Compensatory damages received for a personal physical injury or sickness are excludable from gross income. Damages for any other personal reason, such as defamation, as well punitive damages for any reason, are taxable. In one recent case, a homeowner…
The IRS has announced that the interest rates applicable to overpayments and underpayments of federal taxes for the fourth quarter of 2019 are the same as for the third quarter of the year (Rev. Rul. 2019-21). The rates are:
5% for overpayments by ind…
A high school senior with a perfect attendance record and good grades was entered by the school into a “Strive to Drive” drawing held by a local car dealership. She won a Jeep Renegade valued at over $23,000, which she kept. The dealership sent her Fo…
A wife was ordered by a divorce decree to transfer $10,000 from her retirement account to her former husband. She instructed her broker to transfer this amount to an IRA set up for the former husband at the same brokerage firm. Within a week, he took…
For owners of pass-through entities to claim the 20% qualified business income (QBI) deduction, they must be in a trade or business. When it comes to real estate activities, it’s sometimes difficult to determine whether they are a business or merely i…
Employees can file a revised Form W-4 to change their wage withholding for 2020. The IRS announced the release of a new online withholding calculator estimator to make it easier for an employee to figure the most accurate withholding needed to cover t…
It’s increasingly common for individuals to have their DNA tested through Ancestry.com and other sites in order to learn more about their family background. One site—23andMe—also offers DNA testing to determine familial risks for certain medical condi…
Because of changes made by the Tax Cuts and Jobs Act, many taxpayers didn’t pay enough in income taxes through withholding and estimated tax payments to satisfy the safe harbors for avoiding estimated tax penalties. The IRS announced it would waive a…
In certain situations, an employer is required to distribute funds held in the company’s retirement plan, after withholding 20%. But what happens if the individual fails to cash the check?
The IRS considered the situation in which an employer was requ…
Several years ago, the IRS concluded that cryptocurrency, also called virtual or digital currency, is property not currency (Notice 2014-21). As such, you must report gain or loss on every transaction involving virtual currency. For Bitcoin and other …