Harless Tax Blog
With the end of the year looming, the window is quickly closing for taxpayers who want to minimize the taxes they will pay next spring.
What's more, for those trying to make year-end adjustments to their income and deductions, a tax reform bill being discussed in the District of Columbia has created uncertainty. Although it's tempting to take action based on expected changes to the law, some finance experts urge caution. "Until the law becomes formal, we have to be very careful," says Kristin Bulat, senior vice president of strategic resources for insurance and consulting firm NFP. See More
A new year begins with celebrations, resolutions, and dual IRA opportunities. Most workers and their spouses have until April 18, 2017 (April 19 in some states), to contribute to an IRA for 2016. At the same time, contributions to 2017 IRAs are now permitted; the earlier money goes into the account, the more time for tax-deferred investment buildup.
While you consider IRA contributions, you should also take this time to review IRA investments. Virtually any investment can go into an IRA, other than life insurance and collectibles. In recent years, questionable outlooks for stocks, bonds, and savings accounts have encouraged many IRA owners to consider—or put money into—nontraditional IRA assets. See More
In 2017, the maximum Social Security benefit for a worker retiring at full retirement age (now 66) is $2,687 a month, or $32,244 a year.
Contributions to a traditional IRA are prohibited for those 70½ or older. Contributions to a Roth IRA are permitted, regardless of age.
If married couples file a joint tax return, one spouse may be able to contribute to an IRA even without taxable compensation for the year. The amount of the couple’s combined contributions can’t exceed the taxable compensation reported on the joint return. See More
Source CNBC. Read Original Article
Putting your RMD to work Make the most of your required minimum distribution Thursday, 19 Nov 2015 | 7:00 AM ET | 01:08 The clock is running out on retirees who haven't taken enough from their retirement accounts this year.
IRS rules on the so-called required minimum distributions generally kick in once you reach age 70½. For 401(k) plans and other defined contribution plans, it's either when you turn 70½. or you retire, whichever is later. If you've inherited an IRA, you might also be subject to RMDs, even if your own retirement is years away.
How much you need to take is usually based on the account balance at the end of the previous year, and your life expectancy based on your age. Fail to withdraw enough, and there's a 50 percent penalty on the shortfall. See More
Many people save money for retirement in a traditional IRA. The funds might have come from annual IRA contributions, or from rolling over an employer sponsored retirement account such as a 401(k). Either way, the dollars in your traditional IRA are probably pretax, so they’ll be taxed on withdrawal.
You can leave the money in your traditional IRA for ongoing tax deferral. However, you might need cash now, especially if you’re retired or have had unexpected expenses. In another scenario, you may expect your traditional IRA to be extremely large by the time you reach age 70½ and RMDs begin. Those RMDs might be so large that they’ll be heavily taxed in a high bracket.
Therefore, you might want to take withdrawals from your traditional IRA before year-end 2016, so they’ll count in this year’s taxable income. With savvy planning, you can minimize the tax bite by staying within your current tax bracket. See More
Business owners may need capital to support growth, and the money in their IRA can be tempting. Nevertheless, the pitfalls can be steep, as illustrated in a recent Tax Court case (Thiessen v. Commissioner, 146 T.C. No. 7 [3/29/16]). Here, the court ruled that because a married couple had entered into prohibited transactions with respect to their IRAs, the assets in the IRAs were deemed to have been distributed, resulting in a huge tax bill.
Describing the transaction
When James Thiessen left a long-held job after declining to relocate, he found a metal fabricating business (call it ABC Co.) for sale. Through a friend who had executed such a transaction and also from a broker, James heard about the use of IRA money to help finance the purchase. See More
From the CNBC.com Website. Read Original Article >
Didn't redeposit that 401(k) distribution check from your old employer into an IRA or your new boss' qualified retirement savings plan within two months' time?
That once meant you'd likely have to fork over hefty taxes and penalty fees on those hard-earned, once-tax-deferred savings but now, thanks to a new Internal Revenue Service policy, your word that it was an honest mistake will be enough for the feds to give you a break. See More
The IRS normally issues taxpayer refunds quickly. But this year, some filers are going to have to wait.
Due to budget cuts, people who file paper tax returns could wait an extra week for their refund — "or possibly longer," wrote IRS Commissioner John Koskinen in a memo to employees Tuesday. And filers with errors or questions that require additional review will also face delays. [Source: Money.CNN.com] See More
Your caller ID says “FTC” or “IRS,” and the phone number has the
“202” Washington, DC area code. You might even look the number up and
see that it’s a real government phone number.
But the person calling isn’t really from the FTC, IRS, or any other agency. It’s a government imposter whose goal is to convince you to send money before you figure out it’s a scam. The big giveaway? The caller wants you to send money.[Source: Consumer.ftc.gov] See More
The Internal Revenue Service announced
the annual inflation adjustments for tax year 2015 for more than 40 tax
provisions, including the tax rate schedules, and other tax changes. [Source: AccountingToday.com]
Revenue Procedure 2014-61 provides details about these annual adjustments. The tax items for tax year 2015 of greatest interest to most taxpayers include the following dollar amounts:
The tax rate of 39.6 percent affects singles whose income exceeds $413,200 ($464,850 for married taxpayers filing a joint return), up from $406,750 and $457,600, respectively. The other marginal rates—10, 15, 25, 28, 33 and 35 percent—and the related income tax thresholds are described in the revenue procedure. See More