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 [...]
Many employees assume that if their employer reimburses them for bicycle commuting expenses, those payments are tax-free. While that was generally true for many years, the Tax Cuts and Jobs Act (TCJA) dramatically changed the rules. If your employer pays for your bicycle commuting costs, the tax consequences today are often different than many taxpayers [...]
Many taxpayers know they can deduct charitable contributions if they itemize deductions. Far fewer understand that a legitimate charitable donation can still be denied if the taxpayer cannot properly substantiate it. The Internal Revenue Code allows charitable contribution deductions, but Treasury Regulations impose detailed documentation requirements. If those requirements are not met, the deduction may [...]
Business owners often assume that every piece of equipment they purchase must be depreciated over several years. That is not always true. The Internal Revenue Code and Treasury Regulations contain a separate set of rules governing materials and supplies, allowing many inexpensive or short-lived items to be deducted immediately as ordinary business expenses. Understanding these [...]
IRS Interest Is Not a Penalty Many taxpayers receive an IRS notice showing both penalties and interest and assume they are the same thing. They are not. An IRS penalty is generally intended to encourage compliance with the tax laws. Interest, however, is designed to compensate for the time value of money. If taxes are [...]
When most people inherit property, they assume the only question is whether to accept it. Surprisingly, federal tax law sometimes rewards doing exactly the opposite. Under Internal Revenue Code § 2518, a beneficiary may legally refuse an inheritance through what is known as a qualified disclaimer. If all of the statutory requirements are satisfied, the [...]
Many taxpayers lend money to friends or family members believing that, if the borrower never repays the loan, they will at least receive a tax deduction. Unfortunately, federal tax law is much stricter than most people realize. In many situations, a personal loan that goes unpaid does not produce an ordinary tax deduction. Instead, the [...]
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