In order to enjoy that new car smell, you will likely have to make a decision on how to finance the purchase of that car. Preparing yourself by understanding your different finance options will benefit you in this process. For more information on comparing finance options offered by dealers, leasing companies or your local bank, read this Financial Strategy.
If you’ve been fortunate enough to be able to sell your house, the IRS had some rules that may allow you to exclude up to $250,000 of the gain of your main home from your income. The IRS also has some rules for reporting the sale of your home as well as deducting the remaining points you paid to secure a mortgage. For detailed information on these rules, read this C.P.A. Insight.
If you are retiring and hold a significant amount of your company’s stock in your qualified retirement plan, you can choose to elect a special tax treatment for the distribution called net unrealized appreciation. Before you make this election, you’ll need to compare your tax liability on the distribution to future tax costs. For more information on this strategy, read this Financial Strategy.
If you’re fortunate enough to have a vacation or second home, you should consider some basic tax laws that will allow you to make the best tax use of your vacation home. You may consider taking advantage of tax free rental income, rental income deductions or a tax free sale of the home. For more information on these tax advantages and the rules that apply, read this C.P.A. Insight.
If you’re faced with a bankruptcy situation, there are federal laws in place that protect your assets held inside qualified retirement plans such as a 401(k) or an IRA. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 extends some of these safeguards. For more information on how much is protected by these laws, read this Financial Strategy.
Funds inside a retirement plan that are exempt from income tax are protected from bankruptcy; however, there are limitations.
Inevitably, you may incur a financial loss in your business or personal life. If this loss is due to a loan that cannot be repaid, it may be considered bad debt. From a tax standpoint, how you handle the bad debt is a complicated situation. For more information on determining if you have a bad debt and how it may offset your income, read this C.P.A. Insight.
Everyone knows about death and taxes, and if your estate is large enough, sometimes they go hand in hand. Estate tax is the transfer of property from one individual to another at the time of death. For more information on how estate tax is derived and the deductions and credits available to reduce the gross estate, read this Financial Strategy.
Residents of Georgia are eligible for a state tax deduction for contributions to Georgia’s 529 College Savings Plan regardless of income. Because of this tax benefit, residents should consider this plan as a savings vehicle for higher education costs. For more information on Georgia’s plan and the seven available investment options, read this week’s Financial Strategy.
If you take tax deductions for any activity that is not your full-time job, you need to meet certain criteria to ensure the IRS does not consider your activity a hobby rather than a for-profit business. The IRS has nine factors they consider when determining if your activity is a hobby or a viable business. For more information on these factors, read this week’s C.P.A. Insight.