Tax news and guidance for individual taxpayers — filing tips, deductions, refunds, and everything else that hits your personal return.
We all make mistakes. It’s especially easy to make mistakes at tax time because you’re feeling rushed and sometimes, a bit overwhelmed. It happens. The Internal Revenue Service has identified eight of the most common mistakes taxpayers make when filing returns. Here’s the rundown: Wrong or missing Social Security numbers. Transposing numbers can be as…
V is for Voluntary Disclosure. I know what you’re thinking: this doesn’t apply to me because I don’t have offshore accounts. But don’t leave just yet. It’s not only taxpayers with offshore accounts that might qualify for voluntary disclosure programs. While most taxpayers are familiar with the 2012 Offshore Voluntary Program (and its predecessors, the…
Taxpayer asks: I’m confused. Both my wife and I have home offices, each using about 5% of the total home square footage. Last year, we replaced the both the hot water heater and the washer/drier. For the hot water heater, I think it’s very clear, that improvement directly impacts our home office use, so I…
T is for Tenancy. If you ask taxpayers how their assets are titled, many will simply say “joint ownership.” Under the law, however, there is no such thing as simple “joint ownership” – assets may be held jointly in one of a few different ways. For federal income tax purposes, it’s important to realize that…
As Tax Day creeps closer, I’ve been getting a slew of messages – on Twitter, email, and Facebook – hopeful that the big day will be pushed off a little bit more this year. Nope, not a chance. It’s true that tax season feels as though it’s rushing by faster than ever this year. That’s…
S is for Statute of Limitations. All good things must come to an end… And even the Internal Revenue Service has a limit on how much time can pass before they may no longer assess and collect on federal income taxes. In the legal world, these time limits are called the statute of limitations (SOL)….
R is for Recapture Rule (Alimony). The rules for regular alimony payments are pretty simple. If you receive alimony payments, you report those payments as income at line 11. If you make court-ordered alimony payments, you can deduct those on your federal income tax return. The deduction is an “above-the-line” deduction, meaning that you don’t…
Q is for 1099-Q. If you are the owner of a qualified tuition program (QTP) (like a section 529 plan or a Coverdell ESA), you should receive a federal form 1099-Q, Payments from Qualified Education Programs, when funds are withdrawn in order to pay qualified education expenses of the beneficiary. The form 1099-Q will include…
P is for Passive Activity Rules. The Internal Revenue Service likes to match up income with deductions. And in most cases, when it comes to individuals, if deductions (or losses) exceed income, those deductions are either lost or limited. That’s the general idea behind the passive activity rules. When losses from passive activities exceed the…
N is for Notice of Deficiency. Few things can be scarier for taxpayers than receiving mail from the Internal Revenue Service. No matter how intimidating it might be, always open the mail. Always. Sometimes, those letters can be good news. More often than not, however, the IRS is sending you a notice because they want…