IRS TOUGHENS THE ONE -YEAR WAIT BETWEEN IRA ROLLOVERS IRA rollovers are a popular way of obtaining a short-term tax-free loan from an IRA. To receive tax-free treatment, the amount withdrawn from the IRA must be deposited into the same or another IRA no later than 60 days after the taxpayer received the distribution (the [...]
TAXING SOCIAL SECURITY BENEFITS Some taxpayers must include up to 85% of their social security benefits in taxable income, while others find that their benefits are not taxable at all. If social security is your only source of income, your benefits probably won’t be taxable. In fact, you may not even need to file a [...]
AVOIDING PENALTIES ON IRA WITHDRAWALS BEFORE AGE 59 ½ IRA owners can withdraw money from their account at any time and for any reason because the owner is in total control of this account. Most withdrawals from traditional IRAs will be at least partially taxable. To add insult to injury the taxable portion of a [...]
TAXING A CHILD’S INVESTMENT INCOME Some children who receive investment income are required to file a tax return and pay tax on at least a portion of that income (and possibly at the parents’ marginal tax rate). This is often referred to as the kiddie tax. The kiddie tax cannot be computed accurately until the [...]
LEASING PROPERTY TO A CLOSELY-HELD CORPORATION Shareholders of closely-held C corporations routinely lease real estate, equipment, and other property to their corporate entity. These leases can be held directly by the shareholder or through a separate entity, such as a partnership, LLC, or S corporation. Of course, the corporation could directly purchase the item or [...]
DOUBLE BENEFIT FROM A TAX DEDUCTION For most taxpayers, the amount of federal income tax they pay depends on where they fall in the federal income tax brackets and the breakdown of their taxable income between ordinary (e.g. wages) and capital gains from the sale of assets (e.g., common stock). Taxpayers eligible for the lower [...]