By topic: Relatives

Handling Key Non-Tax Financial Issues When a Loved One Passes Away, Part 3

In this part 3 of this three-part series, learn how to handle key non-tax issues when a loved one passes away. There is much to know and to consider, from a simple matter such as how many “original” death certificates you should obtain to how you deal with the revocable trust that’s now irrevocable because of the death.

Refresher on Tax-Smart College Savings Strategies for Parents

College is expensive. Data for the 2019-2020 academic year indicates that the average cost of tuition, fees, room, and board was $30,500. Tax law has provisions to help you cover the costs, including Coverdell, Section 529 savings, and Section 529 tuition plans. There’s more, of course, as you will learn in this article.

2020 Last-Minute Year-End Tax Strategies for Marriage, Kids, and Family

If you are thinking of getting married or divorced, you need to consider December 31, 2020, in your tax planning. Here’s another planning question: Do you give money to family or friends (other than your children who are subject to the kiddie tax)? If so, you need to consider the zero-taxes planning strategy. And now, consider your children who are under age 18. Have you paid them for work they’ve done for your business? Have you paid them the right way? You’ll find the answers here.

2020 Last-Minute Year-End Tax Deductions for Existing Vehicles

Yes, December 31 is just around the corner. That’s your last day to find tax deductions available from your existing business and personal (yes, personal) vehicles that you can use to cut your 2020 taxes. In this article, you will learn how to find and release tax deductions that the tax code trapped inside your existing business cars, SUVs, trucks, and vans. And you will learn how the Tax Cuts and Jobs Act makes it possible for you to find a big deduction from your existing personal vehicle.

2020 Last-Minute Year-End Medical Plan Strategies

Are you eligible for COVID-19 tax credits for yourself and/or your employees? Have you reimbursed your employees (including your employee spouse) as stipulated in your health reimbursement arrangements? And if you operate as an S corporation, do you have your health insurance set up correctly for your best tax deduction? In this article, we help with these matters and more.

New Law Kneecaps Stretch IRA—Here’s What You Can Do About It

The Setting Every Community Up for Retirement Enhancement Act (SECURE Act) passed last December makes a big change in the stretch IRA—an estate planning device favored by well-off IRA holders. To cope with the downside of this new law, you need to do some planning, as we explain.

COVID-19 Strategy: Hire Family Members to Create Tax Benefits

The COVID-19 pandemic may create tax benefit opportunities for you and your family members. For example, you could hire your under-age-18 children, pay them, say, $10,000 each, and they could pay zero federal income taxes. And you or your corporation, the employer, would deduct the $10,000 you paid to each of the children. The child wins. You win. There’s more, as you will see in this article.

Potential Estate and Gift Tax Threat: Should You Worry?

COVID-19 has changed our nation’s economics. One big hit has been to the federal deficit. What does this mean to the future of taxes? Will the estate and gift taxes increase? If so, what can you do today? You will find a strong idea in this article.

Avoid the Gift Tax—Use the Tuition and Medical Strategy

Lawmakers have given you an easy strategy to avoid paying gift and estate taxes. The strategy involves tuition and medical expenses that, likely, are common issues for your loved ones. Sadly, this tax avoidance technique is often unknown or overlooked—but not for those who have this article.

Top Eight Changes in the SECURE Act You Need to Know

Our lawmakers did it again. They made more last-minute tax law changes, which the president signed into law on December 20, 2019. One such new law is called the SECURE Act. This new law made a lot of changes to how you save for retirement and spend money in retirement. Don’t worry, though. We’ll give you the most important provisions you need to know, and how they impact you regardless of age.

Self-Employed Senior? Collect Your Rightful Tax Breaks

If you are self-employed, you have much to think about as you enter your senior years, and that includes retirement savings, Medicare, and grandchildren, as explained in this article.

2019 Last-Minute Vehicle Purchases to Save on Taxes

Here’s an easy question: Do you need more 2019 tax deductions? If yes, continue on. Next easy question: Do you need a replacement business vehicle? If yes, you can simultaneously solve or mitigate both the first problem (needing more deductions) and the second problem (needing a replacement vehicle), but you need to get your vehicle in service on or before December 31, 2019. This article helps you find the right vehicle for the deduction you desire.

