Many employers assume that every benefit provided to an employee creates taxable income. Fortunately, that is not true. The Internal Revenue Code recognizes that some workplace perks are so small and infrequent that requiring employers to track and report them would be administratively unreasonable. These benefits are known as de minimis fringe benefits, and they [...]
Buying or refinancing a home often comes with a long list of closing costs. One of the most misunderstood expenses is mortgage points, also called discount points. Many taxpayers assume they can simply deduct the entire amount in the year they pay it. Sometimes they can—but often they cannot. The Internal Revenue Code contains specific [...]
One of the most overlooked tax-saving provisions available to small businesses is the de minimis safe harbor election. Many taxpayers assume that every computer, desk, printer, tool, or office purchase must be depreciated over several years. In reality, the Internal Revenue Code and Treasury Regulations provide an election that allows many lower-cost business assets to [...]
Are Inheritances Taxable? One of the most common tax questions people ask after losing a loved one is simple: "Do I have to pay income tax on my inheritance?" Fortunately, the answer is usually no—but there are several important exceptions that every beneficiary should understand. While inherited cash and property generally are not taxable income, [...]
Many taxpayers remember a time when moving expenses were deductible and employer reimbursements for relocation costs could often be received tax-free. However, the Tax Cuts and Jobs Act ("TCJA") dramatically changed these rules for most taxpayers. Today, many employees are surprised to discover that relocation payments from an employer may be fully taxable, even when [...]
What Happens When You Inherit an IRA? Many Americans assume that inheriting an Individual Retirement Account (IRA) means they can simply leave the money invested indefinitely. That was often true in the past. However, the passage of the SECURE Act dramatically changed the rules for many beneficiaries. Today, most non-spouse beneficiaries who inherit an IRA [...]
Divorce is often emotionally and financially difficult, but one tax rule can significantly reduce the immediate tax burden associated with dividing property. Under Internal Revenue Code § 1041, most transfers of property between spouses or former spouses incident to divorce are treated as nonrecognition events for federal income tax purposes. In plain English, this means [...]
Tax-Free Meals and Lodging for Employees: A Valuable but Often Misunderstood Employee Benefit Many employees assume that if an employer provides free meals or housing, the value must automatically be included in taxable income. Surprisingly, the Internal Revenue Code contains a significant exception. Under certain circumstances, employees may receive employer-provided meals and lodging completely tax-free. [...]
Many employees assume that if their employer pays for college courses, professional certifications, or continuing education, the value of those benefits must be included in taxable income. Surprisingly, federal tax law provides a significant exception. Under Internal Revenue Code § 127, employers may provide certain educational assistance benefits to employees on a tax-free basis. Properly [...]
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 [...]
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