The top estate tax rate for 2017 is 40% and there is a $5,490,000 exemption amount. Individuals can transfer up to $5,490,000 (indexed for inflation in the future) to heirs free from estate tax.
In addition, for married couples, if one spouse dies without using the full exclusion, the remainder can be added to the surviving spouse’s own exclusion. This provision provides a way for couples to take advantage of each other’s exemption, without having to create complicated trusts or …
You can withdraw money that you have contributed to a Roth IRA (i.e., your own money) at any time because the account was funded with after-tax dollars on which income taxes were already paid.
You can withdraw the earnings from a Roth IRA tax free in the following situations:
1. You have reached the age of 59½, and at least five years have passed since your Roth IRA account was opened. Earnings can be withdrawn tax-free beginning on the first …
A refund antipation loan or RAL is a method of receiving a Federal income tax refund sooner than it would come to the taxpayer from the IRS. Other common names for this type of transaction are: Fast Cash Refunds, Rapid Refunds, Express Money, and Instant Refunds.
All of these common names are misleading because they are not refunds; they are actually high interest loans.Taxpayers are paying high fees to borrow their own refund money. The IRS has become quite efficient …
First, individual taxpayers or taxpaying married couples must add up their “modified adjusted gross income.” This is their taxable income, plus their tax-exempt income, plus half of their Social Security benefits. If this figure exceeds certain income levels, a portion of Social Security benefits is taxed.
Next, a worksheet is completed to determine the amount of Social Security benefits that is taxable. This worksheet can be found in the annual instructions package for tax forms available online in the “Forms …
Legislation went into effect July 1, 1999, requiring automatic termination of PMI when a homeowner has paid at least 20 percent of the home’s value for loans made after July 29, 1999. High-risk borrowers (such as those with poor credit histories and reduced documentation loans) may have to make PMI payments until they reach 50 percent equity. If you believe that you have reached the 20% home equity mark and your PMI payments have not been discontinued, speak to your …
Single taxpayers can exclude up to $250,000 of capital gains on the sale of a home, and married taxpayers filing jointly can exclude $500,000.
Taxpayers are eligible for the exclusion if they have owned and used a home as their main home for a period aggregating at least two years out of the five years prior to its date of sale. The exclusion is allowed each time that you sell a primary residence but no more than once every two …
Coverdell Education Savings Accounts (ESAs) were originally established in 1997 and called “Education IRAs.” They are investment trust accounts created to pay qualified education expenses, including primary, secondary, and postsecondary education, for a designated beneficiary. The beneficiary of the account must be under the age of 18 at the time of the contribution and the contributor’s income must meet specific annual income guidelines. Total ESA contributions per child under age 18 may not exceed $2,000 per year.
Income phaseouts apply …
To qualify for Social Security retirement benefits, you must generally have “40 quarters of coverage.” This means that you must have been working for 10 years and earning at least the minimum income (adjusted annually for inflation) required to receive a quarter of coverage.
For example, in 2017, you can receive one quarter of coverage for each $1,300 of earnings, up to the maximum of four quarters of credit per year. Thus, the maximum amount of income needed to earn …
Although most 401(k) plans offer loans of up to half your vested balance, this may not be a good idea. Plan loans usually charge the prime rate plus one or two percentage points. In addition, you lose all future compound interest on the lost earnings on money that was borrowed. If you quit your job or are laid off or fired, your loan may be due immediately at a time when you can least afford to pay it back.
If …
Although the IRS typically allows people to gift no more than $14,000 a year (2017 figure) to another person without a federal gift tax, you can contribute up to $70,000 to a 529 plan in one year. A special tax law allows you to aggregate five years of the allowable $14,000 annual gift-tax exclusion (5 x $14,000 = $70,000) to jump-start a 529 plan.
While you will not be able to make any further gifts to the 529 plan for …