2019 Last-Minute Year-End Tax Strategies for Marriage, Kids, and Family

If you are thinking of getting married or divorced, you need to consider December 31, 2019, in your tax planning. Here’s another planning question: Do you give money to family or friends (other than your children who are subject to the kiddie tax)? If so, you need to consider the zero-taxes planning strategy. And now, consider your children who are under age 18. Have you paid them for work they’ve done for your business? Have you paid them the right way? You’ll find the answers here.

Federal Tax Deductions for Section 127 Education of Grandchild

You can use a Section 127 education plan to obtain tax benefits for yourself (or your corporation) while you help your employee-grandchild through college or other training.

Personal Use of Your Rental Triggers Ugly Vacation Home Rules

When you have both personal and rental use of a dwelling, you trigger some tricky tax code rules you need to know. With both personal and rental use, you create the possibility of tax-free rent, rental property deductions, and additional personal residence deductions.

Check Your Beneficiary Designations Now, Before Disaster Strikes

Surprise! You have an agreement in place that says your retirement account goes to person 1. But you have a beneficiary designation that says the account goes to person 2. Read this article to see which wins and why the winner is likely a big surprise.

Avoid This S Corporation Health Insurance Deduction Mistake

If you own more than 2 percent of an S corporation, you have to follow special rules to deduct your health insurance premiums. The health insurance rules can also apply to family members who work in the business and don’t own a single share of stock. Don’t let the zero stock be a surprise and cost your family money.

Defeating the Kiddie Tax after the TCJA Tax Reform

If your family has trouble with the kiddie tax, you face some new wrinkles for tax years 2018 through 2025 thanks to the Tax Cuts and Jobs Act tax reform. This is one of the many areas where tax planning can pay off, as you will see in this article.

2018 Last-Minute Year-End Tax Strategies for Your Stock Portfolio

Your stock market portfolio can represent a little gold mine of opportunities to reduce your 2018 income taxes when you take advantage of the tax code’s offset game. The tax code contains the basic rules for this game, and once you know the rules, you can apply the correct strategies. In addition to saving taxes with the game of offset, you can also avoid paying taxes on stock appreciation by gifting stock to charity, your parents, and your children who are not subject to the kiddie tax.

2018 Last-Minute Year-End Tax Strategies for Marriage, Kids, and Family

If you are thinking of getting married or divorced, you need to consider December 31, 2018, in your tax planning. Here’s a planning question: Do you give money to family or friends (other than your children who are subject to the kiddie tax)? If so, you need to consider the zero-tax-bracket planning strategy. And now, consider your children who are under age 18. Have you paid them for work they’ve done for your business? Have you paid them the right way? You’ll find the answers here.

Claiming the New Employer Tax Credit for Family and Medical Leave

In many business environments, you compete for employee talent in a variety of ways, including perhaps by implementing a medical and family leave policy. The good news on this front is that your federal government may have given you a tax credit (yes, that lovely dollar-for-dollar offset to your taxes) for what you wanted to do anyway.

Reduce Self-Employment Taxes by Renting from Your Spouse

If you operate your business as a sole proprietorship, the government takes a big chunk of your profits in the form of self-employment taxes. But there’s good news. With the help of your spouse, you can reduce your self-employment tax bill by using a simple rental strategy.

Hiring Your Children to Work on Your Rental Properties

If you own rental property in your name or in the name of a single-member LLC, you report your rental property income and expenses on Schedule E of your IRS Form 1040. But what happens when you have an expense for which the IRS has not created a line item on the form? No problem—simply insert it as we explain in this article.

S Corporation Fringe Benefits after the Recent Tax Reform

More than 2 percent shareholder-employees of S corporations don’t catch a lot of breaks when it comes to the taxation of fringe benefits. But arming yourself with the correct information will help you maximize your deductions and avoid costly penalties.

