- Receiving Cash Tips? The IRS Is Watching
- Anyone who collects tips must include them in their taxable income. This requirement is not limited to waiters and waitresses; it applies to anyone who collects tips, including taxicab drivers, beauticians, porters, concierges, etc.
- Most Overlooked Tax Deduction
- One of the most overlooked tax deductions is what is referred to as the IRD deduction. IRD is the acronym for income in respect of a decedent. So what is IRD income? It is income that is taxable to the decedent's estate and also taxable to the beneficiaries of the estate.
- Time-Share Use as a Charitable Contribution
- If you have ever attended a charity auction, it is not uncommon to see a week's use of a time-share included in the items donated for auction. The time-share owners who donate these weeks generally do so in anticipation of being able to take charitable donation deduction on their tax returns.
- Deducting More Than $250 for Teachers’ Classroom Supplies
- Many devoted teachers spend a significant amount of their own money on classroom supplies. Recognizing this, several years ago, Congress created a special deduction for teachers that would allow them to annually deduct up to $250 on their tax returns for classroom supplies—even if they don’t itemize their deductions. This type of deduction is termed an “above-the-line” deduction, and it is available even for taxpayers who claim the standard deduction.
- Back-Door Roth IRAs
- Many individuals who are saving for retirement favor Roth IRAs over traditional IRAs because the former allows for both accumulation and post-retirement distributions to be tax-free. In comparison, contributions to traditional IRAs may be deductible, earnings are tax-deferred, and distributions are generally taxable. Anyone who is under age 70.5 and who has compensation can make a contribution to a traditional IRA (although the deduction may be limited). However, not everyone is allowed to make a Roth IRA contribution.
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