Losing a job can create an immediate financial problem. Unemployment benefits can help bridge the gap while a worker searches for another position. But receiving unemployment compensation can also create a less obvious problem: Federal income taxes. Many taxpayers understandably assume that unemployment benefits are tax-free because the payments come from a government unemployment program. [...]
Most taxpayers understand that wages are taxable. Business profits are taxable. Interest and dividends are generally taxable. Rental income can be taxable. Even prizes, gambling winnings, and bartering transactions can create federal income tax consequences. But what happens when the money itself comes from illegal activity? Can the federal government really require someone to pay [...]
Smartphones have blurred the distinction between business and personal life. An employee may use the same phone to answer a client's call, respond to a work email, check a personal text message, call a family member, and look at directions on the drive home. If the employer pays for that phone, does the employee have [...]
Serving on a jury is one of the basic responsibilities of American citizenship. Unfortunately, performing that civic duty can also produce a small and easily overlooked federal income tax issue. Courts commonly compensate jurors for their service. The amount may be modest, particularly compared with the wages a person might lose by missing work. Nevertheless, [...]
Finding a wad of cash in an old piece of furniture sounds like good luck, not a taxable event. Finding valuable coins buried in the backyard might feel even less like “income.” Nobody paid you. You did not sell anything. You did not perform services. You did not receive a paycheck or investment distribution. Nevertheless, [...]
Americans lose billions of dollars every year to financial scams. Investment fraud, cryptocurrency schemes, fake trading platforms, impersonation scams, and increasingly sophisticated online fraud can wipe out savings remarkably quickly. When that happens, victims naturally ask a tax question: Can money stolen through a scam be deducted on your federal income tax return? The surprising [...]
Receiving an IRS penalty notice can be intimidating. Fortunately, federal tax law recognizes that not every failure to file, pay, or comply with tax requirements is the result of neglect or intentional wrongdoing. In many situations, taxpayers may qualify for penalty relief based upon reasonable cause. Understanding when reasonable cause applies can save hundreds—or even [...]
Donating appreciated property to charity can be one of the most tax-efficient ways to give. Rather than selling an asset, paying capital gains tax, and then donating the proceeds, many taxpayers instead donate the property directly and potentially receive a charitable contribution deduction. However, there is one surprisingly technical requirement that regularly causes taxpayers to [...]
Many retirees assume that donating money to charity and taking a charitable deduction produces the same tax result as giving directly from an IRA. In reality, a Qualified Charitable Distribution (QCD) can be significantly more tax-efficient because it generally excludes the distribution from taxable income altogether. For taxpayers who are charitably inclined and own traditional [...]
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