What is the Kiddie Tax?

What is the Kiddie Tax? The Kiddie Tax is a tax applied to a child’s unearned income. When children under the age of 18 make $2,100 or more in unearned income, that income is taxed at the guardian’s tax rate. Unearned income is considered any gifts of stock or other investments. The Kiddie Tax does not … Continued

What is an Itemized Tax Deduction?

What is an Itemized Tax Deduction? An itemized tax deduction is the alternative to taking the standard tax deduction. An itemized deduction counts all of your tax deductions in order to lower your taxable income. It requires more work than claiming the standard deduction, but it can also pay off if your itemized tax deduction … Continued

What is the Hobby Loss Rule?

What is the Hobby Loss Rule? If your business goes too many years without making a profit it can be classified as a hobby. When it becomes a hobby you can no longer claim losses as business deductions. In order to determine if you are running a business or a growing a hobby, the Internal Revenue … Continued

What are Gifts of Equity?

What are Gifts of Equity? A gift of equity is when family members sell property to other family members for less than market value. The gift of equity is specifically the difference between the market value and what the buyer pays. A gift of equity can be for any amount, up to the total value of … Continued

What is a Federal Tax Lien?

What is a Federal Tax Lien? A federal tax lien is used to put a lien on property, or any other assets, as collateral for unpaid back taxes. The Internal Revenue Service (IRS) can issue federal tax liens to secure payment of those unpaid back taxes. A federal tax lien does not allow the government … Continued

What is the Earned Income Credit?

What is the Earned Income Credit? The Earned Income Credit (EIC) is a tax credit for low to moderate income earners. In order to qualify for the Earned Income Credit, you must file a tax return, even if you are not required to file taxes. Those who file for an Earned Income Tax Credit may … Continued

What is a Tax Deduction?

What is a Tax Deduction? A tax deduction is a credit that is subtracted from your income, which lowers your taxable income. The Internal Revenue Service (IRS) allows taxpayers to take a standard deduction or an itemized deduction. A standard tax deduction is set by the IRS each year. Taking a standard tax deduction doesn’t … Continued

What are Charitable Donations?

What are charitable donations? Charitable donations are gifts given to nonprofit organizations. Charitable donations can take many forms. Common gifts include: Money Real Estate Vehicles Clothing Securities Jewelry Other Assets or Services Most charitable donations are tax deductible. In order to qualify for a tax deduction the nonprofit organization has to be classified with the … Continued

What are Business Tax Credits?

What are Business Tax Credits? Business Tax Credits are a group of credits available to business owners. Business Tax Credits include: Investments Work opportunities Welfare-to-work Employer provided day care services Research and experimentation Low-income housing Enhanced oil recovery Health insurance premiums These tax credits are grouped together and submitted through IRS Form 3800. The IRS … Continued

What is after-tax income?

Define: After-Tax Income After-tax income, also referred to as income after taxes, is the amount of disposable income that a person or company has left over after all federal, state and withholding taxes have been deducted from the taxable income. You can spend your after-tax income on future investments or on present consumption. After-tax income … Continued