Taxes

Home Sale Exclusion After a Divorce Transfer When a spouse receives a home in divorce, the other spouse's ownership and use periods count toward the Section 121 exclusion's 2-year requirement.

Home Sale Exclusion After Remarriage How the $500,000 married-filing-jointly exclusion applies when a remarried couple sells a home and one spouse used the exclusion before.

How 401(k) Distributions Are Taxed How 401(k) distributions are taxed as ordinary income, the mandatory 20% withholding on eligible rollover distributions, and the 10% early-withdrawal penalty rules.

How a Roth Conversion Appears on Form 1099-R The specific Form 1099-R codes and amounts custodians report for a traditional-to-Roth conversion, and how to reconcile them with Form 8606.

How a Roth Conversion Is Taxed Understanding which portion of a traditional-to-Roth conversion is ordinary income and how the pro-rata rule applies to pre-tax and after-tax IRA balances.

How Annuity Distributions Are Taxed The exclusion ratio method determines how much of each annuity distribution is taxable earnings versus tax-free return of premium.

How Capital Gains Affect Adjusted Gross Income Capital gains are added to AGI and can phase out deductions, raise Medicare premiums, and push income into higher tax brackets.

How Capital Gains Affect Medicare Premiums (IRMAA) How capital gains affect medicare premiums through IRMAA surcharges on Part B and Part D; realized gains raise MAGI, triggering higher costs two years later.

How Combined Income Determines Social Security Taxation How the IRS combined income formula determines what percentage of Social Security benefits are taxable: 0%, 50%, or 85%.

How Covered Calls Can Disqualify Dividend Tax Treatment Writing a covered call during a dividend's holding period can disqualify the dividend from preferential long-term capital gains treatment and convert it to ordinary income tax rates.

How Much of Social Security Is Taxable Explains the combined-income formula that determines whether 0%, 50%, or 85% of Social Security benefits are included in taxable income.

How Passive Activity Losses Interact With AMT Passive activity losses are recomputed under AMT rules using different depreciation methods, potentially creating two different allowed loss amounts — one for regular tax and one for AMT purposes.

How Pension Income Is Taxed in Retirement Pension income is generally taxed as ordinary income in retirement, though an exclusion ratio can reduce tax on annuity payments if you contributed after-tax funds.

How Required Minimum Distributions Are Calculated Step-by-step guide to calculating required minimum distributions using the IRS Uniform Lifetime Table, account balance, and life-expectancy divisors.

How Roth Withdrawals Affect Social Security Taxation Roth IRA distributions don't count toward the combined-income formula used to tax Social Security benefits—here's why it matters.

How Social Security Benefits Are Taxed Learn how Social Security benefits are taxed using the combined-income formula and the three taxation tiers.

How to Calculate Alternative Minimum Tax Step by Step Detailed walkthrough of the AMT calculation: preference items, exemption, rates, and comparing tentative minimum tax to regular tax.

How to Calculate Capital Gains on a Stock Sale Calculate capital gains on stock sales by subtracting your adjusted cost basis from proceeds. Learn short-term vs. long-term classification and handle dividends.

How to Calculate Cost Basis for a Rental Property Learn how to calculate cost basis for rental properties, including purchase price, closing costs, improvements, and depreciation recapture for tax purposes.

How to Report a Schedule K-1 on Your Tax Return How to report Schedule K-1 on tax return: K-1 items flow to specific Form 1040 lines; dividends and capital gains to Schedule D, ordinary income to line 5, etc.

Incentive Stock Option AMT Spread Why exercising an ISO creates an AMT preference item equal to the gap between fair market value and exercise price.

Income Tax Treatment of Real Estate Tax Lien Certificates Real estate tax lien certificate income tax: interest earned is ordinary income; foreclosure and property acquisition trigger capital gains and potential depreciation recapture issues.

Incomplete Non-Grantor Trust and State Tax Planning How ING trusts defer gift completion for federal tax while isolating assets from state income tax—a strategy for high-income earners in high-tax states.

Inherited IRA and Income in Respect of a Decedent Understand the income in respect of a decedent deduction for inherited IRAs, which offsets double taxation when an IRA is subject to estate tax.

Inherited IRA Tax Treatment for Beneficiaries How inherited IRA tax treatment differs by account type and beneficiary category; what taxes and distributions you owe after inheriting a traditional or Roth account.

Inherited IRA Ten-Year Rule How the SECURE Act 2.0 replaced stretch distributions with a ten-year window for most non-spouse beneficiaries to empty inherited IRAs.

Inherited IRA Ten-Year Rule Tax Implications Understand the SECURE Act ten-year rule for inherited IRAs, which beneficiaries must empty accounts within ten years, and tax strategies to manage the distribution burden.

Inherited Roth IRA Tax Rules Non-spouse beneficiaries of Roth IRAs must empty the account within 10 years, with tax-free distributions from earnings if the five-year holding period is met.

Inherited Roth IRA Ten-Year Rule The inherited Roth IRA ten-year rule requires non-spouse beneficiaries to empty the account within ten years, though qualified distributions remain tax-free.

