When most people think about taxable interest income, they imagine receiving a check, a bank deposit, or a payment from a borrower. However, federal tax law contains a lesser-known concept called Original Issue Discount (OID) that can require taxpayers to recognize taxable interest income even when no cash has been received. This rule frequently surprises [...]
Many taxpayers know that investment gains are taxable. Fewer understand what happens when investments lose money. Whether the loss comes from stocks, mutual funds, ETFs, cryptocurrency, or other capital assets, the Internal Revenue Code contains specific rules governing how and when those losses can be deducted. The good news is that unused capital losses generally [...]
Understanding One of the Most Overlooked Tax Relief Provisions in the Internal Revenue Code Most taxpayers understand that income is taxable when received. However, what happens if you receive money, report it as income, pay tax on it, and then later discover you must return some or all of that money? At first glance, this [...]
Understanding a Little-Known Exception to Cancellation of Debt Income Most taxpayers have heard that canceled debt can create taxable income. In general, if a lender forgives a debt, the borrower may have to report the forgiven amount as income under Internal Revenue Code ("IRC") § 61(a)(11). However, there is a lesser-known exception that can dramatically [...]
Many employees receive benefits from their employers beyond a paycheck. These benefits may include company vehicles, professional memberships, continuing education, cell phones, business travel, and specialized equipment. While many fringe benefits are taxable, federal tax law provides an important exception for certain employer-provided benefits that are primarily business-related. These benefits are known as working condition [...]
Adoption Is Expensive — But the Tax Code Provides Relief Adopting a child can be one of the most rewarding experiences in life, but it can also be costly. Legal fees, agency costs, travel expenses, court filings, and other adoption-related expenses can quickly add up to thousands of dollars. Many employers offer adoption assistance programs [...]
Many employees are surprised when they discover additional taxable income reported on their Form W-2 even though they never received any extra cash. One common source of this confusion is employer-provided group-term life insurance coverage exceeding $50,000. While life insurance proceeds are often associated with tax-free benefits, the tax treatment of employer-provided life insurance during [...]
Natural disasters can create financial chaos. Whether the disaster is a hurricane, flood, wildfire, tornado, or another federally declared emergency, taxpayers often receive financial assistance from employers, charities, insurance companies, or government programs. One of the most taxpayer-friendly provisions in the Internal Revenue Code is IRC § 139, which allows certain disaster-relief payments to be [...]
Many investors assume that if a stock becomes worthless, they must sell it before claiming a tax loss. Surprisingly, that is not always true. Under Internal Revenue Code § 165(g), a completely worthless security is generally treated as though it were sold on the last day of the tax year, potentially allowing the taxpayer to [...]
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