When property is gifted or transferred upon death, it is treated as a sale and the donor or deceased person is considered the seller. The profits are then treated as income on their federal estate, gift, or separate capital gains tax returns. Tax laws can be complex and difficult to interpret, but understanding them can help clients save money. A handful of states don't impose a sales tax, but that doesn't necessarily make them the best states for low taxes.
October 17th is a key date for tax-related activities, such as requesting an extension, contributing to an IRA or HSA, and meeting other deadlines. Prices are rising, so this may not result in significant savings. However, retirees with fixed income may pay less taxes since their income is static but they have a higher standard deduction, resulting in lower taxable income. The law allows up to 100% of Adjusted Gross Income (AGI) to be deducted from qualified charitable donations, but only if itemizing deductions.
This information is provided for informational purposes only and should not be relied upon for accounting, legal or tax advice.
Tax ExemptionsThere is a group of tax exemptions that are set to expire but Congress continues to extend them for another year or two. The Inflation Reduction Act extended two of these exemptions available to individuals: the credit for non-commercial energy properties and the real estate credit for refueling alternative fuel vehicles. If you had large medical bills last year, you may be able to find some tax relief. To help you understand how key tax benefits will change in the coming tax season, here are some answers. Mailed checks are accepted but remember that if you made early payments on the child tax credit, this will reduce the amount you receive when it comes to paying taxes.
Only those who applied for the standard deduction on their tax return (instead of requesting deductions listed in Schedule A) could make this deduction. A net investment income tax (NIIT) or a tax under the Self-Employment Contributions Act (SECA) would apply to the transferred business income of high-income individuals. This would apply to both the profits and gross income of a business that would not otherwise have been subject to unemployment taxes. As we approach 2022, it's important to stay informed about changes in tax laws and how they may affect you. Knowing what deductions are available and when certain deadlines are can help you save money and avoid penalties.
It's also important to understand how your income level affects your taxes and what exemptions you may qualify for.