Q: I have two IRAs that I established years ago. One was started for deductible contributions when I was young; the other has nondeductible contributions. Now that I'm over age 591/2, I want to withdraw some of that money. Can I withdraw money only from the nondeductible IRA? R.R.S., Key Biscayne, Fla.
Small Business Tax
Section 179 vehicles should be a key part of your small business tax deduction strategies. Can Section 179 property fit in with your business tax strategies?
Let Business Management Daily help you get each and every rental property depreciation credit and business tax deduction you’re entitled to.
You own equipment, furniture and other assets that your business could put to good use. You could sell those assets to your business, but that might drain your company's cash reserves. Plus, the sale proceeds would be taxable to you personally.
President Bush signed legislation that provides $6.1 billion tax relief for people and businesses reeling from Hurricane Katrina. While most of the tax-law changes apply to those in the hard-hit Gulf region, some breaks extend to charity-minded taxpayers throughout the country.
We don't want to sugarcoat things: Getting hit with an IRS "field audit" is a worst-case scenario and a cause for genuine concern. The process is expensive, time-consuming and requires a more comprehensive defense strategy than the other two types of audits we've discussed in our audit series ("correspondence audits" handled through the mail and "office audits" performed at an IRS office).
During an audit, chances are that you won't be able to produce all the receipts, bills or other pieces of written information you'll need to back up your claims, especially if the audit comes several years after the tax year in question.
Common situation: You've remarried and both you and your spouse have children from previous marriages. If you leave most of your fortune to your surviving spouse, it appears at first glance that you'll face no major estate-tax concerns. But there's no guarantee the money will ever wind up in your kids' hands. The current estate-tax exemption can cover direct transfers to your children of up to $1.5 million, but that's all.
If you hit the jackpot at a casino, racetrack or other gambling venue, you can reduce the tax on your winnings by offsetting those winnings with your gambling losses. But you must keep good records and those losses must be claimed as a miscellaneous itemized deduction on your tax return.
Do you help parents, in-laws or other elderly relatives with their living expenses? Maybe you occasionally pitch in with your relative's expenses, but you aren't able to claim a dependency exemption. Reason: You don't provide at least half of that person's annual support.
If you plan on taking a business trip in the coming months and bringing your spouse along for the trip, there is a way to write off travel costs attributable to both of you, regardless of whether your spouse works for your company.
Q: My daughter graduated from college, and she gave $500 to the Red Cross after the hurricane. She probably won't itemize deductions this year. Is there any way she can deduct this donation? B.K., Red Bank, N.J.