Don’t Get Surprised by the Related-Party Matching Rule

The related-party matching rule places your business on the cash method for deducting payments to related cash-method payees. You need to know this rule to avoid unexpected tax results. Also, you need to know how the different ownership thresholds apply because one share of stock could make you a related party. Indirect relationships expand the reach of the rule and can create additional surprises.

Beware: Selling to a Related Party Can Kill Your Tax Losses

You need to know how the related-party rules work if you don’t want to destroy your tax-loss deductions. You are reading this right: you can lose your tax losses when you sell to a related party.

How to Help Your Adult Child Buy a Home—the Tax-Friendly Way

Your adult child asks a big favor—help in buying his or her first home. If you are lucky enough to be able to help, you want to understand and avoid the tax pitfalls. In this article, you find five possible solutions to help your child while avoiding the tax pitfalls.

2016 Last-Minute Year-End Tax Strategies for Marriage, Kids, and Family

If you are thinking of getting married or divorced, you need to consider December 31, 2016, in your tax planning. Here’s another planning question: Do you give money to family or friends (other than your children who are under age 24)? If so, you need to consider the zero-tax-bracket planning strategy. And now let’s consider your children who are under age 18. Have you paid them for work they’ve done for your business? Have you paid them the right way? You’ll find the answers here.

Business Tax Deductions with Section 127 Plan for Child’s College

Establish a Section 127 educational assistance plan in your business to help pay your age-21-or-older child’s college or other education costs. If you are in business and you have a child who is age 21 or older in financial need of educational assistance, this is a plan to consider.

Sample Educational Assistance Plan

As a member, you may download this sample Section 127 educational assistance plan in Microsoft Word format. Then, simply modify the document for your business or tax practice use.

Q&A: Hiring Your Dependent Children

 

Beware When Gifting Business Property

You need to know, and avoid, tax-problem surprises when you gift business property to your parents, children, or others. With the wrong method, you can toss tax-deduction benefits into the trash. You can easily suffer recapture. Don’t let your gift of business property surprise you and take money out of your bank account.

Q&A: Hiring Grandchildren; Exemption from Payroll Taxes

 

Avoid the Big Triple-Tax Whammy When Renting to Relatives

Tax savings when renting to relatives depend on your compliance with the tax law’s fair-rent standards and your relatives’ use of the property. Violate these rules and you face the triple whammy of additional taxation. And it’s easy to violate the rules, especially if you don’t know what they are.

Tax Tips for Avoiding Section 179 Recapture

Your claim to Section 179 expensing comes with strings. You make a deal with the government to keep your business use above 50 percent during the depreciation periods for the assets that you expensed. Should you violate your agreement, and depending on when you did that, the government can show up and recapture a big chunk of your Section 179 expensing.

Beyond the FBAR: Discover Little-Known Traps in Foreign Reporting

The IRS is pursuing taxpayers with foreign accounts and activities. You are likely aware of the FBAR and Form 8939 filing requirements, but the tax code has many other lesser-known required filings that carry large penalties for non-filing. Get onboard now. Learn the tax code’s requirements and how you might fix noncompliance and avoid huge penalties.

2015 Last-Minute Year-End Tax Strategies for Marriage, Kids, and Family

If you are thinking of getting married or divorced, you need to consider December 31, 2015, in your tax planning. Here’s another planning question: Do you give money to family or friends (other than your children who are under age 24)? If so, you need to consider the zero-bracket planning strategy. And now let’s consider your children who are under age 18. Have you paid them for work they’ve done for your business? Have you paid them the right way? You’ll find the answers here.

2015 Last-Minute Year-End Tax Strategies for Your Stock Portfolio

Your stock market portfolio can represent a little gold mine of opportunities to reduce your 2015 income taxes when you take advantage of the Tax Code’s offset game. The Tax Code contains basic rules for this game, and once you know the rules, you can apply the correct strategies. In addition to saving taxes with the game of offset, you can also avoid paying taxes on stock appreciation by gifting stock to charity, your parents, and your children who are not subject to the kiddie tax.

Don’t Make These Mistakes When You Convert Business Property to Personal Use

You need to know the tax rules before you convert business property to personal use. You don’t want the recapture surprise. You don’t want the tear-jerking missed tax deduction. With a little tax knowledge, you can avoid both the surprise and the tears.

