Also referred to as audits, this is where you get the dreaded letter from the IRS (or possibly from a state government) advising you that you are/your business is, being audited. Typically, the audit notice is for only one year, but it can be for a few years – whatever is open under the prevailing statute of limitations (which is generally 3 years - but with many exceptions). The exam can be very broad based, covering everything on your tax return or in your business, even d

The almost inevitable natural consequence of investing in the stock market is that sometimes you’ll have losses. Losses are deductible against gains. What if you have losses that exceed your gains? Let’s say that this year, with all your stock market transactions, you have $10,000 of gains and $30,000 of losses. From a tax point of view, the $10,000 of gains are offset by the $30,000 of losses, leaving you a net $20,000 of losses in excess of gains for the year. The way the

From a tax point of view, there are two kinds of bad debts – business and non-business. A business bad debt is a loan that is not getting paid back, that in some way is connected to a business. It might be the equivalent of an accounts receivable or similar type advance to a customer; it might be a loan, if you are for instance, in the business of making loans; or perhaps, a loan/advance to an employee that doesn’t get paid back. These are business bad debts and can be deduct

To oversimplify, if the interest expense is business related (and that includes, by way of example, rental property) it is deductible. Otherwise, on a personal level, and again as an oversimplification, only 3 types of interest are deductible – mortgage interest, investment interest and interest on student loans – and all are subject to different limitations. In the “old days”, you were able to deduct interest on personal car loans, credit cards, just about anything. That no

This can be a thorny and surprisingly upsetting area. Whether it’s called forgiveness of debt, or cancellation of debt, or other words to that effect, the concept here is that you owed somebody or something money, and then part or all of that was forgiven or waived. A common example is credit card debt. For instance, you ran up charges of $50,000 on your credit card, ran into some problems and worked out a deal with the credit card company where they would take $10,000 and wa

A lot of hand wringing has gone on over the new 3.8% Medicare investment tax. To oversimplify, for those with higher levels of income, investment income (such as dividends and interest income, capital gains and rental income) is subject to an extra 3.8% tax. As a result, much has been written and said about how to try to avoid it, and the horrors that befall those who fail to do so. Examples to avoid it include investing in municipals, which are exempt from this tax. Not to

A question that comes up all the time in our world is along the lines of “I’m getting divorced in December. Since I was married for 11 months of the year, wouldn’t I be filing as married in some fashion or the other?” The answer is no – all that matters for the filing of your own return is your status as of December 31st of that year. Simply put, if you are single the entire year but get married on December 31st, for tax purposes you are considered and entitled to be consider

Probably one of the premier inventions of the 20th century in the world of finance is the credit card. Second on that lineage are the now overly ubiquitous affinity programs, basically getting points for using your credit card, and then being able to get something in exchange for those points. After all, if you are going to use your credit card for various purchases (and nowadays who doesn’t?), and if there is no difference in cost (in the macro sense that is debatable), why

I thought the title was a little gentler than simply saying learning opportunities for senior citizens. But that’s what it comes to. It is likely many of us know that various local community and full colleges, and other venues, offer free or discounted rate education/courses for senior citizens. I myself have had the pleasure of taking a couple of courses at RVCC (Raritan Valley Community College) at discounted tuition prices. Put aside for the moment I was not simply the old

Hopefully the title has caught your attention. This article is focused on poor habits (that by the way is subjective) that can contribute to the financial ruination of the middle-class (as well as the lower middle-class). We all have lifestyle habits that impact finances, and many of them are cherished. However, some of them are financially destructive. If you are particularly well off, the destruction is immaterial and can be ignored. However, if you are in the broadly sense

It is fairly common knowledge that if you have a business, setting up a retirement plan can be an excellent tax saving and investment vehicle. Unlike for virtually anything else, with a retirement plan you get a tax deduction for saving money instead of spending it. The focus of this short piece is on how to maximize what you can put into a retirement plan. For this purpose, as an oversimplification, there are essentially two types of retirement plans – what are called defin

Were it only possible for any of us as individuals to live and spend as if we were the federal government, it would be such a different...

One of the many startling facts of our current tax regime/system is that there are so few audits by the IRS. The basic reason is simple –...

The IRS estimates there is a whole lot of refund money out there waiting to be claimed by the appropriate people. Despite what you might...

In general, and regardless of the type of plan, distributions prior to reaching age 59 ½ (other than if you die) are subject to a 10%...

No, this has nothing to do with the potential for the US to acquire Greenland, the Panama Canal, or even St. Petersburg...

Some of you might have noticed a recent uptick in unsolicited pen pal correspondence. The unfortunate reality is that there indeed has...

I have long argued that one of the financial banes (wastes) of the middle class is the cost of cars. More pointedly, the issue of...

I was thinking of titling this article something along the lines of “It’s not your father’s wash sale”, but I figured that would be too...

Under limited circumstances, the cost of clothing, as well as the cost of cleaning it, can be a deductible business related expense. The...