Tag Archive for Form 1040

5 Biggest, Best Homeowner Tax Breaks – Get Them While They Are Still Here!

Leaving off deductions you’re eligible for, such as mortgage interest and property taxes, is leaving money on the table and with tax reform revving up again on Capitol Hill, with the heads of key committees pledging to work toward a simpler and fairer tax code, Congress may be looking to tradeoff these tax breaks with lower tax rates. Sounds intriguing?

Homeownership can pay off big time if you itemize your deductions. Use these five tax breaks to cut what you owe Uncle Sam:

1. Home Office

Do you work at home? Collect a tax break either by using the simplified method explained below or doing some complicated calculations to claim your exact home office expenses. Read More

Written by | Posted in Tax Deductions

Business Expenses For A Minister

In the course carrying out ministerial duties, a minister will incur various expenses that are related to his or her occupation. Some of these may be reimbursed by the employer, while others may be the expense of the minister. What is the criteria for reimbursing or deducting legitimate business-related expenses?

Whether an expense is reimbursed by the employer or if it falls on the minister to pay, the same IRS guidelines apply. An expense must be “ordinary” and “necessary under IRS rules. Business expenses do not include capital expenses such as a computer or other equipment. However, these may be depreciated in most cases. Personal expenses are not deductible business expenses. Read More

Written by | Posted in Clergy • Individual • Religion

What Is The Best Business Structure To Form? If Any…

What I love most about Colorado, more than the 300+ days of sun every year and the glorious rocky mountains, are the people. For the most Coloradans are risk taking job creators, starting new businesses from scratch out of their garages and turning passions for a hobby into a business with a profit motive.

Of course I surround myself with these people that live and play outside their comfort zone and quite often I am asked about the nuanced tax law implications of starting a new business. Specifically what might be the most appropriate business structure to form, if any, so I’ve decided to draft a post about this topic for general edification. Hopefully you find these words helpful. Read More

Written by | Posted in Small Business • Tax Planning

IRS Simplifies RRSP Treaty Benefit Election For U.S. Citizens

The IRS recently released a new Revenue Procedure regarding U.S. citizens and residents holding Canadian Registered Retirement Savings Plans (RRSP) and Registered Retirement Income Fund (RRIF). The IRS has simplified some of the reporting requirements for these taxpayers.

In the past, filing a 1040 tax return for a taxpayer who held RRSPs required the filing of form 8891 for each and every RRSP and RRIF account owned by the taxpayer. This form reported the December 31st balance of these accounts and claimed treaty benefit, Article XVIII(7), which is enshrined in the U.S.-Canada Income Tax Convention (herein referred to as treaty) whereby a taxpayer could defer taxation on the earnings within these accounts until distribution. This treatment was intended to give similar treatment to RRSP that was Read More

Written by | Posted in Canada • FBAR • International • IRS • Retirement

How Do I Set Up My New Business For Tax Purposes?

New business owners often ask, “How do I set up my business For Tax Purposes?” One of the choices you make when starting a business is the type of legal organization you select. This decision can affect how much you pay in taxes, the amount of bookkeeping and paperwork required, the personal liability you might be responsibility for, and your ability of borrow money.

For-profit businesses fall under one of four structures for tax purposes:

1. Sole Proprietor – An individual who owns an unincorporated business by themselves. Most small and home based businesses are sole proprietorships. For tax purposes, the business activity of a sole proprietor is reported on Schedule C of Form 1040. This is Read More

Written by | Posted in Corporate • Partnership • Small Business • Tax Tips

How To Calculate Basis of A Primary Residence Converted To Rental Property

[Reg. §1.168(i)-4(b)] [Reg. §1.165-9(b)(2)]

Many people have built impressive residential real estate portfolios one property at a time, living in the property while fixing it up thus declaring it their primary residence for income tax purposes and then moving onto a new house to fix up and subsequently rent out, and repeat. Several of my friends in Colorado, Minnesota and Wisconsin are doing this to one or more homes per year. Good for them!

For those with the tools and the skill set it is a great way to navigate life. For me, I know as a matter of fact my wife would have divorced me 3 time over if this was my calling. She just has a thing about living in a kept up uncluttered house. Nevertheless my friends usually Read More

Written by | Posted in Income Tax • IRS • Real Estate

Estimated Tax Payments Due June 16th!! Don’t Forget!

Tips On Making Estimated Tax Payments

If you don’t have taxes withheld from your pay, or you don’t have enough tax withheld, then you may need to make estimated tax payments. If you’re self-employed you normally have to pay your taxes this way.

Here are six tips you should know about estimated taxes:

1. You should pay estimated taxes in 2014 if you expect to owe $1,000 or more when you file your federal tax return. Special rules apply to farmers and fishermen.

2. Estimate the amount of income you expect to receive for the year to determine the Read More

Written by | Posted in Income Tax • Individual • IRS • Tax Deductions • Tax Tips

Alimony? What Is That? And… Do I Have To Report It On My Taxes?

The word Alimony comes from the Latin Word alimonia which means nourishment or sustenance. It also comes from Scots Law which is the legal system of Scotland and their concept of aliment. This was a rule of sustenance to assure the wife’s lodging, food, clothing and other necessities of divorce.

In the 1970s, the United States Supreme court ruled against gender bias in alimony awards. You may remember some high profile divorces, where women such as Britney Spears, Jessica Simpson etc., have paid multimillion dollar settlements in lieu of alimony to their ex-husbands.

Alimony is not child support. Child support is paid by one parent to the custodial parent Read More

Written by | Posted in Income Tax • Individual • Treasury Regulations

Income Tax Aspects of Non-Business Capital Gains and Losses – Part V

Government Debt Securities

Interest on non-taxable bonds

The interest on most of these is not taxable but must be reported on the tax return. On form 1040 and 1040A, it is reported on line 8b (non taxable interest). On form 1040 EZ, on line 2, put “TEI” and then the amount, but do not include it in the amount reported for taxable interest on line 2. Exceptions (i.e., interest is taxable) are federally guaranteed obligations (there are some exceptions to these), revenue bonds used to finance home mortgages (there are some exceptions to these), and private activity bonds (there are some exceptions to Read More

Written by | Posted in Capital Gains • Income Tax

Income Tax Aspects of Non-business Capital Gains And Losses – Part I

This article is divided in to three parts. Part I will cover the general aspects of capital gains and losses and how and where they are reported on Form 1040 and supporting schedules. Part II covers special situations involving sales of securities-wash sales, gifts, and inheritances. Part III will cover mutual funds, stock rights, debt securities purchased at a discount and premium, and exchanges.

Part I

It is advantageous to have investment income in the form of long-term (held longer than one year) capital gains (LTCG) because they are taxed at a lower rate than ordinary income. For 2013, the net LTCG will be taxed at various rates depending on the tax bracket: Read More

Written by | Posted in Capital Gains • Income Tax

Exemptions On The Federal Tax Return

1040 tapeTwo types of exemptions are allowed – personal and dependents. There are special situations for a noncustodial parent of divorced or separated parents to claim a dependent and situations where several persons may contribute to the support of another person.

Personal Exemptions

These are for the taxpayer(s) filing the return – one for single, head of household, and married filing separate, and two for married filing joint. Each personal exemption is $3,900 for 2013 ($3,950 for 2014).

Dependents Exemptions

Tax payers are allowed one exemption for each dependent who must at some time during the year, qualify as a:

(a) Citizen of the U.S.

(b) U.S. national who has permanent allegiance to the U.S.-one born in American Samoa or the Northern Mariana Islands who has not become a naturalized American citizen. Read More

Written by | Posted in Federal • Income Tax • Tax Deductions
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