Cut the Cost of College with Tax Credits

The paradox of choice applies when you consider the multitude of tax benefits available when paying educational expenses. In this article, we help you put money in your pocket by taking both the paradox of choice and the complexity out of two education tax credits with our step-by-step guide.

Hire Your Kids to Work in Your LLC or Sole Proprietorship and Put a Huge Chunk of Their Pay Back in Your Pocket

If you put your kids to work in your business, you can use their compensation to create nice tax savings for yourself. This strategy lets you spend time with your children during the workday and teach them valuable lessons about working life—as well as valuable lessons about money and tax planning.

Make Your Company Party More Fun: Find Thousands More in Legal Tax Deductions!

Lawmakers may not always make your life easy, but at least you know they want you to have fun every now and then. The tax code gives you a 100 percent deduction for the parties that you throw for your employees—as long as you invite the right kind of employees.

4 Ways to Turn Your Cars, SUVs, Trucks, and Vans into More Profitable Tax Deductions

December 31 is just around the corner. That’s likely your cutoff date for finding tax deductions that will cut your 2014 taxes. And remember, your 2014 taxes are the highest they’ve been in 28 years. This article helps you identify tax deductions embedded in your existing business and personal cars, SUVs, trucks, and vans.

Reduce Self-Employment Taxes by Renting from Your Spouse

If you operate your business as a sole proprietorship, the government takes a big chunk of your profits in the form of self-employment taxes. But there’s good news. With the help of your spouse, you can reduce your self-employment tax bill by using a simple rental strategy.

 

Secrets to Beating the Kiddie Tax

Good tax planning these days includes planning for your children as old as age 24. They may be subject to the kiddie tax, which can skyrocket their tax rates, even on investments they received from grandma and the ones they created themselves from their own income. If you have children under the age of 24, read this article to learn when the kiddie tax applies and to see what strategies you can use to reduce or completely eliminate the kiddie tax.

Helping Daughter Creates Hobby That Kills Tax Deductions

Don’t be a victim of your own success. When you operate two businesses, one that is profitable and one that is not, the IRS likes to attack the deductions of the losing business. When the IRS attacks, you are in for a fight. But it’s a fight that you can win with knowledge and planning.

Obamacare Revives S Corporation Income-Shifting Strategy

Find out how giving stock in your S corporation rather than the same dollar amount in cash can save you over $6,000. Until recently, this income-splitting strategy worked only when giving to adults, but because of the recent Obamacare tax, you now get a benefit when you shift money to your children.

Tax Deductions for Entertainment Facility (Part 3), Employee Use

Learn how employee use of your ski cabin or beach home produces a 100 percent business asset with deductions for depreciation, operating expenses, and mortgage interest. This can make for a great fringe benefit for both the employees and you. It also can make for a profitable investment.

10 Last-Minute Tax Deductions for Business Vehicles

Your tax-benefit time for your business and personal vehicles is running out on December 31. If you are going to do something, do it now. This article gives you 10 year-end tax-benefit strategies for replacing or adding a business vehicle.

Year-End Tax Deduction Tips for Kids and Marriage

You have some last-minute tax deduction opportunities with your family. Do you have children under the age of 18? If so, you should consider having them on the payroll. In this article, we explain how you benefit. Also, your marital status gives tax-planning opportunities. Have you been giving cash to relatives, other than your under-age-24 children? If so, you need to consider the 0 tax-bracket strategy in this article.

Test Your Tax IQ: Realizing Tax Benefits of a Loss Deduction

Let’s say that you calculate a tax loss on the sale of your business vehicle. Tax law gives you tax benefits from a valid tax-loss deduction. But you need to make the right move to realize those tax benefits. And when it’s time to dispose of your old business vehicle, you have a number of choices, only one of which will produce immediate tax benefits for you.

