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Understanding Tax Terms: Head of Household

Mon, Nov 26th 2018
The tax term head of household is one of the more misunderstood tax phrases inside the U.S. tax code. However, if your situation warrants head of household status, there are two big tax benefits. First, a higher standard deduction. Second, lower effective tax rates for virtually every income level. This is great, but only if you qualify. Three key qualifications There are three specific rules to qualify for the head of household status: You are not married. First, you need to be unmarried or... Read More »

Hustling for extra income

Mon, Nov 19th 2018
Conduct an online search of the phrase "side hustle" and you will find websites with countless ideas on how you can make some money on the side. The ideas range from carpet cleaning to podcasting. What a lot of these sites fail to inform you, is the tax implications that come from the additional income. Here are five tips to help you stay on top of your side hustle taxes: Business or hobby? When reviewing your activity, the first determination made by the IRS is whether the arrangement is a... Read More »

It's Your (and the IRS's) Lucky Day!

Mon, Nov 12th 2018
We've all imagined what it would be like to be the big winner, but what actually happens when you are? When you win a prize, there are really two winners: you and the taxing authorities. Should you be fortunate enough to win that trip of a lifetime to the French Riviera in your new yacht, here is what you need to know. Prizes are taxable. Almost all prizes are taxable income. You report them on your income tax return as other income. This is the case whether your prize is cash, merchandise, or... Read More »

The IRS Loves Your Business ... and That is NOT Good

Mon, Nov 5th 2018
The IRS continues to focus their audit activities in key small business areas. The wise business owner is well advised to be able to defend the following five areas to keep the IRS at a comfortable distance: Business or hobby? Be ready to provide proof your business is truly a business and not a hobby. Those who fail in the eyes of the IRS can have their expense deductions severely limited, while still required to report the income. Make sure you can answer and provide documentation for these... Read More »

Surprise! The Mutual Fund Tax Trap

Mon, Oct 29th 2018
Too often taxpayers receive tax surprises at year-end due to actions taken by mutual funds they own. What can add insult to injury is the unsuspecting taxpayer who recently purchases the shares in a mutual fund only to be taxed on their recent investment. How does this happen and what can you do about it? Tax surprises Towards the end of each year, many mutual funds pay a dividend to the holders on record as of a set date. The fund might also distribute funds deemed as capital gains based upon... Read More »