Way back in March 2021 the Treasury Department announced that the filing deadline for 2020 individual income tax returns was extended to May 17, 2021. But, what about your state income tax return (if you have a state income tax to pay)? Don’t just assume that your state return due date is also extended.
Urgent Tax Moves to Make Before Dec 31
URGENT tax steps to take before year-end!
Starting 2018, the tax overhaul that President Donald Trump signed into law this past Friday caps the deductions for state and local income and property taxes at $10,000 combined. This is a significant blow to homeowners in expensive housing markets like California. If you pay more than that and itemize your taxes, it makes sense to try to pay as much of your California and local tax bill before 2018, when you can still use the old rules to take a larger deduction.
Hitting a Tax Gapper
Summer is almost here, and sports fans across America have a lot to look forward to. Basketball's 13-month-long season is (finally) starting to heat up. Hockey playoffs are coming to a close. Baseball is in full swing, and NFLers are about to report to training camps. Stop at any bar or water cooler in the land, and you'll hear talk of wins, losses, and plays that you just have to see.
Fans and analysts have all sorts of statistics they can use to measure (and argue about) their teams' performance. "Turf investors" have relied on The Daily Racing Form for over a century. Baseball is famed for legions of "sabermetricians," who obsess over statistics like WAR (Wins Above Replacement), BABIP (Batting Average on Balls in Play), and LWCT (Largest Wad of Chewing Tobacco). Football and basketball too, even hockey, all lend themselves to measures far beyond the mere score at the end of the game.
But there's one more sports statistic we might need to evaluate our favorite team by, and that's SITR (State Income Tax Rate).
New rules for divorced parents & depedent deductions
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IRS issued in 2007 regulations addressing various issues pertaining to divorced parents and who can claim the dependent exemptions. These new rules take affect for most divorced parents with the filing of your 2009 income tax return.
Beginning for years beginning after July 2, 2008 (so 2009 for calendar year individual taxpayers) the IRS will no longer accept a divorce decree in lieu of Form 8332, Release of Claim to Exemption fro Child of Divorced or Separated Parents, even if the decree contains all of the information otherwise found on the Form 8332 and is not conditional in any respect (for example, conditioned on child support payments being current, etc.).
Watch out for taxes if you sell your life insurance contract
The IRS has issued two new rulings addressing the sale and surrender of life insurance contracts from the point of view of policyholders and the investors. In this down economy, it can make good economic sense to sell an insurance policy that is no longer needed, or maybe can no longer be afforded.
The sale of an insurance policy is the sale of an asset; however, the gain could be either ordinary income (taxed like wages) or capital gain income (generally a lower tax rate). You will also need to take into account your investment in the policy (your tax basis).
Now, this discussion does not pertain to someone selling their insurance policy when they are either chronically ill or terminally ill. In those circumstances special exclusions generally will apply.
There are three situations under which you may be selling your policy.
- Surrender of the policy to the issuer for cash value.
- Sale of the policy with cash surrender value to an unrelated person.
- Sale of the policy with no cash surrender value to an unrelated person.
Here are the examples for each situation which demonstrate how the tax bite is determined.