When it comes to divorce and taxes, the IRS cares about who the custodial parent is. Custodial = who has custody of the kids more nights out of the year. Note: many people say “well we have joint custody.” Or “my divorce decree says blah blah blah.” Unless you truly have custody an equal number […]
A common question people ask is, am I required to make quarterly estimated tax payments? I guess the best answer is: “sort of.” It’s not a matter of you “must,” but there are penalties for not doing so. The IRS will assess a penalty against you if you don’t make estimated payments and you owe […]
If you take money out of a retirement account to buy a house (for example to make a down payment), you can avoid the 10% early withdrawal penalty … but only on IRA withdrawals. The rules on retirement withdrawals are tricky and vary between 401(k) accounts and IRAs. With home purchases, you can take money […]
I usually advise my clients against making IRA contributions for the prior year after the year has ended. Let’s back up. What are we even talking about here? IRA Contributions After Year-End A taxpayer who qualifies to make a deductible IRA contribution (WARNING: not everyone does qualify!) can make a contribution up to the due […]
Even before COVID-19 happened, I had said this was the worst tax season ever. COVID was just the rancid cherry on top of a moldy cake. It’s easy to be negative and cynical — social media almost demands this attitude, I think. But I am not being cynical here. I spent nearly 3 hours writing […]
One of the things I deal with every year is a client who sold a rental property and they have a capital gain from it, and the client is not pleased. The conversation always follows the same course. “I sold the rental for about the same as I bought it for, so no big deal.” […]
One of the topics that comes up often when talking to clients and other accountants is, the accounting service problem that small non-profits are facing. They need help from tax and accounting professionals. They can’t (or don’t want to…) pay full price. So they seek out affordable accounting pros. Most of the time these accounting […]
I try to be “proactive” with my clients, and I think most reputable accountants and tax preparers do too (despite what “experts” might say). One of the sticking points I have found, especially when dealing with average folks, is Roth accounts. Here’s an example: Taxpayer makes enough money to be able to max out their […]
How does the calculation for self-employment tax work when self-employment income is over the Social Security Wage Base? Let’s take a look. Basic Calculation When self-employment income is below the Social Security Wage Base, the calculation is straightforward. Let’s say your self-employment income is $50,000, well below the Social Security Wage Base. You take $50,000 […]