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QUALIFIED EDUCATION EXPENSES AND 529 PLANS Think all distributions from earnings from 529 plans are tax free because you used them all for educational expenses? — Think Again! There are certain instances where that is not true. Are you utilizing the American Opportunity or Lifetime Learning Credit? Did you take a tuition deduction? Are you relying on the…
Now that “Tax Season” is substantially over perhaps it is appropriate to offer some ideas on what he can do to improve the nation’s tax system and the Internal Revenue Service. As a CPA for over 40 years I believe I am qualified to say unequivocally that our tax system is a convoluted set of…
I made this item of taxation #1 because it is the most egregious. Monies that have been previously taxed during the lifetime of the decedent are taxed yet again. There is some history behind this tax that has to do with the attempt to break up the huge family empires of the early 20th century.…
Almost 30 years ago the passive activity rules were created. It includes things like rental income and losses, income and losses from businesses in which you do not materially participate and income and losses from ventures in which you are not at risk. There are exceptions to the rules such as for real estate professionals…
The mileage deductions set forth by the Internal Revenue Service are published each year. The 2014 rates are shown below. There is a rate for: Business 56 cents per mile Medical Trips 23.5 cents per mile Charity 14 cents per mile In 2015 the rates are: Business 57.5 cents per mile Medical Trips 23 cents per mile…
There are three kinds of entertainment deductions, those that are not deductible, those that are 50% deductible and those that are 100%. Navigating the rules surrounding these different types of deductions can be mind numbing and requires the assistance of your CPA. Generally speaking 50% meals and drinks are deductible. This rule was enacted in…
Most people do not argue that some portion of social security should be taxed. After all employers got a tax deduction for the FICA tax they paid in on behalf of the employer. That is the usual logic in any event. It is only used as a method to hurt the taxpayer. It rarely is…
Beware the 10% Premature Withdrawal Penalty from IRA’s and Qualified Plans. Also check your annuity polices you purchased some time back. Some have the same type of penalty. During tough economic times it is tempting to withdraw funds from your retirement account. If you are younger than 59 1/2 years of age this can cost…
You can rally get shafted despite all your tax planning by the infamous ALTERNATIVE MINIMUM TAX or AMT. Individuals with a higher income may be subject to the Alternative Minimum Tax. Under the tax law, certain tax benefits can significantly reduce a taxpayer’s regular tax amount. The AMT sets a limit on those benefits. If…
In December 2010 The Sarasota Herald Tribune published my version of the top 10 Screwiest Tax Provisions. We have been updating that list here: Screwy income tax provision – #8 Tax Planning: Deducting Capital Losses The annual capital-loss limitation is $3,000. This one has been around for a long time and never made any sense. You…
In December 2010 The Sarasota Herald Tribune published my version of the top 10 Screwiest Tax Provisions. Over the next ten weeks I am going to update that list here: Screwy income tax provision – #9 Tax Planning: Medical Deductions: The 7.5 percent medical deduction limit: The medical deduction has been limited to the excess…
List of screwy income tax provisions – #10 IRA Distribution Alert! Required Minimum Distribution or “RMD rules” If you turned 70 1/2 this year and have funds in either one IRA or several IRA accounts you need to spend some time studying this really screwy but deadly tax provision. Required Minimum Distributions (RMDs) generally are…
Ever since the Hudson Bay companies, corporations have been in our life. They began and continue to be a method for accumulation of capital by investors who wish to create a new company, finance a venture and launch new ideas. They never were intended to be taxable entities. Unfortunately our government insatiable appetite for money…
You can hardly pick up a paper without seeing articles about whether corporations are paying their fair share of taxes or are they avoiding taxation with offshore locations and companies. Look at the recent brouhaha about Burger King. Also, you can argue endlessly about what is the effective percentage of tax really paid by corporations,…