Innocent Spouse Tax Rules

Must one spouse pay the tax resulting from a fabrication or omission by another spouse on a jointly filed tax return? It depends. If the spouse qualifies, he or she may be able to avoid personal tax liability under the “innocent spouse” rules. Joint filing status Generally, married taxpayers benefit overall by filing a joint tax return on the federal level. This is particularly the case when one spouse earns significantly more than the other. Filing jointly may also help the couple maximize certain income…

Tax Break for Kid’s Camp

Among the many great challenges of parenthood is what to do with your kids when school lets out. Do you keep them at home and try to captivate their attention yourself or with the help of sitters? Or do you send them off to the wide variety of day camps now in operation? There’s no one-size-fits-all answer, but if you choose the latter option, you might qualify for a tax break! Dollar-for-dollar savings Day camp — but, to be clear, not overnight camp — is…

Should you be worried about an IRS audit?

Now that you’ve likely filed your 2018 tax return, one troubling afterthought may come to mind: Could I get audited? The mere notion strikes fear into most people’s hearts. And for good reason — under a worst-case scenario, an audit could take up lots of your time, create an enormous amount of stress and leave you with a hefty bill from the federal government in unpaid tax, penalties, and interest. Now let’s take a deep breath. An audit can also be a rather routine process…

Business vs. Hobby: Tax Rules Have Changed

  If you generate income from a passion such as cooking, woodworking, raising animals — or anything else — beware of the tax implications. They’ll vary depending on whether the activity is treated as a hobby or a business. The bottom line: The income generated by your activity is taxable. But different rules apply to how income and related expenses are reported. Factors to consider The IRS has identified several factors that should be considered when making the hobby vs. business distinction. The greater the…

Running your Personal Finances Like a Business

Most individuals don’t regard themselves as businesses, trying to turn a profit and beat the competition. But, occasionally, it may help to look at your financial situation this way to determine where you might cut expenses and boost cash flow. Here are some tips. Lay out your financials Where an executive might reach for financial statements to get a read on the company’s standing, you can create or update a net worth statement. Essentially a monetary scorecard, a net worth statement helps you determine where…