Normally when debt is forgiven, the forgiven amount is considered taxable income for the person responsible for the debt. Recent tax law changes have made exceptions for qualified principal residence indebtedness. However, this is not necessarily a tax-free transaction–more likely tax-deferred. For more information on the rules surrounding mortgage forgiveness, read this C.P.A. Insight.
With nearly 30% of the U.S. population expected to reach retirement age in the next 18 years, more resources will be required for them to live comfortably during retirement. It is imperative that proper plans and tools are set in place so that they can reach their retirement goals. For more information on the retirement of the baby boomer generation, read this C.P.A. Insight.
The IRS has often interpreted one’s tax home to be the location of the taxpayer’s principal place of business; however the Second, Fifth, Sixth and Ninth Circuit Courts have all maintained that a taxpayer’s tax home is the location of his permanent residence. For more information on establishing residency to maintain your tax home, read this C.P.A. Insight.
Regardless of income level, each Georgia taxpayer can now take up to a $2,000 deduction per return for contributions made on or after January 1, 2007 to Georgia-sponsored 529 Plans. Prepaid College Tuition Plans and College Savings Plans are the two types of 529 Plans available. For more information on 529 Plans and some of their rules and regulations, read this C.P.A. Insight
In order to maximize your estate tax credits, you must first begin with proper planning. Both marital deductions in your estate and a unified tax credit can aid in taking full advantage of estate credits that both you and your spouse are entitled to. For more on estate tax credits, how they work and for some examples of the two, read this week’s C.P.A. Insight.
According to the IRS, there is no such thing as an interest-free loan. Many times, loans that are at below-market interest rates are recharacterized so that market-rate interest income is recognized. For more information about these types of loans and the rules that regulate them, read this C.P.A Insight.
If you have children, who have been in college for more than two years, or if you plan on attending college yourself, the Lifetime Learning Credit may be an option to ease some of the cost of tuition. The Lifetime Learning Credit is family based and offers, for an unlimited number of years, an allowable credit of up to $2,000 per tax return per year. For more information on the Lifetime Learning Credit, its benefits and eligibility requirements, read this C.P.A insight.
Timing is critical in determining when to purchase equipment for businesses. The year in which the equipment is purchased and is available and ready for use plays a significant role in determining the amount allowable depreciation and tax liability for a given year. For more on asset acquisition, some planning tips, and to learn about depreciation rules, read this C.P.A Insight.
If your student is tired of seeing Uncle Sam take money from him each paycheck, he may be in luck. Students, who have summer or part-time jobs, may be exempt from paying federal withholding tax if certain requirements are met. This C.P.A. Insight details the circumstances that must be met to stop the withholding deduction.
If your teen is learning to drive, consider looking into the Georgia driver education income tax credit.