Rats! Related Parties Destroy Qualified Leasehold Improvements

As the landlord or the lessee, you get big tax breaks when you can take advantage of a qualified leasehold improvement. We gave you those details last month. But if the landlord and the lessee are tax law-defined related parties, you can kiss those tax-favored benefits good-bye. In this article, you learn who those related parties are so you can avoid the kiss good-bye.

Tax Deduction for Disneyland Tickets

When you attend a convention or similar meeting, your attendance automatically qualifies as you having a substantial and bona fide business discussion. When you precede or follow a substantial and bona fide business discussion with entertainment that takes place in a non-business setting such as going to Disneyland, you qualify to deduct the cost of the Disneyland tickets.

1031 Exchange Survives Rental to Son

If you own rental properties, enjoy being in that business, and want to grow that rental property business, you need to know the ins and outs of the Section 1031 exchange. The word “exchange” is misleading; what you really do in a 1031 is sell an existing property and then buy a new property, but you do this using an exchange intermediary. It’s easy and the intermediary is not expensive. In this article you will learn how to avoid Mr. Adams’s fate as we follow him to court with an exchange that involved a rental to his son that raised issues with the IRS.

How to Deduct Travel by Car, Train, Plane, or Boat

You have a wide variety of choices on how to travel for business. You can use a car, train, plane, or boat. You can fly economy, business, or first class. Should you own a plane, you can use it for business travel. Special rules apply to the plane, boat, and car; accordingly, if you travel for your business, you should know the rules in this article.

Learn What Happens When You Convert an Asset from Business to Personal Use

Although you might have thought you converted an asset from business to personal use, you did not. You now simply use the asset for personal use and that changes your business/personal mix. The business asset retains its business attributes and that means gain, loss, and recapture at the time of ultimate disposal.

Tax Breaks on Shift of Corporate Ownership to Kids (and Others)

When it comes time to remove yourself from your business, what’s your plan? This article gives you one maneuver to consider if you operate your business as a corporation. It’s called the stock redemption, and this article shows how a father used the redemption to transfer ownership to his children in a tax-friendly manner. The principles in this article can also be used to transfer ownership to business associates, employees, and other shareholders

Best Tax Deduction for Employee Party

Does your chart of accounts contain two categories for your business entertainment tax deductions? It should. Your tax deduction for an employee party goes into a different deduction category from your regular business entertainment. Learn about the two accounts and how to get more tax deductions when you party with your employees.

Create Both Tax-Free Income for Mom and Dad and Business Travel Deductions for You

Stay with your mom and dad on a business trip, and create tax deductions by paying them for business lodging. You have a choice: deduct the cost of staying at the big hotel downtown or deduct the cost of staying with your parents. Either way, the choice of location does not change the fact that you are on a tax-deductible business trip.

Mom Avoids Self-Employment Tax When She Gets Paid for Painting CPA’s Office

Are you subject to the self-employment tax if your activity does not rise to the level of a trade or business? Answer: no. When not subject, you report the non-business income on page 1 of your Form 1040 where the self-employment tax does not apply. That’s good for the income. The deductions for this non-business activity have to take another route, and the deductions don’t fare very well.

Tax Tips for the New Estate and Gift Tax Rules

The newly enacted tax cut creates a new 2011 and 2012 estate tax. The new rules are taxpayer friendly in two respects. First, they are easy to understand. Second, they contain a $5 million exclusion (portable, if properly elected, for husband and wife, giving a married couple an exclusion of $10 million).

Tax Choices for Estates of Those Who Died in 2010

Tax law gives choices to the executors who are handling the estates of those who died in 2010. Choice one is to apply the 2010 rules. Choice two is to apply the newly enacted 2011 and 2012 estate tax rules.

Tax Tips for Rental of Ski Cabin

The cabin at the ski hill could be a hotel, a residential rental property, or a personal residence. It depends on your personal use of the property; the length of rental periods; and documentation of your time, others’ time, expenses, and activities.

Tax Audit Tips on Hiring Your Child

When the IRS invites you for a tax audit, the examiner does not know that you hired your children. This fact surfaces during the initial interview or survey process, and the IRS instructs its examiners to examine this hire closely. You avoid all the problems when you have the right records.

