People often ask: Is the interest paid during the year deductible on my federal income tax return? The answer is, “It depends.” Generally, the interest you incurred must be allocated among the following five “baskets” for tax purposes. Based on how the interest is classified, it may be nondeductible, partially deductible, or fully deductible. Other special
Category: Tax
Do LLC Members Owe Self-Employment Tax?
The federal tax code’s self-employment tax provisions were enacted long before the existence of limited liability companies (LLCs). As LLCs became increasingly popular, an important question arose: How do the self-employment tax rules apply to LLC members? Despite IRS attempts to make the issue go away, that question still exists for LLCs with several members, which
Beware: Remote Work May Complicate Your Income Taxes
Remote work has become more common in recent years, and the COVID-19 pandemic has resulted in employers realizing that many jobs can be done from home. Some remote workers even work in a different state than where their employers are based. These employees may have opted to move to states with lower or no income taxes,
Tax Implications of Student Loan Debt Relief
The total amount of outstanding student loan debt is estimated at approximately $1.75 trillion, including $1.59 trillion in federal student loans. It’s also estimated that 43.2 million student borrowers owe an average of roughly $39,000 each. The good news is that, in some cases, student loan balances can be forgiven or even paid off by employers.
How to Maximize the QBI Deduction Amid the Pandemic
Since the qualified business income (QBI) deduction first became available in 2018, things have changed dramatically, mainly due to the various effects of the COVID-19 pandemic. Possible tax rate increases and inflation have also entered into the mix. How do these developments affect planning to maximize QBI deductions for your business? The Basics The QBI deduction
The ABCs of Scholarship Tax Rules
Good news: You just found out that your high school senior son or daughter will be receiving a sizeable scholarship at a prestigious university next fall. But what are the tax consequences? In most cases, scholarships awarded to students are exempt from federal income tax, assuming certain conditions are met. Comparable rules apply to fellowships for
Receivables May Offer Relief When Cash is Tight
Many companies are experiencing a buildup of accounts receivable on their balance sheets as customers – especially large corporate buyers – are stretching out their payment terms. While these bills may eventually be paid, delays are causing a cash flow crunch across many supply chains. Recent Study The CFO/The Hackett Group 2021 Working Capital Scorecard provides
Let’s Review the Tax Implications of Investing in Mutual Funds
Mutual funds are an attractive investment option, especially for people who are looking for a low-maintenance, long-term way to participate in the securities markets. These funds are managed by professionals who should be well-qualified to judge which securities are attractive bets. Mutual funds also make it easier to maintain a diversified portfolio, which can reduce risk
Navigating the Tax Angles for ETFs
Exchange traded funds (ETFs) are hot. Last year, $507.4 billion flowed into ETFs listed in the United States, according to Statista, a provider of market and consumer data. Net assets held by ETFs totaled roughly $5.4 trillion in 2020 – up from less than $1 trillion a decade earlier. The trend has apparently continued with a
Refresher on the Home-Sale Gain Exclusion Tax Break
In many areas, residential real estate markets have surged, and some are still surging. In these sellers’ markets, big home-sale gains are likely. That’s great news if you’re a seller – but will you owe taxes on the profit? If you sell your principal residence for a large profit, you can potentially exclude tax (pay