Ask JK

A minister may be eligible for the qualified business income (QBI) deduction if he or she performs weddings, funerals, or other activities the income from which is reported on Schedule C. Wages receiv...

If your IRA holds a CD and you cash it in early, the bank may charge you an early withdrawal fee. Because the fee merely reduces the funds within your IRA, there’s no tax deduction. If you take a di...

A worthless security is treated as a capital asset that’s been sold on the last day of the year. As such, it generates a long-term capital loss if you’ve held the stock for more than a year or a s...

If interest on U.S. savings bonds, series EE or I, hasn’t been reported annually, then the accrued interest becomes fully taxable when the bonds are redeemed. This income is ordinary interest income...

You may take an in-kind required minimum distribution (RMD) by having the IRA distribute stock to your taxable (non-IRA) account. The value of the stock on the date of the distribution determines the ...

A wrongful death settlement of compensatory damages is nontaxable because it is the result of a claim arising from personal physical injury or illness. However, if the settlement includes punitive dam...

Unfortunately, you may only make one IRA rollover during any 12-month period, regardless of the number of IRAs you own. Because of this rule, your second rollover needs to be addressed now. If the sec...

You may be able to deduct the property taxes on vacant land held for investment, but you must itemize personal deductions to do so. These taxes are not subject to the limitation on state and local tax...

A coronavirus-related distribution is a distribution that is made from an eligible retirement plan to a qualified individual from January 1, 2020, to December 30, 2020, up to an aggregate limit of $1...

The IRS allows victims of Ponzi schemes to deduct their losses as theft losses rather than as capital losses. While thefts of personal use property are currently barred (only disaster losses are allow...

It depends on your plan. Tax law allows plans to permit “in-service withdrawals” by those who are still employed at the company maintaining the plan. However, plans are not required to offer this ...

Yes. Even though you are required to start drawing down the account, you can continue to add to it through deductible contributions as long as you have net earnings from self-employment. However, you ...

U.S. citizens and residents pay tax on their worldwide income. However, if you live abroad, the articles of most tax treaties allow the country of residence to tax pensions under its laws. If you live...

No, you can do it more than one time. However, you must wait until the following year to make a Roth IRA conversion of the funds that had been recharacterized....

Unfortunately not, except for certain reinvestments in qualified small business stock or empowerment zone business stock (see the Schedule D instructions for these special rollover rules). Apart from ...

You don’t have to amend the return on which the taxes were deducted. Instead, you report the income on the return for the year of the refund under the tax benefit rule. This rule says that you pick ...

A repayment of principal is never deductible. Interest on the loan may be deductible, depending on what you used the proceeds for. If you purchased securities, the interest is treated as investment in...

Yes. The specific identification method allows you to use the cost basis of the shares you sell to figure your gain or loss. FIFO, or first-in, first-out, is the default method for figuring basis if y...

This rule expired at the end of 2014 and has not yet been extended for 2015. Many believe it will be extended, but it is advisable to wait until later this year to see what Congress does before making...

While you clearly have an economic loss, tax rules prevent you from deducting the decline in value from your $120,000 purchase price to the value at the time you converted the condo to rental property...

You can deduct the unpaid principal if you can show that the debt is fully worthless. The fact that the borrower filed for bankruptcy does not automatically establish worthlessness. However, even if y...

It depends. First, you must itemize to do so. Then, you must choose to deduct state and local sales tax rather than state and local income taxes. If you make this choice, you can add the sales tax on ...

Yes, if you have a record of your driving. The rate for driving for medical purposes is 23 cents per mile in 2015 and 19 cents per mile in 2016....

The payment of pre-college tuition is not tax deductible. However, if you pay the tuition directly to the school, the payment is not subject to gift tax, regardless of the cost of tuition....

It depends on when the sale takes place. If you sell so that you will have used the home for at least two years within the five years before the sale, you will be able to take the exclusion. If it tak...

The cost of adaptive equipment for a medical condition is a deductible expense. However, you must itemize and your total medical costs must exceed your applicable threshold (10% of adjusted gross inco...

Unfortunately, the tax law limits a medical expense itemized deduction for travel costs to the patient in most cases. The only exceptions: Travel to accompany a patient who is unable to travel on ...

Yes. While it’s not the usual situation that someone in a younger generation gives gifts to someone in the older generation, there’s no tax rule barring this. In fact, under tax law there’s no b...

No. You can give each person up to the annual exclusion amount ($14,000 in 2015 and 2016) without any gift tax, or even the need to file a return. A person can make one gift on December 31, 2015, and ...

For income tax purposes, there’s no tax on gifts—to make or receive them. For federal gift tax purposes, there’s an annual exclusion ($14,000 in 2015 and 2016). Above that, you can apply your li...

Yes. Exchange traded funds, or ETFs, are essentially stock, and the wash sale rules apply to stock as well as mutual fund shares and bonds. Thus, a loss on the sale of an EFT cannot be recognized if y...

Not really. Most of the taxes you refer to (as well as taxes on airline tickets, gasoline at the pump, and cable and Internet access) are excise taxes, which are not deductible as itemized deductions ...

The law doesn’t put a cap on generosity. However, when gifts to an individual exceed a certain amount, you’ll have to deal with federal gift taxes. In 2014, you can give up to $14,000 per individu...

While the interest on municipal bonds is tax free, this doesn’t mean gain or loss on the sale of bonds is excludable from gross income. Gain or loss on the sale of municipal bonds is figured in the ...

The cost of housekeeping services are never a deductible medical expense; only personal care services may be deductible under certain conditions. However, the cost of housekeeping services incurred to...

A child who is unrelated to the person who provides support may be able to claim a dependency exemption if the child is a qualifying relative. Even though there are no blood ties, a qualifying relativ...

The starting point is determining whether you have a gain or loss. If you have a gain, your other buying or selling activities have no impact on reporting the gain. If you have a loss and buy substant...

Once you enroll in Medicare (April 1, 2015), you are no longer eligible to contribute to an HSA. You can, however, contribute to an HSA for the months prior to this date (assuming you are covered by a...

When a person cannot handle his or her financial affairs because of physical or mental impairment and did not make arrangements (e.g., a durable power of attorney or trust) prior to impairment, a cour...

It depends. HH bonds were issued in exchange for E and certain other bonds to enable bondholders to continue deferring the tax on the interest that accrued. The Treasury stopped issuing HH bonds in 20...