If you’re fortunate enough to own a vacation home, you may want to rent it out for part of the year. What are the tax consequences?
The tax treatment can be complex. It depends on how many days it’s rented and your level of personal use. Personal use of the vacation home includes use by you, your relatives (even if you charge them market rent) and use by nonrelatives if a market rent isn’t charged.
Continue Reading Your Tax Bill if You Rent Out Your Vacation Home
If you own a valuable piece of art, or other property, you may wonder how much of a tax deduction you could get by donating art to charity.
The answer to that question can be complex because several different tax rules may come into play with such contributions. A charitable contribution of a work of art is subject to reduction if the charity’s use of the work of art is unrelated to the purpose or function that’s the basis for its qualification as a tax-exempt organization. The reduction equals the amount of capital gain you’d have realized had you sold the property instead of giving it to charity.
For example, let’s say you bought a painting years ago for $10,000 that’s now worth $20,000. You contribute it to a hospital. Your deduction is limited to $10,000 because the hospital’s use of the painting is unrelated to its charitable function, and you’d have a $10,000 long-term capital gain if you sold it. What if you donate the painting to an art museum? In that case, your deduction is $20,000.
Continue Reading What You Need to Know About Donating Art to Charity
Studies have found that more people are engaging in online gambling and sports betting since the pandemic began. And there are still more traditional ways to gamble and play the lottery. If you’re lucky enough to win, be aware that tax consequences go along with your good fortune.
Continue Reading You Win! But What are the Tax Consequences?
If you use an automobile in your trade or business, you may wonder how depreciation tax deductions are determined.
The rules are complicated, and special limitations that apply to vehicles classified as passenger autos (which include many pickups and SUVs) can result in it taking longer than expected to fully depreciate a vehicle.
Continue Reading Have a Business Automobile? Know the Tax Rules
Many homeowners across the country have seen their home values increase recently. According to the National Association of Realtors, the median price of homes sold in July of 2021 rose 17.8% over July of 2020. The median home price was $411,200 in the Northeast, $275,300 in the Midwest, $305,200 in the South and $508,300 in the West. Be aware of the tax implications if you’re selling a home or you sold one in 2021. You may owe capital gains tax and net investment income tax (NIIT).
As we approach the holidays and the end of the year, many people may want to make gifts of cash or stock to their loved ones. By properly using the annual exclusion, gifts to family members and loved ones can reduce the size of your taxable estate, within generous limits, without triggering any estate or gift tax. The exclusion amount for 2021 is $15,000.
The annual exclusion covers gifts you make to each recipient each year. Therefore, a taxpayer with three children can transfer $45,000 to the children every year free of federal gift taxes. If the only gifts made during a year are excluded in this fashion, there’s no need to file a federal gift tax return. If annual gifts exceed $15,000, the exclusion covers the first $15,000 per recipient, and only the excess is taxable. In addition, even taxable gifts may result in no gift tax liability thanks to the unified credit (discussed below).
Note: This discussion isn’t relevant to gifts made to a spouse because these gifts are free of gift tax under separate marital deduction rules.
In recent weeks, some Americans have been victimized by hurricanes, severe storms, flooding, wildfires and other disasters. No matter where you live, unexpected disasters may cause damage to your home or personal property. Before the Tax Cuts and Jobs Act (TCJA), eligible casualty loss victims could claim a deduction on their tax returns. But there are now restrictions that make these deductions harder to take.
What’s considered a casualty for tax purposes? It’s a sudden, unexpected or unusual event, such as a hurricane, tornado, flood, earthquake, fire, act of vandalism or a terrorist attack.
Continue Reading Claiming Casualty Loss Tax Deduction in Certain Situations
If you’re a business owner and you’re getting a divorce, tax issues can complicate matters. Your business ownership interest is one of your biggest personal assets and in many cases, your marital property will include all or part of it.
Continue Reading Tax Implications for Business Owners Getting a Divorce
Are you familiar with Achieving a Better Life Experience (ABLE) Accounts? There may be a tax-advantaged way for people to save for the needs of family members with disabilities — without having them lose eligibility for government benefits to which they’re entitled. It can be done through ABLE accounts, which is a tax-free account that can be used for disability-related expenses.
Continue Reading How ABLE Accounts Help Disabled Family Members
If your child is fortunate enough to be awarded scholarships, you may wonder about the tax implications. Fortunately, scholarships (and fellowships) are generally tax free for students at elementary, middle and high schools, as well as those attending college, graduate school or accredited vocational schools.
It doesn’t matter if the scholarship makes a direct payment to the individual or reduces tuition.
Continue Reading Scholarships: Tax Free but May Result in Taxable Income