MAKING YOUR HOBBY A BUSINESS Taxpayers often enjoy their hobby activity more than they do their job. In many cases, they invest a great deal of time and money, and some eventually make their hobby a full or part-time business activity. Unfortunately, the IRS has a lot to say when it comes to the business [...]
RETIREMENT PLAN REVIEW Your retirement plan savings (e.g., qualified plans and IRAs) are important to your financial wellbeing for many reasons. You can accumulate income without currently paying tax, and the power of compounding pretax dollars makes a retirement plan one of the most powerful investment vehicles available. When you reach retirement age, your retirement [...]
CONVERTING A RESIDENCE TO RENTAL PROPERTY Recovering real estate values may cause some homeowners to consider converting their personal residence to rental property for investment purposes. The process for making this decision should include an analysis of economic factors, such as the homeowners’ marginal tax rate and the potential loss of the ability to exclude [...]
STRUCTURING A TAX-FREE INCORPORATION When forming a corporate entity, one method of capitalization is through a tax-free (actually, tax deferred) exchange. Properly transferring property to a corporation delays the recognition of any gain on that property until a taxable event occurs (e.g., sale of property or stock of the corporation, or liquidation of the corporation). [...]
ADDITIONAL 0.9% MEDICARE TAX Individuals must pay an additional 0.9% Medicare tax on earned income above certain thresholds. The employee portion of the Medicare tax is increased from 1.45% to 2.35% on wages received in a calendar year in excess of $200,000 ($250,000 for married couples filing jointly; $125,000 for married filing separately). Employers must [...]
Before this year, you could claim itemized deductions for medical expenses paid for you, your spouse and your dependents to the extent those expenses exceed 7.5% of your adjusted gross income (AGI). But the rules have changed for the worse in 2013 and beyond. Due to the 2010 Affordable Care Act, the old 7.5%-of-AGI [...]