Archive for the ‘General Taxation’ Category

Big Change in the 401k Rollover Rules

September 23, 2014

We don’t often get a change this big in an area as important as 401k rollovers. The IRS released guidance completely revising the way we treat rollovers when your 401k or similar account includes after-tax dollars. Ed Slott, author of Ed Slott’s 2014 Retirement Decisions Guide, praised the guidance, saying, “The IRS has made it easier for many people to make their retirement savings more tax-efficient.”

What’s the big deal? Previously it was difficult to separate pre-tax dollars from after-tax dollars when taking money from an employer plan. Now it’s a snap, which means you can send pre-tax dollars to a traditional IRA for a tax-free rollover while sending after-tax dollars to a Roth IRA for a tax-free conversion. This is a big win for people with retirement savings. Use the link below for a full explanation

details: Isolating Basis for a Roth Conversion

Inflation Adjustments for 2015

September 22, 2014

inflation-rate-of-changeThe August inflation numbers, which came out September 17, are the last ones needed to adjust most of the tax figures that change annually, including the tax rate schedules. The IRS hasn’t published the adjusted figures, but we “did the math” and updated our Reference Room to give you an advance look at the 2015 numbers. Highlights include an increase in the personal exemption amount from this year’s $3,950 to a round $4,000. The IRA contribution limit (under age 50) will remain at $5,500. (The 401k contribution limit depends on September inflation numbers, so that information isn’t available yet.) The annual gift tax exclusion amount will be unchanged at $14,000.

Inflation for the twelve-month period ending in August was 1.7%.

Clergy Housing Allowance Exemption Unconstitutional

December 30, 2013

Court rulingsSection 107 of the Internal Revenue Code provides a tax exemption for a housing allowance provided to a “minister of the gospel.” In a decision virtually certain to be overturned, a federal judge has found the exemption unconstitutional.

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Roth Guide Updated

December 22, 2013

Roth retirement accountsOur free online guide to Roth retirement accounts has been fully updated. This extensive guide offers much of the information covered in Go Roth!, our book on the subject.

details: Roth IRA and Other Roth Retirement Accounts

Standard Mileage Rates for 2014

December 6, 2013

The IRS is out with the standard mileage rates for 2014. Here are the main points, quoted from the IRS announcement:

Beginning on Jan. 1, 2014, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 56 cents per mile for business miles driven
  • 23.5 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations

The business, medical, and moving expense rates decrease one-half cent from the 2013 rates.  The charitable rate is based on statute.

Inflation Adjustments for 2014 Tax Numbers

September 21, 2013
By Kaye A. Thomas

The August inflation numbers are out, and that means it is now possible to determine the 2014 amounts for many of the tax numbers that are adjusted each year for inflation. Among the numbers affected are the size of the income tax brackets, personal exemptions, and the income levels where various tax benefits begin to phase out. The IRS usually waits at least a few weeks before announcing these numbers, but we’ve done our own calculations, which are available in our Reference Room.

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Key Tax Question on Gay Marriage

August 5, 2013
By Kaye A. Thomas

Update: The IRS has issued a ruling that addresses the most important issues discussed in this post. We’ll have detailed guidance in the near future but for now here are the main points:

  • For federal tax purposes, the IRS will treat same-sex couples as married if the marriage occurred in a state or country where such marriages are legal, even if they live in a state that doesn’t recognize such marriages.
  • IRS will not require couples to amend prior year returns, but couples are permitted to do so if an amended return would produce a refund for a year when they were married but required to file single, provided that year is still open under the statute of limitations.
  • Civil unions, domestic partners and similar relationships will not be treated as marriages.

More to come.


The Supreme Court’s decision in Windsor to overturn the Defense of Marriage Act raises many complicated tax issues. One of the most important is whether the marital status of same-sex couples will be determined based on the state of celebration or the state of residence. What happens if a couple has been married in a state where same sex-marriage is legal but now resides in a state where such marriages are not recognized? (more…)

Taxing Internet Sales

April 23, 2013
By Kaye A. Thomas

If you read the Wall Street Journal, you may be aware that legislation dealing with Internet sales is moving forward. Monday, the Senate voted 74 to 20 in favor of opening debate on the measure. [Update: the Senate subsequently passed the bill; action in the House is pending with the outcome uncertain at this point.] The picture of this legislation painted on the Journal’s editorial pages is misleading, however.

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IRS Tool for Homebuyer Credit

March 3, 2013

A few years ago, to stimulate the housing market Congress created a special credit for certain people buying homes. It was called the first-time homebuyer credit, although it wasn’t strictly limited to people who had never owned a home. The first version of the credit was really an interest-free loan made through the tax system: qualified taxpayers received the credit in the year they bought the home but had to repay it through “recapture” of the credit over a number of years. If you claimed this version of the credit and are unsure where you stand in terms of repaying it, the IRS has a new tool on its website where you can look up this information. (Taxpayers who used the revised version of this credit do not have to repay it.)

link: First Time Homebuyer Credit Account Look-up

Forbes Quotes Fairmark

February 15, 2013

Forbes quotes us in this article about estimated tax concerns of high-income taxpayers following the tax increases that took effect as of 2013.

more info: Free online guide to estimated tax payments