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). [...]
INDIVIDUAL IS RESPONSIBLE FOR PAYING THE ADDITIONAL 0.9% MEDICARE TAX. Josh and Anna are married. Josh’s salary is $180,000, and Anna’s wages are $150,000. Assume they have no other wage or investment income. Their total combined wage income is $330,000 ($180,000 + $150,000). Since this amount is over the $250,000 threshold, they owe the additional [...]
2014 SOCIAL SECURITY WAGE BASE The Social Security Administration announced the wage base for computing social security tax for 2014 will increase to $117,000 from the 2013 wage base of $113,700. This means that for 2014, the maximum OASDI portion of the FICA tax an employee will pay is $7,254 ($117,000 x 6.2%), and employers [...]
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 [...]
IRA owners and beneficiaries who have reached age 70 ½ are permitted to make donations to IRS-approved public charities directly out of their IRAs. These so-called qualified charitable distributions, or QCD‘s are federal-income-tax-free to you, but you get no charitable deduction on your tax return. But,that is fine because the tax-free treatment of QCDs [...]