“Fair market value (FMV) is the price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts.” Source: IRS Publication 561 This is the standard the IRS uses to determine if an item sold or donated by you is
If you own your own business, by hiring your children you can save in the following ways: Salaries paid to children under 18 are not subject to Social Security or unemployment taxes (in most states). No Federal withholding taxes are required if the child is under age 21 and earns under $5,950 per year. Even if the child must pay taxes, the child’s rate of tax is normally lower than
On average less than 2% of over 90 million tax returns are selected for audit each year. The percentage increases for higher income groups and tax returns in areas of specific interest to the IRS. If you should receive notice from the IRS of an impending audit please remember: IRS computers usually flag the tax returns for audits. The vast majority of them are routine. Because of the flagging process,
Most income you receive is taxable income that is reported to you and to the Federal/State tax authorities. However, there are a few income-producing events that the IRS has said are not taxable. One of them is renting out your home or vacation property. The rule: If you receive rental income for less than 15 days per year, that income is generally not taxable income. Added benefit: In addition to
Understanding the rules surrounding investment losses can really help minimize your tax obligation each year. This is because investment gains and income can be subject to a variety of federal tax rates as high as 39.6%. This and a newly minted tax law in 2013 that could add a 3.8% Medicare investment tax surcharge make planning around when to take investment losses an important tax planning subject. Know the meaningful
IRS to send out special mailings Noted here is a copy of a recent interest error calculation announcement made by the IRS. If you recently received a form CP2000 from the IRS please be aware an adjusted, higher interest amount may be owed. The IRS alerted taxpayers and tax professionals about an interest calculation error on certain notices mailed the weeks of July 1 and July 8. The IRS discovered
With the increased popularity of lotteries and casinos, more unsuspecting winners are experiencing a lucky payday only to end up with a huge tax head-ache when filing their income taxes. Here is what you need to know: Look for the warning signs You are required to report as income any winnings you receive including, but not limited to: • slot machines • bingo • pull tabs • horse/dog racing •
Understanding Required Minimum Distribution (RMD) Rules Every year thousands of taxpayers are hit with a heavy 50% penalty for not withdrawing enough money from their retirement plan(s). Here is what you need to know to ensure this does not happen to you or someone you know. Who is subject to Required Minimum Distribution (RMD) rules? Anyone who participates in a qualified retirement plan like IRAs (traditional, SEP, SARSEP, and SIMPLE),
The tax code allows deductions for qualified miles driven for business, medical, moving and charitable purposes. But to claim this deduction you must keep adequate records of actual miles driven. During an audit this is an often disallowed deduction, despite the fact that you actually drove the distance claimed. How to make sure this doesn’t happen to you? Here are some tips. Keep a log. The tax code is clear
In a continuing effort to provide information as we listen to the budget and debt debates out of Washington D.C., outlined here are some IRS statistics on who pays individual income taxes. The information provided here is the most current available information. Income % of Income Share of Income Tax Paid Average Tax Rate Top 1% 18.9% 37.4% 23.4% Top 5% 33.8% 59.1% 20.6% Top 10% 45.2% 70.6% 18.5% Top
