Identifying Charities Eligible to Receive Tax Deductible Contributions If you’re counting on a federal income tax deduction for donating to a charity, you should confirm that the charity has been approved by the IRS as a tax-exempt organization eligible to receive deductible contributions. For some charities, this is easy-everybody knows the American Red Cross, the [...]
DEDUCTING MEDICALLY NECESSARY HOME IMPROVEMENTS Individuals can claim medical tax deductions for the cost of special equipment installed in a home, or for home improvements, if the main purpose is to accommodate the individual’s, spouse’s, or dependents’ medical needs. Medically required home improvements that would not ordinarily be for medical care are deductible only to [...]
EXPENSES QUALIFYING FOR THE CHILD CARE CREDIT Working parents can find summer child care solutions challenging. However, a nonrefundable credit is available if the qualifying child care expense is incurred so that you (and your spouse, if married) can work. The maximum credit is 20%-35% (depending on your adjusted gross income) of the lesser of [...]
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). [...]
IRS MODIFIES FSA USE-IT-OR-LOSE-IT RULE Health Flexible Spending Account (FSA) contributions left over at the end of the plan year are forfeited to the employer under the “use-it-or-lose-it rule,” although a plan can provide a grace period extending the period of incurring expenses for qualified benefits to the 15th day of the third month after [...]