Many Americans receive disability income. You may wonder if — and how — it’s taxed. As is often the case with tax questions, the answer is … it depends. The key factor is who paid for the benefit. If the income is paid directly to you by your employer, it’s taxable to you as ordinary
Joan Ellenbogen
Nov 19, 2020
Nov 12, 2020
Do you want to withdraw cash from your closely held corporation at a low tax cost?
- By Joan Ellenbogen
- Business
- 0 Comments
Owners of closely held corporations are often interested in easily withdrawing money from their businesses at the lowest possible tax cost. The simplest way is to distribute cash as a dividend. However, a dividend distribution isn’t tax-efficient, since it’s taxable to you to the extent of your corporation’s “earnings and profits.” And it’s not deductible
Nov 10, 2020
How Series EE savings bonds are taxed
- By Joan Ellenbogen
- Taxes
- 0 Comments
Many people have Series EE savings bonds that were purchased many years ago. Perhaps they were given to your children as gifts or maybe you bought them yourself and put them away in a file cabinet or safe deposit box. You may wonder: How is the interest you earn on EE bonds taxed? And if
Nov 3, 2020
New business? It’s a good time to start a retirement plan
- By Joan Ellenbogen
- Retirement
- 0 Comments
If you recently launched a business, you may want to set up a tax-favored retirement plan for yourself and your employees. There are several types of qualified plans that are eligible for these tax advantages: A current deduction from income to the employer for contributions to the plan, Tax-free buildup of the value of plan
Oct 27, 2020
What tax records can you throw away?
- By Joan Ellenbogen
- Taxes
- 0 Comments
If you’re finally done filing last year’s return, you might wonder: Which tax records can you toss once you’re done? Now is a good time to go through old tax records and see what you can discard. The general rules At minimum, you should keep tax records for as long as the IRS has the
Oct 20, 2020
The 2021 “Social Security wage base” is increasing
- By Joan Ellenbogen
- Business
- 0 Comments
If your small business is planning for payroll next year, be aware that the “Social Security wage base” is increasing. The Social Security Administration recently announced that the maximum earnings subject to Social Security tax will increase from $137,700 in 2020 to $142,800 in 2021. For 2021, the FICA tax rate for both employers and
Oct 15, 2020
Is your business inadvertently paying a shell company?
- By Joan Ellenbogen
- Fraud
- 0 Comments
Shell companies exist only on paper, but they may be used to hold other companies’ assets and for other legitimate purposes. That said, some unscrupulous employees who perpetrate billing fraud use shell companies. Fortunately, most of these perpetrators leave a paper trail of invoices. These may arrive more than once a month, show increased purchases
Oct 8, 2020
Don’t procrastinate if you plan to transfer ownership of your life insurance policy
- By Joan Ellenbogen
- Estate
- 0 Comments
Generally, the proceeds of your life insurance policy are included in your taxable estate. You can remove them by transferring ownership of the policy, but there’s a catch: If you wait too long, your intentions may be defeated. Essentially, if ownership of the policy is transferred within three years of your death, the proceeds revert
Oct 6, 2020
Can investors who manage their own portfolios deduct related expenses?
- By Joan Ellenbogen
- Taxes
- 0 Comments
In some cases, investors have significant related expenses, such as the cost of subscriptions to financial periodicals and clerical expenses. Are they tax deductible? Under the Tax Cut and Jobs Act, these expenses aren’t deductible through 2025 if they’re considered expenses for the production of income. But they are deductible if they’re considered trade or
Sep 30, 2020
Homebuyers: Can you deduct seller-paid points?
- By Joan Ellenbogen
- Taxes
- 0 Comments
Despite the COVID-19 pandemic, the National Association of Realtors (NAR) reports that existing home sales and prices are up nationwide, compared with last year. One of the reasons is the pandemic: “With the sizable shift in remote work, current homeowners are looking for larger homes…” according to NAR’s Chief Economist Lawrence Yun. If you’re buying