TAXING SOCIAL SECURITY BENEFITS Some taxpayers must include up to 85% of their social security benefits in taxable income, while others find that their benefits are not taxable at all. If social security is your only source of income, your benefits probably won’t be taxable. In fact, you may not even need to file a [...]
AVOIDING PENALTIES ON IRA WITHDRAWALS BEFORE AGE 59 ½ IRA owners can withdraw money from their account at any time and for any reason because the owner is in total control of this account. Most withdrawals from traditional IRAs will be at least partially taxable. To add insult to injury the taxable portion of a [...]
TAXABLE TIP INCOME If you receive tips on the job from customers, you must include those tips in the computation of your tax liability, if any. This includes tips, directly from customers, tips added to credit cards, and your share of tips received under a tip-splitting agreement with other employees. The method for paying out [...]
LEASING PROPERTY TO A CLOSELY-HELD CORPORATION Shareholders of closely-held C corporations routinely lease real estate, equipment, and other property to their corporate entity. These leases can be held directly by the shareholder or through a separate entity, such as a partnership, LLC, or S corporation. Of course, the corporation could directly purchase the item or [...]
MAKING YOUR HOBBY A BUSINESS Taxpayers often enjoy their hobby activity more than they do their job. In many cases, they invest a great deal of time and money, and some eventually make their hobby a full or part-time business activity. Unfortunately, the IRS has a lot to say when it comes to the business [...]
RETIREMENT PLAN REVIEW Your retirement plan savings (e.g., qualified plans and IRAs) are important to your financial wellbeing for many reasons. You can accumulate income without currently paying tax, and the power of compounding pretax dollars makes a retirement plan one of the most powerful investment vehicles available. When you reach retirement age, your retirement [...]