The Tax Questions Blog

Archive for May, 2010

Question: 2-Re: grants under the Americans with Disability Act. Does anyone know if grant money is taxable?

I desperately need to apply for a Government Grant in order to purchase a
wheel chair accessable van so I can get out of this house whenever I want/need to, without imposing on others. But, if grant money IS taxable, I may have to re-think this whole thing, as I am surely not prepared to rack up a huge tax bill, as I am still paying-off the balance I owe for 2002.
Thank you for any information you can give me on this subject.

Answer: The same answer as your first question -- the ADA is a law that guarantees the rights of the disabled. It is not an organization that grants money to the disabled. If you need money for a van / van conversion, you should talk to your state or county occupational therapy group or social services organization. Money for such services is generally administered at the state or local level.

Treatment of grants as nonshareholder contributions to capital.: An article from: The Tax Adviser $9.95 This digital document is an article from The Tax Adviser, published by American Institute of CPA's on September 1, 2009. The length of the article is 2675 words. The page length shown above is based on a typical 300-word page. The article is delivered in HTML format and is available immediately after purchase. You can view it with any web browser.Citation DetailsTitle: Treatment of grants as nonsh...

Private foundations: Taxable expenditures (Sec. 4945) (Tax management portfolios : Estates, gifts and trusts) ...

ECHO projects by community

Since 2002, more than $48 million in Volusia ECHO grants has been divvied up among dozens of communities and interest groups. The money comes from a 20 cent tax on every $1,000 of taxable property value. The owner of a $150,000 home with two $25,000 homestead exemptions pays about $20 a year.

Question: reduce taxable income 2008?

I sold land this year that I held less than 1 year. I'm told it will be counted as personal taxable income. I will have huge taxable income this year and I want to reduce it. I have been told to start a business. What are some examples of losses a business incurres in the first year? How will this reduce my taxable income?

Answer: Okay Taxation 101.

First, the gain on the property will be a short term capital gain and will be offset by capital gain losses (if any).

I am assuming that you want to file a legal return. So the following applies:

Taxes are always a percentage.
Deductions never offset tax on a dollar for dollar basis.

So basically at this point you would be spending a dollar to save a few cents (the amount depends on the tax bracket).

The main (legal) advantage of owning a business used as a tax deduction is the ability to reclassify some of the income. HOWEVER, it does have to be a real business with an expectation of earning a profit. If it does not show a profit in two out of any given five year period then the IRS can reclassify it as a hobby (meaning no loss is allowed). That would mean back taxes, penalties and interest.

Now with that said...I will answer your question. Most people use an office in the home (it will increase the odds of an audit though). Many people lease their cars to their business...but, this should create income for the percentage that you use it for personal reasons. That is the general gist of it.

Oh, did I mention...that by using these options you will also reduce your basis in the property. This increasing your taxable income and reducing your options in the future. Yes, when you trade in your car you will have created a taxable event.

It is possible to create a structure when running a home business is a benefit...but, it takes a lot of thought. It is not something you should do as an after thought.

Hope this helps.

Donate to charity and provide for your heirs

In planning for your retirement, you may face several financial issues. Maybe you'd like to generate retirement income, but want to minimize the taxes on investments you've held for several years. Perhaps you'd like to minimize your income taxes during retirement. You also might like to reduce the size of your taxable estate so more of your money goes to your heirs. Finally, you may want to ...

Question: Can I open a Roth IRA account for my 5 yr old niece? Can her allowance be claimed as taxable income?

I'd like to get her started early on her retirement.

Answer: Unfortunately you can only open a Roth IRA with "earned income" and allowance does not meet that test. (she isn't expected to pay tax on the money). At that age, her next major expense is likely college. You could start an education IRA on her behalf, or better yet, a 529 plan.

The Bogleheads' Guide to Retirement Planning $8.40 The Bogleheads are back-with retirement planning advice for those who need it!Whatever your current financial situation, you must continue to strive for a viable retirement plan by finding the most effective ways to save, the best accounts to save in, and the right amount to save, as well as understanding how to insure against setbacks and handle the uncertainties of a shaky economy.Fortunately, t...

The New Reverse Mortgage Formula: How to Convert Home Equity into Tax-Free Income $4.16 The New Reverse Mortgage Formula explains reverse mortgages in easy language so seniors and their family members can fully understand and benefit from these useful loan products. Reverse loans allow seniors to convert part of their home equity into tax-free income, letting seniors easily borrow against the value of their home without selling it. Safer than ever, today’s reverse mortgages are non...

Deferral and spreading of Roth conversion income not always best.: An article from: Journal of Accountancy $9.95 This digital document is an article from Journal of Accountancy, published by American Institute of CPA's on July 1, 2010. The length of the article is 833 words. The page length shown above is based on a typical 300-word page. The article is delivered in HTML format and is available immediately after purchase. You can view it with any web browser.Citation DetailsTitle: Deferral and spreading of R...

Take stock of IRAs to plan retirement

The week leading up to your retirement is busy with farewells. But you look forward to finally being able to settle back, catch your breath and enjoy a life of leisure.

Roth IRA Conversion Analysis

Question: is Interest on PPF taxable?

Answer: The method of taxation for PPF is EEE i.e.

Investment - Exempt
Interest - Exempt
Withdrawal - Exempt

HMT

Retirement corpus: To tax or not

Investors in the Employee Provident Fund (EPF), Public Provident Fund (PPF) and insurance plans for retirement have a reason to worry. The Direct Tax Code (DTC), meant to replace the existing Income Tax Act, proposes to introduce the exempt-exempt-taxation (EET) regime for all retirement corpuses.

Question: When is the Canadian Tax Freedom Day in 2009?

Please answer for 2009. Not like "cool dude" below that gave LAST years answer (2008)

Answer: Alberta on May 28, New Brunswick on June 3, Prince Edward Island June 4, Manitoba June 8, Ontario June 9, Nova Scotia June 12, British Columbia June 13, Quebec June 19, Saskatchewan June 20, and Newfoundland and Labrador June 30.

Insights about China and Nicaragua

In the next 1,618 words, I'll share few insights about both China and Nicaragua. These insights share no particular connection to one another...

Tax Freedom Day in Canada