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Are you thinking about selling your home but worried about the additional tax it could generate?

It is possible that you could be one of the many who can sell your home while avoiding the capital gains tax.

 $1.2 billion in penalties will be refunded to 1.6 million taxpayers

In late August, the Internal Revenue Service announced on its website that it had issued Notice 2022-36, which will provide penalty relief to most taxpayers who filed certain 2019 or 2020 tax returns late.

In early June, the Internal Revenue Service started sending letters to families about how they may be able to qualify for monthly Child Tax Credit payments.

The letters are going out to families who may be eligible based on information they included in either their 2019 or 2020 tax return or who used the Non-Filers tool on IRS.gov last year to register for an Economic Impact Payment.

In early June, the U.S. Treasury Department released its general explanations of proposed changes to the U.S. tax code.

Please note, the following items have only been proposed. In order to become law, they must pass through both the U.S. House of Representatives and the U.S. Senate.

The PATH Act accelerated the due date for filing Form 1099 that includes nonemployee compensation (NEC) from February 28 to January 31 and eliminated the automatic 30-day extension for forms that include NEC. Starting with tax year 2020, taxpayers should use Form 1099-NEC to report nonemployee compensation.

Form 1099-NEC replaces the use of box 7 on Form 1099-MISC from previous years. Other uses of 1099-MISC have not changed and will continue to be used for common payments such as rent and payments to an attorney.

Many individuals may think the time to plan for tax season occurs during the tax season, which occurs after their tax year has ended.

Unfortunately, this is often too late to make any adjustments, which may have benefited the taxpayer.  

Similarly, businesses can also fall into this line of thinking and fail to plan for tax season during their tax year.

Q: What Does ‘Like-Kind’ Mean in a 1031 Exchange?

A: As you are probably aware, a 1031 Exchange refers to a provision in the U.S. tax code, which allows real estate investors to sell or dispose of a piece of real property and purchase another piece of “like-kind” property without incurring any short-term tax consequences. But what does like-kind mean?

It’s the 4th quarter. The holidays are right around the corner. The last thing you may want to think about is income taxes … but there are some compelling reasons why you should be thinking ahead.

Last year’s tax season saw the biggest change to the tax code in over 30 years. At the end of the tax season, we noted that one of the lessons learned was that individuals who engage us in tax planning early, on average, fared much better than those who did not. There are some very important reasons for this:

Current Law:

The Tax Cuts and Jobs Act of 2017 limits individual taxpayer's state and local tax (SALT), itemized deduction to $10,000 (including real estate taxes). The previous law allowed an unlimited deduction. This change may be detrimental to many individual taxpayers who relied heavily on these deductions in the past.

State Work-Arounds:

Some states have considered "work-arounds" to combat this limitation. Select states (California, Connecticut, Illinois, New York and New Jersey, thus far) have created state

When couples divorce, financial negotiations often involve alimony. The tax rules regarding alimony were dramatically changed by the Tax Cuts and Jobs Act (TCJA) of 2017, but existing agreements have been grandfathered. In addition, the old rules remain in effect for divorce and separation agreements executed during 2018. Next year, the rules will change, and the roles will be reversed.

Under divorce or separation agreements executed in 2018, and for many years in the past, alimony payments have been tax deductible. Moreover, these deductions reduce adjusted gross income, so they may have benefits elsewhere on a tax return. While the spouse or former spouse paying the alimony gets a tax deduction, the recipient reports alimony as taxable income.

Shifting into reverse

Beginning with agreements executed in 2019, there will be no tax deduction for alimony. As an offset, alimony recipients will not include the payments in income.