When you acquire ownership of land, you become liable for property taxes, which are a type of tax imposed by local governments to fund essential services and infrastructure within the area where the land is located. These taxes are typically calculated based on the assessed value of your land, which is determined by local tax … Read more
When you inherit an IRA, the taxes you’ll pay depend on your age and what you do with the money. If you’re under 59½ and take a withdrawal, you’ll pay income tax plus a 10% early withdrawal penalty. If you’re 59½ or older, you’ll pay income tax but no penalty. If you leave the money … Read more
A corrective tax is a government-imposed charge on specific products or activities that aim to discourage their consumption or participation. These taxes are designed to address negative externalities, situations where an individual’s actions impose costs on others. By increasing the price of harmful activities, corrective taxes encourage people to reduce their engagement in those behaviors. … Read more
When your tax code is incorrect, it can lead to complications and potential mistakes in your tax calculations. If your code is too low, you may end up paying too little tax, resulting in a tax bill or even penalties later down the line. On the other hand, if your code is too high, you … Read more
Tax ID and FEIN are both identifiers used for tax purposes in the United States. A Tax ID, also known as an Employer Identification Number (EIN), is a nine-digit number assigned by the Internal Revenue Service (IRS) to businesses or other entities. It is used to identify the business and to report its income and … Read more
When an individual receives a set sum of money or personal property under a will, known as a pecuniary legacy, it may be subject to inheritance tax. The value of the legacy will be included in the recipient’s taxable estate, potentially increasing the overall tax liability. In some cases, the deceased individual’s estate may be … Read more
Accrued expenses, also called unpaid expenses, are business expenses incurred but not yet paid. For tax purposes, the timing of expense recognition and deduction depends on the type of accounting method used, either cash basis or accrual basis. Under the accrual basis, accrued expenses are deductible in the period they are incurred, regardless of when … Read more
The likelihood of an amended tax return being audited depends on several factors. Generally, amended returns are audited more frequently than original returns, as the IRS scrutinizes changes made to previously filed information. The significance of the changes, such as the amount of additional tax owed or the nature of the adjustments, can also influence … Read more
Deciding whether to claim medical expenses on your taxes requires careful consideration. The threshold for deducting these expenses is 7.5% of your adjusted gross income (AGI). If your total medical costs exceed this amount, it may be beneficial to itemize your deductions and include them. However, if your AGI is relatively high, the savings from … Read more
With 401(k) loans, it’s important to understand the tax implications. When you take out a loan from your 401(k), you’re essentially borrowing money from yourself. The amount borrowed is not taxed, so you don’t pay taxes on it now. However, when you repay the loan, you’re using after-tax dollars. This means that you’re paying taxes … Read more