Schedule C – Profit or Loss From Business

Schedule C

Profit or Loss From Business Taxpayers use Schedule C to report profit or loss from a business owned and operated as a sole proprietor or as a single-member LLC (i.e. treated as a disregarded entity). Income and expenses are combined on this form to determine the net profit or loss for the activity. Schedule C […]

The Net Investment Income Tax

The Net Investment Income Tax

What is it? The Affordable Care Act created the Net Investment Income Tax (NIIT) effective as of tax year 2013. This is a 3.8 percent tax on net investment income earned by individuals, estates, and trusts above a specific threshold of modified adjusted gross income. The portion of income above the threshold representing investment income […]

Gift Tax

The Gift Tax

What is a gift? The Gift Tax applies to the lifetime transfers of property from a donor to donees. If you are the donor of a gift over the annual exclusion, you are responsible for filing the Gift Tax Return, Form 709, and paying any applicable tax. A gift is the transfer of something of […]

Standard Deduction

The Standard Deduction

What is the standard deduction? The Internal Revenue Code allows taxpayers to take either the standard deduction, a fixed amount that is deducted from adjusted gross income, or itemized deductions when determining their taxable income. The IRS provides an Interactive Tax Assistant to help determine your deduction using their online tool. Deduction amounts by filing […]

Self-Employment Tax

Self-employment tax

How does it work? Social Security and Medicare taxes are paid to the IRS either as payroll tax or self-employment tax. Your employer withholds payroll taxes from your W-2 wages and remits both the employee and employer match to the IRS. Sole proprietors, in business for themselves, are considered self-employed and are not permitted to […]

Schedule B

Schedule B

Interest and Ordinary Dividends Taxpayers must use Form 1040, Schedule B to report income received in the form of interest and ordinary dividends. Generally, you will report the amounts reported to you on various forms including Forms 1099-INT, 1099-DIV and 1099-OID. Ordinary versus qualified dividends Ordinary dividends are the most common type of dividend, and […]

Schedule A

Schedule A

Itemized Deduction Taxpayers can use the higher of either the standard deduction or the itemized deduction. It’s worth the effort to compare the two methods because it can result in noticeably lower taxable income if you have enough qualifying expenses. Various types of deductible personal expenses can be itemized using Form 1040, Schedule A.  Examples […]

The Additional Medicare Tax

The Additional Medicare Tax

The Affordable Care Act added the Additional Medicare Tax effective as of tax year 2013. This is a .9 percent tax on wages and self-employment income above a specific threshold. As of tax year 2021 these thresholds are: Filing Status Income Threshold Married filing jointly $250,000 Married filing separate $125,000 Single $200,000 Head of household […]

Wash Sale

Wash Sale

Definition A wash sale has occurred if an investment is sold for a loss and is then replaced with the same or substantially identical investment within 30 days before or after the sale. Losses on a wash sale are disallowed. The loss is instead added to the cost basis of the new investment. See other […]

Getting Married

getting married

When you get married, your filing status will change from Single (usually) to Married Filing Jointly. This filing status change will take effect in the year you get married, so even a wedding in December can impact your taxes for the entire year. In some cases, effective tax rates are higher for married couples than […]