- Avoid Home Cancellation of Debt Income
- When a taxpayer settles a debt for less than its full amount, the forgiven amount of the debt is taxable, unless the taxpayer qualifies for one of two currently available exclusions. With the downturn in the economy and the accompanying drop in home prices that occurred in recent years, many taxpayers are unable to keep up the mortgage payments on their home, and unable to sell their homes because they owe more than the market price. As a result, a large number of homeowners have let their homes go back to the lender.
- Fine Tuning Capital Gains and Losses
- Year-end has historically been a good time to plan tax savings by carefully structuring capital gains and losses. Conventional wisdom has always been to minimize gains by selling “losers” to offset the gains from “winners” and where possible, generate the maximum allowable $3,000 capital loss for the year.
- 2013 May Be Your Last Chance to Deduct Sales and Use Tax
- The 2013 tax year may be the last chance for taxpayers who itemize deductions to deduct state and local sales taxes. That is because the option to deduct state and local sales taxes in lieu of state and local income taxes expires after the year's end unless Congress extends it.
- Planning Pension Distributions
- An individual may begin withdrawing, without penalty, from his or her qualified pension plans and Traditional IRAs at the age of 59½. There are several exceptions that will allow earlier withdrawal without penalty. Upon reaching age 70½, you are required to take distributions from your plans or face a substantial penalty for failing to do so. An exception applies for Roth IRAs: no distributions are required while the account owner is alive (Roth distributions are generally tax-free anyway).
- What's Best, Tax-Free or Taxable Interest Income?
- A frequent tax strategy question is whether investing for tax-free or taxable interest is better. Generally, taxable interest will provide the greater return, but this may not hold true after taking into account taxes on the income.
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