Taxation Newsletters

Filing a Return after a Spouse Dies

In general, the surviving spouse is considered married for the entire year no matter when the death occurred, and he or she is entitled to file a joint return in the year of the spouse's death. This allows the surviving spouse to take advantage of the lower joint tax rates and to take an exemption for the deceased spouse. However, if a joint return is filed, it must include all income from both spouses for the year.

Home-Based Business Tax Avoidance Schemes

We are all entitled to take advantage of every legal exclusion, deduction, and credit to reduce our federal income tax liability. However, we must, as taxpayers, be aware of bad advice that could result in improper and costly tax avoidance.

Renting Residential and Vacation Property

Generally, if you own a house or an apartment that you rent to others, you are entitled to deduct certain expenses such as repairs, maintenance, utilities, insurance, interest, taxes, and depreciation to reduce the amount of taxable rental income. If you do not use the dwelling unit as your home and are renting it to make a profit, your deductible rental expenses may exceed your gross rental income (with certain limitations, of course.) However, if you use the house or apartment as your home or vacation home, stricter limitations apply to the amount of deductible losses.

Rollovers from Retirement Plans

If you withdraw assets from one qualified employer retirement plan and contribute them within 60 days to another qualified retirement plan or traditional Individual Retirement Account (IRA), you do not have to include the amount withdrawn in your taxable income for the year. You are entitled to roll over most distributions except for the nontaxable part of a distribution, a distribution that is one of a series of payments based on life expectancy or paid over a period of years, a required minimum distribution, or a hardship distribution.

SIMPLE IRA Plans

In order to reduce the costs of administering an individual retirement arrangement (IRA), Congress created the SIMPLE IRA plan, a Savings Incentive Match Plan for Employees of Small Employers. The establishment of a SIMPLE IRA allows employees to choose to defer a portion of their salaries into the plan for retirement.

 

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