Avoid a 50% penalty: Take retirement plan RMDs by December 31

After you reach age 70½, you must take annual required minimum distributions (RMDs) from your IRAs (except Roth IRAs) and, generally, from your defined contribution plans (such as 401(k) plans). You also could be required to take RMDs if you inherited a retirement plan (including Roth IRAs). If you don’t comply — which usually requires[ … ]

Protect your deduction: Verify before you donate

Verify that a charity is eligible to receive tax-deductible contributions before you donate Donations to qualified charities are generally fully deductible, and they may be the easiest deductible expense to time to your tax advantage. After all, you control exactly when and how much you give. But before you donate, it’s critical to make sure[ … ]

Your exec comp could be subject to the 0.9% additional Medicare tax or the 3.8% NIIT

The additional Medicare tax and net investment income tax (NIIT) apply when certain income exceeds the applicable threshold: $250,000 for married filing jointly, $125,000 for married filing separately, and $200,000 for other taxpayers. The following types of executive compensation could be subject to the 0.9% additional Medicare tax if your earned income exceeds the applicable[ … ]

Selling rather than trading in business vehicles can save tax

Although a vehicle’s value typically drops fairly rapidly, the tax rules limit the amount of annual depreciation that can be claimed on most cars and light trucks. Thus, when it’s time to replace a vehicle used in business, it’s not unusual for its tax basis to be higher than its value. If you trade a[ … ]

Why you should contribute more to your 401(k) in 2015

Contributing to a traditional employer-sponsored defined contribution plan, such as a 401(k), 403(b) or 457 plan, offers many benefits: Contributions are pretax, reducing your modified adjusted gross income (MAGI), which can also help you reduce or avoid exposure to the 3.8% net investment income tax. Plan assets can grow tax-deferred — meaning you pay no[ … ]

Tax treatment of NQSOs differs from that of their better-known counterpart

With nonqualified stock options (NQSOs), if the stock appreciates beyond your exercise price, you can buy shares at a price below what they’re trading for. This is the same as for the perhaps better-known incentive stock options (ISOs). The tax treatment of NQSOs, however, differs from that of ISOs: NQSOs create compensation income — taxed[ … ]

When will Congress pass “extenders” legislation to revive expired tax breaks for 2015?

With Congress returning from its August recess, this is the question on tax-savvy Americans’ minds. Many valuable tax breaks aren’t permanent, so Congress has to pass legislation extending them to keep them in effect. Unfortunately, Congress often waits until the last minute to do so. For example, Congress didn’t pass 2014 extenders until December 2014,[ … ]