits when you’re eligible to claim them. People approaching retirement age often have questions about benefits they may be eligible to receive from the Social Security Administration (SSA). Here are eight of the most commonly asked queries: 1. How Soon Can I Start Collecting Retirement Benefits? If you want… Read more ›

  The individual alternative minimum tax (AMT) rules were made more taxpayer-friendly for 2018 through 2025 by the Tax Cuts and Jobs Act (TCJA). The odds that you’ll owe the AMT for those years have been significantly reduced — and, if you still owe the AMT, you’ll probably owe less than under prior law. Are you at risk for this dreaded tax? Various factors make it difficult to pinpoint exactly who will be hit by the AMT. Here’s a summary… Read more ›