Alpha’s Tax Tips

Unleash a ‘power’ for finances

If you’re suddenly unable to handle your financial affairs, it could lead to a big mess if you haven’t provided for the possibility. Strategy: Include a power of attorney in your estate plan. This legal document appoints someone—called the agent or attorney-in-fact—to act on your behalf. Generally, you’re better off with a “durable” power of […]

Thinking about a real estate swap? Use a go-between

Under the new Tax Cuts and Jobs Act (TCJA), like-kind exchanges of commercial or investment real estate properties remain exempt from tax. However, things usually aren’t so cut-and-dried in the real world. For one thing, it’s unlikely the potential buyer of your property will own any real estate you desire. Strategy: Use a “qualified intermediary” […]

Passports could be revoked for not paying back taxes

The IRS is reminding taxpayers that their passports could be revoked if they don’t pay back taxes.(IR-2019-141, 8/8/19) Under the Fixing America’s Surface Transportation (FAST) Act, the IRS notifies the State Department about taxpayers who are certified as owing a “seriously delinquent tax debt.” Currently, the threshold is $52,000. If a taxpayer has a valid […]

More Online Purchases are hit with Sales Tax

More online purchases are hit with sales tax. Thanks to a landmark Supreme Court case that gives states greater power to impose sales tax on e-commerce. In June, the Court overturned ruling that shielded sellers with no physical presence in the buyer’s home state from collecting sales tax. The Court blessed South Dakota’s internet sales […]

Find clothing deduction that fits

Does your business require employees to wear uniforms or other special clothing? Under the Tax Cuts and Jobs Act (TCJA), employees can no longer deduct out-of-pocket expenses for those items. Strategy: Buy uniforms or clothes for employees. The cost is deductible as an ordinary and necessary business expense. Similarly, reimbursements for these expenses are deductible […]

Crack nest egg for child’s home

Suppose your recently graduated child wants to buy a starter home. You’d like to help out, but you don’t have extra cash. Strategy: Withdraw money from your IRA. Although the distribution is taxable, you can avoid the usual 10% early withdrawal penalty when funds are used for qualified first-time homebuyer expenses. The maximum penalty-free lifetime […]

IRS is eyeing early distributions from IRAs

IRS is eyeing early distributions from IRAs…And qualified employer plans such as 401(K)s. The agency wants to make sure that individuals are properly reporting payouts taken before the age 59 ½. The issue is a common IRS Audit red flag. A 2015 review found that 40% of people scrutinized made mistakes, with most coming from […]

Line up an IRA rollover

Suppose you’re getting ready to call it quits or sell your company. The good news is that you’ve accumulated a tidy nest egg in your company retirement plan. The bad news: You will owe a hefty tax bill if you take a lump-sum payout. Strategy: Roll over the plan balance into an IRA. Assuming you […]

Lessons from the Tax Court: Keep it strictly business

If you are a self employed individual, you can deduct your “ordinary and necessary” business expenses. But you must operate in a businesslike fashion and keep proper records to segregate business income and expenses from personal income and expenses. Strategy: Don’t commingle your personal funds with your business funds. This could lead to a heap […]

Half of all seniors will need long-term care

Half of all seniors will need long-term care at some point, according to government estimates. It can be in-home, assisted living or nursing home care. About one in six will pay $100,000 or more out of their own pockets for long-term-care services. Luckily, the tax code can provide some help for seniors or anyone else […]