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a Coverdell ESA), you should receive a federal form 1099-Q, Payments from Qualified Education Programs, when funds are withdrawn in order to pay qualified education expenses of the beneficiary.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…
O Is For Ordering Rules. Roth individual retirement accounts (Roth IRAs) have been around for a relatively short period of time. Specifically, Roth IRAs were part of the Taxpayer Relief Act of 1997, signed into law under President Clinton. They’re still fairly new, so the rules aren’t all that familiar to many taxpayers. Unlike traditional…
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…
M is for Miscellaneous Income. Wages and income, check. Interest and dividends, check. Net business income, check. Income from sale or disposition of property, check. But what happens to that income that doesn’t seem to fit nicely on your tax return? When you’re not sure where to report income, chances are it goes on good…
K is for Kidnapped Children. When an Alabama boy was taken from his school bus last month and held hostage, it made national news. It was horrifying and nearly impossible to think that such a thing could have happened, that a child could be taken from his parents. But it happens more often than you…
J is for Junk Fees. If you’ve ever bought or sold a home, you’ve probably seen a laundry list of fees on your sale or mortgage papers. These fees, usually found at the bottom, are in addition to notary fees and appraisal fees, and are sometimes called “junk fees.” While a specific fee may be…
I is for IRA Rollover. An individual retirement account (IRA) is type of retirement plan that allows you to set aside money for later use. Depending on the kind of IRA you establish (traditional versus Roth), you can rely on tax-free withdrawals or tax-deferred growth in the future. (Quick caveat: since this topic can be…