Resources on IRS.gov Help All Taxpayers Understand Tax Reform

The following article was published by the IRS.

taxes-646512_1280IRS.gov is a great place for taxpayers to visit when they have questions about the Tax Cuts and Jobs Act. The legislation, which was passed late last year, includes changes to many areas of the tax law.

Here are some of the resources on IRS.gov that will help individual taxpayers, businesses and the tax community understand the law and its effect on their taxes:

  • Tax Reform Web Page. The Tax Reform page highlights what taxpayers need to know about the tax law changes and how these changes affect them. This page also links taxpayers and tax professionals to news releases, tax tips, publications, notices, and legal guidance related to the legislation.
  • Updated Withholding Calculator. The IRS encourages everyone to use the Withholding Calculator to perform a “Paycheck Checkup,” which is even more important this year because of the tax law changes. The calculator helps taxpayers determine if they’re having the right amount of tax withheld from their paychecks.
  • Updated Form W-4, Employee’s Withholding Allowance Certificate. Taxpayers who determine they need to make changes to their withholding can complete a Form W-4, which reflects the tax law changes. Employees will submit the completed Form W-4 to their employers.
  • Frequently Asked Questions. The IRS posted new FAQs to help people understand how to use the Withholding Calculator and the changes to the Withholding Tables.

More information about the tax law changes will be coming throughout the year. IRS.gov will be updated to reflect changes as they develop.

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What is An Annuity?

What is an annuity? An annuity is an investment product that pays out a steady stream of income over time during retirement. When you purchase an annuity, usually from an insurance company, you agree to make a lump sum payment up front, or regularly scheduled payments at agreed-upon intervals. In exchange, you are guaranteed a fixed payment for a particular period of time: either a set number of years or until you or your spouse dies, depending on your policy.

The amount you are paid out by the insurance company is called a distribution. The contributions you make are invested by the annuity company and grow until you begin taking distributions. As you are the one receiving the distributions, you are also responsible for paying the taxes, though usually only on the growth portion of your money. Continue reading

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Retirees Can Visit IRS.gov for Helpful Tools and Resources

The following article was published by the IRS.

older-adult-1546130_1280Retirement can affect someone’s tax situation. Anyone who has retired recently — or who plans to retire soon — can visit IRS.gov for information that can help them prepare for filing their taxes next year.

Here are some tools and resources for retirees, all available on IRS.gov:

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How Stores Get You to Spend

Whether it’s clothing, groceries, electronics, or home goods, odds are that you spend more than you should when you go into a store. Why is this? It’s simple marketing. Stores are experts in running promotions and sales that get us to spend more money than we realize by making us think we are actually saving.

Some might call it silly marketing tactics, but the reality is that these sales and promotions actually work. For example, some stores offer free shipping on purchases of $50 or more. But most people end up spending more than they would have to reach the free shipping threshold, so the free shipping doesn’t end up “free” after all.

Grocery stores are notorious for using various marketing schemes to increase sales. They place certain items at eye level, put displays where they know you will walk by them, and offer sales such as “buy 10 for $10” when in fact you can get just one for $1. Continue reading

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Like-Kind Exchanges – Real Estate Tax Tips

The following article was published by the IRS.

purchase-3113198_960_720Like-kind exchanges — when you exchange real property used for business or held as an investment solely for other business or investment property that is the same type or “like-kind” — have long been permitted under the Internal Revenue Code.

Generally, if you make a like-kind exchange, you are not required to recognize a gain or loss under Internal Revenue Code Section 1031. If, as part of the exchange, you also receive other (not like-kind) property or money, you must recognize a gain to the extent of the other property and money received. You can’t recognize a loss. Continue reading

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What is a Power of Attorney?

A power of attorney is simply a legal document that gives you the right to name one or more individuals to step into your shoes and act on your behalf in certain pre-determined circumstances.

Two terms used in this document to describe the individuals affected are the principal (you), and the agents (others you delegate to act on your behalf). This document will give this agent (or agents) a very specific list of authorities and abilities to act on your behalf.

What are some of the common things that an agent does on a principal’s behalf? Here are a handful of the more common ones: Continue reading

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