04 May 2025
0

The “Wash Sale” Rule: Don’t Let Losses Circle the Drain

Roger Rossmeisl, CPA
Individual Tax Briefs
The "Wash Sale" Rule: Don't Let Losses Circle the Drain

Stock, mutual fund and ETF prices have bounced around lately. If you make what turns out to be an ill-fated investment in a taxable brokerage firm account, the good news is that you may be able to harvest a tax-saving capital loss by selling the loser security. However, for federal income tax purposes, the wash sale rule could disallow your hoped-for tax loss. Rule basics A loss from selling stock or mutual fund shares is disallowed if, within the 61-day period beginning 30 days before the date of the loss sale and ending 30 days after that date, you buy substantially identical securities. The theory behind the wash sale rule is that the loss from selling securities and acquiring substantially identical securities within the 61-day window adds up...

04 May 2025
0

Understanding the “Step-up in Basis” When Inheriting Assets

Roger Rossmeisl, CPA
Individual Tax Briefs
Understanding the "Step-up in Basis" when Inheriting Assets

If you inherit assets after a loved one passes away, they often arrive with a valuable — but frequently misunderstood — tax benefit called the step-up in basis. Below is an overview of how the rule works and what planning might need to be done. What “basis” means First, let’s look at a couple definitions. Basis is generally what the owner paid for an asset, adjusted for improvements, depreciation, return of capital, etc. Capital gain (or loss) equals the sale price minus the basis. At death, many capital assets (stocks, real estate, business interests, collectibles, crypto, etc.) are stepped up (or down) to their fair market value (FMV) as of the date of death (or, if elected by the executor, the “alternate valuation date” six months later). The...

04 May 2025
0

What Tax Documents Can Your Safely Shred? And Which Ones Should You Keep?

Roger Rossmeisl, CPA
Individual Tax Briefs
What Tax Documents Can You Safely Shred? And Which Ones Should You Keep

Once your 2024 tax return is in the hands of the IRS, you may be tempted to clear out file cabinets and delete digital folders. But before reaching for the shredder or delete button, remember that some paperwork still has two important purposes: Protecting you if the IRS comes calling for an audit, and Helping you prove the tax basis of assets you’ll sell in the future. . Keep the return itself — indefinitely Your filed tax returns are the cornerstone of your records. But what about supporting records such as receipts and canceled checks? In general, except in cases of fraud or substantial understatement of income, the IRS can only assess tax within three years after the return for that year was filed (or three years after...

27 Apr 2025
0

Discover if you Qualify for “Head of Household” Tax Filing Status

Roger Rossmeisl, CPA
Individual Tax Briefs
Discover if you Qualify for "Head of Household" Tax Filing Status

When you prepare your tax return, you’ll check one of the following filing statuses: single, married filing jointly, married filing separately, head of household or qualifying widow(er). Only some people are eligible to file a return as a head of household. But if you’re one of them, it’s more favorable than filing as a single taxpayer. To illustrate, the 2025 standard deduction for a single taxpayer is $15,000. However, it’s $22,500 for a head of household taxpayer. To be eligible, you must maintain a household that, for more than half the year, is the principal home of a “qualifying child” or other relative of yours whom you can claim as a dependent. Tax law fundamentals Who’s a qualifying child? This is one who: Lives in your home for...

27 Apr 2025
0

Deduct a Loss from Making a Personal Loan to a Relative or Friend

Roger Rossmeisl, CPA
Individual Tax Briefs
Deduct a Loss from Making a Personal Loan to a Relative or Friend

Suppose your adult child or friend needs to borrow money. Maybe it’s to buy a first home or address a cash flow problem. You may want to help by making a personal loan. That’s a nice thought, but there are tax implications that you should understand and take into account. Get it in writing You want to be able to prove that you intended for the transaction to be a loan rather than an outright gift. That way, if the loan goes bad, you can claim a non-business bad debt deduction for the year the loan becomes worthless. For federal income tax purposes, losses from personal loans are classified as short-term capital losses. You can use the losses to first offset short-term capital gains that would otherwise be...

