4Thought Blog

4thought graphic - blog 2020

The Home-Sale Gain Exclusion Tax Break: Cashing in on the Sellers’ Market

Posted by Concannon Miller on Tue, Sep 21, 2021

In many areas, residential real estate markets have surged, and some are still surging. In these sellers' markets, big home-sale gains are likely. That's great news if you're a seller — but will you owe taxes on the profit?

If you sell your principal residence for a large profit, you can potentially exclude tax (pay no federal income tax) on a certain amount of profit. Here are the basics of how to take advantage of this tax-saving opportunity.

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Topics: Individual tax planning

Hold or Sell Stocks: Tricks to Avoid Unfavorable Tax Consequences

Posted by Concannon Miller on Tue, Jul 20, 2021

With autumn coming up in a couple months, it's time to think about "harvesting" capital gains or losses from sales of securities.

In addition, unfavorable tax law changes proposed in President Biden's American Families Plan may create an added sense of urgency for some taxpayers.

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Topics: Individual tax planning

Child Tax Credit Payments: Find Out How Much You’ll Get

Posted by Concannon Miller on Thu, Jul 1, 2021

The IRS has launched a new online tool that can help families determine whether they qualify for the Child Tax Credit and the special monthly advance payments that begin on July 15. The interactive tool is called the "Advance Child Tax Credit Eligibility Assistant" and it can be accessed here

In order to determine if you're eligible for the payments, you'll need to answer a series of questions about yourself and your family members. The tool can be used by anyone, but the IRS states "it may be particularly useful to families who don't normally file a federal tax return and have not yet filed either a 2019 or 2020 tax return."

Using this tool can help these parents decide whether they should take the next step and register for the CTC payments on another new IRS tool unveiled earlier (called the "Non-Filer Sign-Up Tool").

The IRS explained that most families don't need to take any action. Eligible families who already filed, or plan to file, 2019 or 2020 income tax returns shouldn't use the Non-Filer Sign-Up Tool. Once the IRS processes their 2019 or 2020 tax returns, the information will be used to determine eligibility and issue advance payments.

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Topics: Individual tax planning

Biden To Seek Tax Changes on High Earners, Capital Gains, Some Businesses

Posted by Tony Deutsch on Thu, Jun 24, 2021

The Biden Administration recently released detailed tax proposals through the so-called Green Book. If approved, there would be big changes for high-income earners, on capital gains and for some business taxes.

While these proposals would all have to go through the legislative process and therefore may not pass or may be changed, it’s possible some of these may become law and therefore warrant tax planning considerations.

Even if Biden’s proposals don’t become law, there are some automatic taxes changes coming down the road as tax changes in President Trump’s Tax Cuts and Jobs Act only run through 2026. While five years feels like a long time, it’s not when it comes to tax planning.

Here’s what the Biden administration has proposed:

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Topics: Business tax planning, Individual tax planning

Rent Your Vacation Home? Watch for Adverse Tax Consequences

Posted by Concannon Miller on Thu, May 13, 2021

Do you own a vacation home that's classified as a rental property for tax purposes? Rental property owners may be tempted to use their rental properties for their personal "staycations" or as remote office locations during the COVID-19 pandemic.

But this could cause adverse tax consequences, depending on your situation. Here's what you need to know.

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Topics: Individual tax planning

Bitcoin and Other Virtual Currencies: The Impact on Your Tax Situation

Posted by Concannon Miller on Tue, Apr 27, 2021

Virtual currencies, also known as cryptocurrencies, have gone mainstream. For example, you can use Bitcoin to buy a Tesla, or you can use a Bitcoin wallet on your smartphone to make everyday purchases. But beware: Using virtual currency has federal income tax implications that may surprise you.

With increasing market acceptance and the skyrocketing price of Bitcoin, virtual currency has become an IRS hot-button issue. Here's an overview of the tax rules that apply to this blockchain-based method of payment.

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Topics: Individual tax planning

Child and Dependent Care Credit: Learn the New Benefits for 2021

Posted by Concannon Miller on Tue, Apr 20, 2021

The American Rescue Plan Act includes major, but temporary, changes to the longstanding federal income tax child and dependent care credit.

The changes are favorable for most taxpayers, except high-income individuals. Here's what you need to know about this credit and how it's changing for 2021.

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Topics: Individual tax planning

The New Child Tax Credit: How Much More Will You Get?

Posted by Concannon Miller on Thu, Mar 25, 2021

The American Rescue Plan Act significantly liberalizes the rules for the federal child tax credit, which means more money in the pockets of eligible parents this year.

However, the liberalizations are only for the 2021 tax year. Here's the story.

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Topics: Individual tax planning

IRS Extends Federal Income Tax Deadline to May 17, 2021

Posted by Concannon Miller on Thu, Mar 18, 2021

The IRS has announced a one-month extension for filing federal individual income tax returns to May 17, 2021.

The extension affects the filing of your federal individual income tax return and your federal tax payment for the year 2020.

The extension was made to allow for more time to adjust to the many tax changes included in the third stimulus act – officially known as the American Rescue Plan – which passed earlier this month. Get details on the many changes for individuals and businesses here.

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Topics: Individual tax planning

Deducting Home Office Expenses for Telework: The Pros & Cons in Pennsylvania

Posted by Pennsylvania Department of Revenue on Tue, Mar 16, 2021

The COVID-19 pandemic has brought about a great deal of changes for Pennsylvanians, with one of the biggest disruptions coming in the workplace. Namely, many taxpayers are now finding themselves working from home, setting up workstations at their kitchen tables or in their home offices.

With remote work becoming commonplace, the Pennsylvania Department of Revenue has received questions from taxpayers who are wondering about the deduction of home office expenses on their 2020 tax returns and wrote this article to answer taxpayers’ questions.

The guidance below pertains mostly to Pennsylvania taxes — not federal taxes. (Some federal guidance can be found here.)

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Topics: Individual tax planning

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