If you’re paying back college loans for yourself or your children, you may wonder if you can deduct the interest you pay. The answer is yes, subject to certain limits. The maximum amount of student loan interest you can deduct annually is $2,500. The deduction is phased out if your adjusted gross income (AGI) exceeds […]
Author Archive | James B. Reynolds
Stock Market Investors: Year-end Tax Strategies to Consider
Year-end is a good time to plan to save taxes by structuring your capital gains and losses. Consider some possibilities. For example, suppose you lost money this year on some stock and have other stock that has appreciated. Consider selling appreciated assets before Dec. 31 (if you think the value has peaked) and offset gains […]
How are court awards and out-of-court settlements taxed?
Awards and settlements are paid for many reasons. For example, a person could receive payments for personal injury or discrimination. By law, individuals can exclude from gross income damages that are received on account of personal physical injury or physical sickness. For purposes of this exclusion, emotional distress isn’t considered physical injury or sickness. So, […]
With year-end approaching, 3 ideas that may help cut your tax bill
You may still have time to trim your 2021 federal tax liability by taking certain steps. For example, contribute the maximum to your retirement plans, including traditional IRAs and SEP plans. Another idea: If you make your Jan. 2022 mortgage payment in December, you can deduct the interest portion on your 2021 tax return (assuming […]
New Digital Asset Reporting Requirements Will be Imposed in Coming Years
The Infrastructure Investment and Jobs Act was signed into law on Nov. 15, 2021. It includes new reporting requirements that will generally apply to digital asset transactions starting in 2023. Cryptocurrency exchanges will be required to perform intermediary Form 1099 reporting for crypto transactions. The law expands the definition of brokers who must furnish Forms […]
Remember to use up your flexible spending account money
Do you have a tax-saving flexible spending account (FSA) with your employer to help pay for health or dependent care expenses? It’s a good time to review 2021 expenses and project amounts to be set aside for 2022. A pre-tax contribution of $2,750 to a health FSA is permitted in 2021. This is increasing to […]
Feeling generous at year end? Strategies for donating to charity or gifting to loved ones.
Planning to donate to charity this year? Normally, if you take the standard deduction and don’t itemize, you can’t claim a deduction for charitable gifts. But for 2021, you’re allowed to claim a limited deduction for cash contributions made to qualifying charities. For cash donations made this year, you can deduct up to $300 ($600 […]
Factor in taxes if you’re relocating to another state in retirement
Are you considering a move to another state when you retire? While you’re thinking about how many square feet you’ll need in a new home, don’t forget to factor in state and local taxes. It may seem like a state with no income tax is a smart choice, but you also have to consider property […]
Thinking About Participating in your Employer’s 401(k) Plan? Here’s How it Works
Interested in participating in a 401(k) plan offered by your employer? Under a 401(k), you have the option of setting aside a certain amount of your wages in a qualified retirement plan. By making this election, you’ll reduce your gross income, and defer tax on the amount until the cash (adjusted by earnings) is distributed […]
You May Owe “Nanny Tax” Even if You Don’t Have a Nanny
Have you heard of the “nanny tax?” Even if you don’t employ a nanny, it may apply to you. Hiring a house cleaner or other household employee (who isn’t an independent contractor) may make you liable for federal income tax, Social Security and Medicare (FICA) tax and federal unemployment tax. You may also have state […]