Installment Sale A sale structure where the seller receives payment over multiple years from the buyer, spreading the capital gain recognition across those years for tax purposes.

Installment Sale Real Estate Spreading gain over multiple years when property is paid in installments, deferring tax liability.

Installment Sale Tax Treatment Understand how installment sale tax treatment spreads gain across payment years using the gross-profit percentage.

Intentionally Defective Grantor Trust A trust structure that is treated as owned by the grantor for income-tax purposes (preserving grantor deduction eligibility) but excluded from the grantor's taxable estate (permitting tax-free wealth transfer to heirs).

Interval Fund Tax Treatment How interval funds distribute income and capital gains as regulated investment companies, and what the limited-liquidity structure means for tax timing and reporting.

Intra-Family Loan vs Outright Gift: Tax Tradeoffs Compare using an IRS-approved intra-family loan against an outright gift when transferring wealth to family, weighing gift tax, interest income, and forgiveness risk.

Investment Property Classification Determining if real estate is rental, dealer, or personal for tax purposes, affecting depreciation, capital gains treatment, and deductibility.

IRA Traditional Tax-deductible retirement account with deferred taxes on withdrawals; income limits apply to high earners.

IRA Withdrawal Tax Withholding Rules Covers mandatory 10% federal withholding on traditional IRA distributions, how to change the election, and why under-withholding can trigger penalties.

IRA Withholding Elections and Form W-4P How to use Form W-4P to elect voluntary withholding on IRA distributions and avoid underpayment penalties.

Irrevocable Life Insurance Trust A trust that owns life insurance outside the taxable estate, keeping proceeds free of federal estate tax.

IRS Form 6251 Line-by-Line Walkthrough A plain-English explanation of each section of Form 6251, the Alternative Minimum Tax Computation form, so taxpayers understand what each adjustment represents.

ISO Exercise AMT Breakeven: How to Calculate Your Safe Exercise Amount Learn how to calculate your ISO exercise AMT breakeven point and find the maximum number of incentive stock options you can exercise in a year without owing AMT.

Itemized deduction for investors Itemized deductions are deductions for specific expenses: charitable contributions, mortgage interest, state taxes, and medical expenses. Use if they exceed the standard deduction.

Itemized Deduction Limitation Tax caps and phase-outs that restrict the deduction of state and local taxes (SALT) and other personal expenses for high-income filers.

Joint Tenancy Property and Estate Tax Inclusion Rules How the IRS includes jointly held property in a deceased owner's estate tax; rules vary by ownership structure and spousal vs. non-spousal tenancy.

K-1 income for investors K-1 income is pass-through income from partnerships and S-corporations reported on Schedule K-1. Investors report K-1 income on their personal returns, paying tax at their individual rates.

Kiddie Tax for College Students: When Investment Income Is Taxed at Parent Rates How the kiddie tax applies to full-time college students ages 19–23, including how scholarship and grant income affects the unearned income threshold.

Kiddie Tax on Unearned Income The kiddie tax is a rule that taxes a child's net unearned income above a threshold at the parent's marginal tax rate. Learn what ages it applies to, how it's calculated, and how it affects investment strategy.

Kiddie Tax Rules U.S. tax provisions that subject minor children's unearned income to taxation at parental rates rather than the child's marginal rate, limiting tax-avoidance strategies.

Kiddie Tax Unearned Income Threshold and How It Works The kiddie tax applies when a child's unearned income exceeds the annual threshold, taxing it at the parent's marginal rate. Learn how the floor is indexed and when it triggers.

Land Contract Tax Treatment for the Seller How sellers of real estate on a land contract recognize gain using installment-sale rules and account for interest income over the contract term.

Lifetime Exemption Amount The total value of gifts and transfers a person can make tax-free during their lifetime under federal law.

LIFO tax basis method LIFO (Last In, First Out) is a cost basis method where the newest tax lot is sold first. It is more tax-efficient than FIFO when recent purchases are at higher prices.

Like-Kind Exchange (Section 1031) A federal tax provision allowing investors to defer capital gains by swapping investment or business property for similar property, delaying tax recognition indefinitely.

Limited Partnership Passive Activity Loss Rules How passive activity loss rules limit LP investor deductions for losses from non-material-participation investments, and when suspended losses become deductible on exit.

Long-term capital gain tax Long-term capital gain tax is the preferential federal tax on profit from assets held over one year. Rates are 0%, 15%, or 20%, significantly lower than ordinary income rates.

Long-Term Capital Gains Rate by Income Level Map of 0%, 15%, and 20% long-term capital gains tax brackets by taxable income threshold, plus how ordinary income fills lower brackets first.

Longterm Care Insurance Deduction A self-employed deduction for qualified long-term care insurance premiums paid by self-employed individuals and sole proprietors.

Lump-Sum Pension vs Annuity: Tax Implications Taking a defined-benefit pension as a single lump-sum rollover or monthly annuity payments has distinct tax timing, planning, and reinvestment consequences.

Marginal tax rate for investors Your marginal tax rate is the tax rate applied to the next dollar of income. It determines the tax cost of short-term capital gains and ordinary dividends.