29 Oct 2023
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Selling Your Home for a Big Profit? Here are the Tax Rules

Roger Rossmeisl, CPA
Individual Tax Briefs
Selling Your Home for a Big Profit? Here are the Tax Rules

Many homeowners across the country have seen their home values increase in recent years. According to the National Association of Realtors, the median price of existing homes sold in July of 2023 rose 1.9% over July of 2022 after a couple years of much higher increases. The median home price was $467,500 in the Northeast, $304,600 in the Midwest, $366,200 in the South and $610,500 in the West. Be aware of the tax implications if you’re selling your home or you sold one in 2023. You may owe capital gains tax and net investment income tax (NIIT). You can exclude a large chunk If you’re selling your principal residence, and meet certain requirements, you can exclude from tax up to $250,000 ($500,000 for joint filers) of gain. To qualify...

29 Oct 2023
0

Tax Consequences of Employer-Provided Life Insurance

Roger Rossmeisl, CPA
Individual Tax Briefs
Tax Consequences of Employer-Provided Life Insurance

If your employer provides life insurance, you probably find it to be a desirable fringe benefit. However, if group term life insurance is part of your benefits package, and the coverage is higher than $50,000, there may be undesirable income tax implications. You’re taxed on income you didn’t receive The first $50,000 of group term life insurance coverage that your employer provides is excluded from taxable income and doesn’t add anything to your income tax bill. But the employer-paid cost of group term coverage in excess of $50,000 is taxable income to you. It’s included in the taxable wages reported on your Form W-2 — even though you never actually receive it. In other words, it’s “phantom income.” What’s worse, the cost of group term insurance must be...

18 Sep 2023
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Can You Deduct Student Loan Interest on your Tax Return?

Roger Rossmeisl, CPA
Individual Tax Briefs
Can You Deduct Student Loan Interest on your Tax Return?

The federal student loan “pause” came to an end on August 31 after more than three years. If you have student loan debt, you may wonder whether you can deduct the interest you pay on your tax return. The answer may be yes, subject to certain limits. The deduction is phased out if your adjusted gross income exceeds certain levels — and they aren’t as high as the income levels for many other deductions. Deduction basics If you’re eligible, the maximum amount of student loan interest you can deduct each year is $2,500. The interest must be for a “qualified education loan,” which means a debt incurred to pay tuition, room and board, and related expenses to attend a post-high school educational institution, including certain vocational schools....

04 Sep 2023
0

Pocket a Tax Break for Making Energy-Efficient Home Improvements

Roger Rossmeisl, CPA
Individual Tax Briefs
Pocket a Tax Break for Making Energy-Efficient Home Improvements

An estimated 190 million Americans have recently been under heat advisory alerts, according to the National Weather Service. That may have spurred you to think about making your home more energy efficient — and there’s a cool tax break that may apply. Thanks to the Inflation Reduction Act of 2022, you may be able to benefit from an enhanced residential energy tax credit to help defray the cost. Eligibility rules If you make eligible energy-efficient improvements to your home on or after January 1, 2023, you may qualify for a tax credit up to $3,200. You can claim the credit for improvements made through 2032. The credit equals 30% of certain qualified expenses for energy improvements to a home located in the United States, including: Qualified energy-efficient improvements...

04 Sep 2023
0

Moving Mom or Dad into a Nursing Home? 5 Potential Tax Implications

Roger Rossmeisl, CPA
Individual Tax Briefs
Moving Mom or Dad into a Nursing Home? 5 Potential Tax Implications

More than a million Americans live in nursing homes, according to various reports. If you have a parent entering one, you’re probably not thinking about taxes. But there may be tax consequences. Let’s take a look at five possible tax breaks. 1. Long-term medical care The costs of qualified long-term care, including nursing home care, are deductible as medical expenses to the extent they, along with other medical expenses, exceed 7.5% of adjusted gross income (AGI). Qualified long-term care services are necessary diagnostic, preventive, therapeutic, curing, treating, mitigating and rehabilitative services, and maintenance or personal-care services required by a chronically ill individual that are provided under care administered by a licensed healthcare practitioner. To qualify as chronically ill, a physician or other licensed healthcare practitioner must certify an individual...

06 Aug 2023
0

Retirement Account Catch-Up Contributions Can Add Up

Roger Rossmeisl, CPA
Individual Tax Briefs
Retirement Account Catch-up Contributions Can Add Up

If you’re age 50 or older, you can probably make extra “catch-up” contributions to your tax-favored retirement account(s). It is worth the trouble? Yes! Here are the rules of the road. The deal with IRAs  Eligible taxpayers can make extra catch-up contributions of up to $1,000 annually to a traditional or Roth IRA. If you’ll be 50 or older as of December 31, 2023, you can make a catch-up contribution for the 2023 tax year by April 15, 2024. Extra deductible contributions to a traditional IRA create tax savings, but your deduction may be limited if you (or your spouse) are covered by a retirement plan at work and your income exceeds certain levels. Extra contributions to Roth IRAs don’t generate any up-front tax savings, but you can take...

06 Aug 2023
0

Inheriting Stock or Other Assets? You’ll Receive a Favorable “Stepped-up Basis”

Roger Rossmeisl, CPA
Individual Tax Briefs
Inheriting Stock or Other Assets? You'll Receive a Favorable "Stepped-up Basis"

If you’re planning your estate, or you’ve recently inherited assets, you may be unsure of the “cost” (or “basis”) for tax purposes. How do the rules work? Under the current fair market value basis rules (also known as the “step-up and step-down” rules), an heir receives a basis in inherited property equal to its date-of-death value. So, for example, if your grandfather bought stock in 1940 for $600 and it’s worth $1 million at his death, the basis is stepped up to $1 million in the hands of your grandfather’s heirs — and all of that gain escapes federal income tax. The fair market value basis rules apply to inherited property that’s includible in the deceased’s gross estate, and those rules also apply to property inherited from foreign...

06 Aug 2023
0

That E-mail or Text from the IRS: It’s a Scam!

Roger Rossmeisl, CPA
Individual Tax Briefs
That E-mail or Text from the IRS: It's a Scam!

“Thousands of people have lost millions of dollars and their personal information to tax scams,” according to the IRS. The scams may come in through email, text messages, telephone calls or regular mail. Criminals regularly target both individuals and businesses and often prey on the elderly. Important: The IRS will never contact you by email, text or social media channels about a tax bill or refund. Most IRS contacts are first made through regular mail. So if you get a text message saying it’s the IRS and asking for your Social Security number, it’s someone trying to steal your identity and rob you. Remember that the IRS already has your Social Security number. “Scammers are coming up with new ways all the time to try to steal...

06 Aug 2023
0

The Best Way to Survive an IRS Audit is to Prepare

Roger Rossmeisl, CPA
Individual Tax Briefs
The Best Way to Survive an IRS Audit is to Prepare

The IRS recently released its audit statistics for the 2022 fiscal year and fewer taxpayers had their returns examined as compared with prior years. But even though a small percentage of returns are being chosen for audits these days, that will be little consolation if yours is one of them. Recent statistics Overall, just 0.49% of individual tax returns were audited in 2022. However, as in the past, those with higher incomes were audited at higher rates. For example, 8.5% of returns of taxpayers with adjusted gross incomes (AGIs) of $10 million or more were audited as of the end of FY 2022. However, audits are expected to be on the rise in coming months because the Biden administration has made it a priority to go after high-income...

ROGER ROSSMEISL, CPA

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

(714) 325-0442
roger@khopatel.com

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