One of the most common questions asked during tax season is, "Do I have to file a tax return?" The answer, of course, is a bit complicated, but in general, if your income is equal to or greater than the sum of the standard deduction plus your personal exemption, you must file a return. The standard deduction is higher for those 65 or older, so age makes a difference in some cases.
You will have income tax due if you went through with a 2010 Roth conversion, so make sure your tax return includes deferred income. Did you do a Roth conversion in 2010 and take the default option of deferring the income to 2011 and 2012?
IRS released its "Dirty Dozen Tax Scams for 2012" on February 16, 2012. Number one on the list this year - Identity Theft. We detail this problem and how you can protect yourself below.
In an interview with MarketWatch's Andrea Coombes, Ed Slott and Jack Nuckolls discuss strategies to reduce your tax bill before 2013. Taxes are going up (tax on investment income, 3.8% healthcare surtax, income tax rates for the highest earners are heading to 39.6%), and Ed provides several strategies you can use to avoid the uncertainty of future tax rates.
Ed Slott was interviewed by MarketWatch's Andrea Coombes in a multi-video discussion on IRAs, how to avoid a big tax hit and how to avoid the penalty-induced mistakes many individuals make. This first video features Ed and Jack Nuckolls in a discussion about IRA mistakes you don't want to make...unless you want to see penalties and plenty of taxes in your future.
Phase-outs apply to many items on your income tax return. This means that if your adjusted gross income (AGI) exceeds specified limits, your eligibility to deduct certain items will be cut back or curtailed altogether, including deductions for contributions you make to traditional IRAs. When your income increases, you could lose lots of otherwise allowable itemized deductions as well as personal exemptions.
Ed Slott discusses a provision in President Barack Obama's budget proposal that would eliminate required minimum distributions (RMDs) for certain seniors. Ed discusses the makeup of this provision, who it would benefit and how it would be enforced in this video
One of the best ways to legally avoid current income taxes is by contributing to an employer-sponsored retirement plan. While it’s too late to make any contributions to 401(k)s and 403(b)s for last year, you actually have until April 17, 2012 to set up and fund a new IRA or add money to an existing one and have the contribution count for 2011. The last day to contribute for the prior year is generally April 15, but in 2012 the 15th falls on a Sunday and the 16th is Emancipation Day, a holiday in the District of Columbia that affects tax filing deadlines the same way federal holidays do.
Private letter rulings (PLRs), are written decisions by the Internal Revenue Service (IRS) in response to taxpayer requests for guidance. A private letter ruling binds only the IRS and the requesting taxpayer and may not be cited or relied upon as precedent by other individuals. However, if the subject matter addressed in a PLR has broad application to the general public, the IRS can redact its text and reissue it as a revenue ruling, which becomes binding on all taxpayers and the IRS.
You are not yet 59 1/2 and have become disabled. You want to take funds out of your IRA. Can you escape the 10% early distribution penalty?
