Disability Income: How is it Taxed?

Revisor

Many Americans receive disability income. You may wonder if — and how — it’s taxed. As is often the case with tax questions, the answer is … it depends. The key factor is who paid for the benefit. If the income is paid directly to you by your employer, it’s taxable to you as ordinary salary would be. (Taxable benefits …

Steer Clear of the Wash Sale Rule if You’re Selling Stock by Year End

Revisor

Are you thinking about selling stock shares at a loss to offset gains that you’ve realized during 2020? If so, it’s important not to run afoul of the “wash sale” rule. IRS may disallow the loss Under this rule, if you sell stock or securities for a loss and buy substantially identical stock or securities back within the 30-day period …

Employees: Don’t Forget About Your FSA Funds

Revisor

Many employees take advantage of the opportunity to save taxes by placing funds in their employer’s health or dependent care flexible spending arrangements (FSAs). As the end of 2020 nears, here are some rules and reminders to keep in mind. Health FSAs A pre-tax contribution of $2,750 to a health FSA is permitted in both 2020 and 2021. You save …

Taking Distributions From a Traditional IRA

Revisor

Although planning is needed to help build the biggest possible nest egg in your traditional IRA (including a SEP-IRA and SIMPLE-IRA), it’s even more critical that you plan for withdrawals from these tax-deferred retirement vehicles. There are three areas where knowing the fine points of the IRA distribution rules can make a big difference in how much you and your …

How Series EE Savings Bonds Are Taxed

Revisor

Many people have Series EE savings bonds that were purchased many years ago. Perhaps they were given to your children as gifts or maybe you bought them yourself and put them away in a file cabinet or safe deposit box. You may wonder: How is the interest you earn on EE bonds taxed? And if they reach final maturity, what …

Divorcing Couples Should Understand These 4 Tax Issues

Revisor

When a couple is going through a divorce, taxes are probably not foremost in their minds. But without proper planning and advice, some people find divorce to be an even more taxing experience. Several tax concerns need to be addressed to ensure that taxes are kept to a minimum and that important tax-related decisions are properly made. Here are four …

Buying and Selling Mutual Fund Shares: Avoid These Tax Pitfalls

Revisor

If you invest in mutual funds, be aware of some potential pitfalls involved in buying and selling shares. Surprise sales You may already have made taxable “sales” of part of your mutual fund investment without knowing it. One way this can happen is if your mutual fund allows you to write checks against your fund investment. Every time you write …

What Tax Records Can You Throw Away?

Revisor

October 15 is the deadline for individual taxpayers who extended their 2019 tax returns. (The original April 15 filing deadline was extended this year to July 15 due to the COVID-19 pandemic.) If you’re finally done filing last year’s return, you might wonder: Which tax records can you toss once you’re done? Now is a good time to go through …

There May Be Relief From Tax Liability For “Innocent Spouses”

Revisor

What’s “joint and several” liability? When a married couple files a joint tax return, each spouse is “jointly and severally” liable for the full tax amount on the couple’s combined income. That means the IRS can come after either spouse to collect the entire tax — not just the part that’s attributed to one spouse or the other. Liability includes …

Why it’s Important to Plan for Income Taxes as Part of Your Estate Plan

Revisor

As a result of the current estate tax exemption amount ($11.58 million in 2020), many estates no longer need to be concerned with federal estate tax. Before 2011, a much smaller amount resulted in estate plans attempting to avoid it. Now, because many estates won’t be subject to estate tax, more planning can be devoted to saving income taxes for …