Maybe Congress realized what they did when they increased the Standard Deduction for single folks to $12,000 for year 2018 ($24,000 for joint returns). But now your child can earn up to $12,000 of wages and still pay no income tax. If you are self-employed, own your own business and report income and expenses on Schedule C of form 1040, …
Innocent Spouse Relief is not Always Granted – By John R. Bullis
Mindy Lessard was married to Mr. Tomko in 2013 and they filed a joint tax return. However, two items of income were not reported on the return. There was $14,936 of cancellation of debt income that was his and $20,502 of distributions to him from his retirement plan. They were divorced in 2014. It seems they did not live in …
Health Savings Account Briefly Explained – By John R. Bullis
The Health Savings Account is a wonderful thing! Contributions (that are qualified, or allowed) are an income tax deduction on page 1 of form 1040, whether Itemized Deductions on Schedule A are done, or not. And employers can contribute to an eligible person’s Health Savings Account. The employer contribution is not included in taxable income. But you do not need …
Non Tax Estate Planning – By John R. Bullis
Of course Estate Planning is done to minimize taxes and be sure the financial matters are done as desired. However, the planning for other than taxes is very important. Designating the best Trustee or Executor and possible successors is not easy, but extremely important to being sure the administration goes smoothly. As time goes by it might be important to …
What if My Stock Investment is Worthless – By John R. Bullis
Once in a while a stock or bond you bought has big problems and becomes worthless. A security (stock or bond) that becomes worthless during the year is treated (and reported on your tax return) as if it were sold on the last day of the year. The definition of worthless means the stock or bond has no value or …
Your Surprise IRA Beneficiary – By John R. Bullis
Saving for your retirement and possible bequest to family and friends is good to do! Many folks have an Individual Retirement Account (IRA) that is a major part of their retirement savings. Your IRA has designated beneficiaries. Usually you during your lifetime, you will take the distributions from the IRA. If you are age 70 ½, you must take a …
Gift Tax Rules – By John R. Bullis
IRS form 709, U.S. Gift Tax Return, is used to report major gifts done in the year. The return is due the following April 15th but if an Extension of Time is filed, the due date might be the following October 15th. Usually the Gift Tax Return does not require a tax payment since each person has an exemption of …
New Death Tax “Portability” Rules – By John R. Bullis
Every person has a death tax allowance or exemption of $5,490,000 this year. If you die with total assets (net of any debts or liabilities) of less than $5,490,000, there is no death tax to pay. If the husband dies first and his total assets (net of debts) are only $1,490,000, his unused exemption is $4,000,000 and it can be …
Let’s Think About Funerals – By John R. Bullis
First a little background. One of my grandfathers started a mortuary in Hardin, Montana just over a hundred years ago. It is still run by family, currently one of my cousins. My father had many occupations, including being a mortician. When we begin planning for a funeral, one of the first decisions is a choice of wanting burial or …
What is the 3.8% Medicare Surtax? – By John R. Bullis
IRS Code Section 1411 charges 3.8% additional Medicare tax on unearned income of high earning taxpayers. That surtax is called earned income Medicare contribution tax or the Net Investment Income Tax. It is in addition to the regular income tax. The tax applies, in certain situations, on investment income such as interest, dividends, annuities, royalties and rents-unless it is …