Tax Tips for S Corporation Employing Owner’s Mom

When your S corporation employs a relative, you need to be aware of the stock attribution rules that can wreak havoc on the health insurance fringe benefit.

Tax Savings Tips When Renting to Relatives

Tax savings when renting to relatives depend on your compliance with the tax law’s fair-rent standards and your relatives’ use of the property. Violate these rules and you face the triple whammy of additional taxation.

Cashing Out Real Estate Profits without Section 1031

Section 1031 exchanges are perfect when you are going to stay in the real estate rental or investment business. When it’s time to cash out, you need to look at different strategies that help you avoid taxes and give you cash to spend (liquidy).

Federal Tax Deductions for Section 127 Education of Grandchild

You can use a Section 127 education plan to obtain tax benefits for yourself (or your corporation) while you help your grandchild through college or other learning.

About Time! A True Tax Credit for First-Time Home Buyers

Higher inflation could be good for that home you buy today—and if you buy today, you will have today’s low interest rate. That’s a pretty good combination. Then add the 2009 tax credit and get the government to pay you $8,000 for taking the chance. Sounds like you hit the trifecta doesn’t it?

Section 179: Avoid These Three Things

When you claim a Section 179 expensing deduction, you make a deal with the government. You agree to give back your early tax benefits if, during the recapture period, your business use drops to 50 percent or less.

Do You Have What It Takes to Deduct Your Holiday Parties

Holiday parties trigger a variety of tax rules. Some parties, or parts of parties, are 100 percent deductible. Make sure that your chart of accounts has a place for 100 percent entertainment and a place for 50 percent entertainment deductions.

Son Pays the Mortgage Interest

Your son may not deduct the interest on the mortgage payments he makes on your behalf. You need to reconsider and restructure this arrangement.

 

15 Last-Minute Tax Planning Tips for 2007

You have very little time left to impact your 2007 taxes. Here is a meat-and-potatoes list of last-minute opportunities.

Deduction for Family Wedding

Trying to deduct the expenses for a wedding? Good luck. We don’t think it’ll work. You’ll have a much better shot at deducting it if you can make it a business trip, and still attend the wedding,

New Law Changes Kiddie Tax to Destroy College Funding Strategies

Lawmakers wiped out tried-and-true tactics for getting the government to help with the cost of your child’s college with the new tax law in 2007. You can do a lot to mitigate the damage if you get after this problem right now.

Renting Property to Your Corporation Problem

Section 280A(c)(6) forbids the home-office deduction when you rent home-office space to your corporation. Whenever you have transactions with or your owned corporations, partnerships, and other entities, you face rules in the tax . As Gary and Delores Beecher recently , of the related-party rules produce harsh results.

Tax Quiz—Sell Stock at a Loss to Your Daughter

If you sell stock to your relatives at a loss, don’t lose possible deductions – know the related party rules!

S Corporation Loses Child Care Deductions

Tax court and the IRS establish that child care is not an ordinary and necessary expense and, thus, is not deductible. This ruling, though sloppy (we show you why), establishes a precedent. However, under section 129 in the tax law, the employer may provide child care benefits.

Gift of Home

The $250,000 exclusion on the sale of this home is complicated by the mother and daughter owning this home together.

How the Business Condo Escapes the Tough Tax Rules

The properly used business condo does not run up against the vacation-home, passive-loss, or entertainment-facility rules.

Bed and Breakfast Joke

Personal use of your bed and breakfast includes use by your tax-law defined relatives, including those relatives who pay fair rent.

Death Taxes the IRA

At death, IRAs are not treated like homes, which pass to the heirs at fair market value with no income tax issues. Instead, the IRA faces both the estate tax and the income tax. In this court case, the combined estate and income taxes devoured $1.6 million and the heirs had $1.1 million left to spend.

Problem with In-law Suite

To deduct mortgage interest, (1) you must have title, (2) the mortgage must be in your name, (3) the home must secure the mortgage, and (4) you must make the mortgage payments from your money.

Who Owns This Property?

When you receive property in which you had an interest as a result of a family member’s death, make sure you clarify your income-tax basis in this property right away.