27 Apr 2025
0

Turning Stock Downturns into Tax Advantages

Roger Rossmeisl, CPA
Individual Tax Briefs
Turning Stock Downturns into Tax Advantage

Have you ever invested in a company only to see its stock value plummet? (This may become relevant in light of recent market volatility.) While such an investment might be something you’d rather forget, there’s a silver lining: you can claim a capital loss deduction on your tax return. Here are the rules when a stock you own is sold at a loss or is entirely worthless. How capital losses work As capital assets, stocks produce capital gains or losses when they’re sold. Your capital gains and losses for the year must be netted against one another in a specific order based on whether they’re short-term (held one year or less) or long-term (held for more than one year). If, after netting, you have short-term or long-term losses...

26 Apr 2025
0

Maximizing Employee Transportation Fringe Benefits

Roger Rossmeisl, CPA
Individual Tax Briefs
Maximizing Employee Transportation Fringe Benefits

There are some nice tax breaks for transportation-related employee fringe benefits. If your employer offers these tax-favored fringes, you should probably take advantage of them by signing up. Here’s a quick summary of the current federal tax treatment of transportation-related benefits. Mass transit passes For 2025, employer-provided mass transit passes for train, subway and bus systems are tax-free to a recipient employee up to a monthly limit of $325. Thanks to an unfavorable change in the 2017 Tax Cuts and Jobs Act (TCJA), your company can’t deduct the cost of this benefit. However, your company may offer a salary-reduction arrangement that allows you to set aside up to $325 per month from your salary to pay for transit passes with your own money. That way, you pay...

25 Apr 2025
0

The Extended 2024 Gift Tax Return Deadline is Looming

Roger Rossmeisl, CPA
Individual Tax Briefs
The Extended 2024 Gift Tax Return Deadline is Looming

If you made significant gifts to your children, grandchildren or other heirs last year, it’s important to determine whether you’re required to file a 2024 gift tax return. And in some cases, even if it’s not required to file one, you may want to do so anyway. Requirements to file The annual gift tax exclusion was $18,000 in 2024 (increased to $19,000 in 2025). Generally, you must file a gift tax return for 2024 if, during the tax year, you made gifts: That exceeded the $18,000-per-recipient gift tax annual exclusion for 2024 (other than to your U.S. citizen spouse), That you wish to split with your spouse to take advantage of your combined $36,000 annual exclusion for 2024, That exceeded the $185,000 annual exclusion in 2024 for...

25 Apr 2025
0

Can I Itemize Deductions on my Tax Return?

Roger Rossmeisl, CPA
Individual Tax Briefs
Can I Itemize Deductions on my Tax Return?

You may wonder if you can claim itemized deductions on your tax return. Perhaps you made charitable contributions and were told in the past they couldn’t be claimed because you didn’t have enough deductions to itemize. How much do you need? You can itemize deductions if the total of your allowable itemized write-offs for the year exceeds your standard deduction allowance for the year. Otherwise, you must claim the standard deduction. Here’s how we’ll determine if you can itemize or not for 2024 when your return is prepared. Standard deduction amounts The basic standard deduction allowances for 2024 are: $14,600 if you’re single or use married filing separate status, $29,200 if you’re married and file jointly, and $21,900 if you’re a head of household. . Additional standard deduction allowances...

23 Mar 2025
0

You May Be Able to Make a Deductible IRA Contribution for Last Year This Year

Roger Rossmeisl, CPA
Individual Tax Briefs
You May Be Able to Make a Deductible IRA Contribution for Last Year This Year

If you’re getting ready to file your 2024 tax return and your tax bill is higher than you’d like, there may still be a chance to lower it. If you’re eligible, you can make a deductible contribution to a traditional IRA until this year’s April 15 filing deadline and benefit from the tax savings on your 2024 return. Who’s eligible? You can make a deductible contribution to a traditional IRA if: You (and your spouse) aren’t an active participant in an employer-sponsored retirement plan, or You (or your spouse) are an active participant in an employer plan, but your modified adjusted gross income (MAGI) doesn’t exceed certain levels that vary from year-to-year by filing status. . For 2024, if you’re a married joint tax return filer and you’re covered...

ROGER ROSSMEISL, CPA

Kho & Patel CPAs
160 E. Arrow Highway
San Dimas, CA 91773

(714) 325-0442
roger@khopatel.com

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