Homeowners and businesses across the country have experienced weather-related disasters in recent months. From hurricanes, tornadoes and other severe storms to the wildfires again raging in the West, natural disasters have led to significant losses for a wide swath of taxpayers. If you’re among them, you may qualify for a federal income tax deduction, as well as other relief from the IRS.
Selling a home: Will you owe tax on the profit?
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 your home or you sold one in 2021. You may owe capital gains tax and net investment income tax (NIIT).
Planning for year-end gifts with the gift tax annual exclusion
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.
You can only claim a casualty loss tax deduction in certain situations
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.
Does your employer provide life insurance? Here are the tax consequences
ABLE accounts may help disabled or blind family members
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 their government benefits. It’s done though an ABLE account, which is a tax-free account that can be used for disability-related expenses. Eligible individuals must have become blind or disabled before turning age 26. ABLE accounts can be created by eligible individuals to support themselves, by family members to support their dependents, or by guardians. Contributions up to the annual gift-tax exclusion amount ($15,000 in 2021), can be made to an account each year. Contact us if you have questions about setting up or maintaining an ABLE account.
IRS issues ERC guidance as Congress mulls early termination
Scholarships are usually tax free but they may result in taxable income
If your child is fortunate enough to be awarded a scholarship, you may wonder about the tax implications. Scholarships and fellowships are generally (but not always) 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 student or reduces tuition. However, certain conditions must be met. A scholarship is tax free if it’s used to pay for tuition and fees required to attend the school, and fees, books, supplies and equipment required of students. Room and board, travel, research and clerical help don’t qualify. Contact us to learn more.