A casualty loss is classified as “The damage, destruction or loss of your property”. These losses can be tricky to report and deduct on your taxes. However, we have compiled a few tips to help you.
In Minnesota, both federal and state tax reporting follow the same set of procedures. If you have a casualty or loss relating to real property (your home, household items or vehicles), you are allowed to deduct it on both your federal and state tax return. A casualty event includes unexpected or uncommon events and disasters but does not include normal wear, tear or breakdown from usage.
If your property is not completely demolished you need to find the lesser of the adjusted basis of your property or the decrease in fair market value. This can be difficult to do, so it is recommended that consult an appraiser. Once you have calculated this amount, you must … Read More
IRS Scrambling as Refunds Vanish
With digital crimes such as identity theft becoming more and more common, government agencies like the IRS are frantically trying to protect themselves and U.S. citizens. But it isn’t easy. Organized crime groups have begun to be more cooperative with one another, turning once small attacks into “epic wave[s] of fraud”, according to Alabama revenue commissioner Julie Magee.
Tax identity theft (which the IRS is battling) occurs when a person’s social security number (SSN) is compromised by thieves. When thieves steal an SSN, there are two common outcomes. First, they can use the number and attempt to file for a refund before the taxpayer. If successful, this means that the taxpayer will not receive a refund when he or she files since the system has already paid out the money owed. Second, a thief could apply for employment with the stolen SSN. If they obtain the job, it usually causes the … Read More
529 Plans: Invest for Anyone
529 plans allow people to save for college and the costs of higher education. In MN this is called the “Minnesota College Savings Plan”. This flexible plan allows any U.S. citizen over 18 years of age to open an account on behalf of a beneficiary.
There are numerous benefits that go along with the College Savings Plan. There are no federal or state tax deductions for contributions to the fund. However, all of the account earnings are considered “tax-free investment income”, meaning they are not subject to federal or state income tax.
Any distributions for qualifying higher education expenses (including tuition, books or supplies are also tax free. Room and board is also permitted as an education expense if the student is enrolled more than half-time. If a non-qualifying distribution is made, the earnings are taxable at the state income tax rate for your tax bracket. Furthermore, federal law assigns a … Read More
Casualty Losses and Income Taxes
A casualty loss is classified as “The damage, destruction or loss of your property”. These losses can be tricky to report and deduct on your taxes. However, we have compiled a few tips to help you.
In Minnesota, both federal and state tax reporting follow the same set of procedures. If you have a casualty or loss relating to real property (your home, household items or vehicles), you are allowed to deduct it on both your federal and state tax return. A casualty event includes unexpected or uncommon events and disasters but does not include normal wear, tear or breakdown from usage.
If your property is not completely demolished you need to find the lesser of the adjusted basis of your property or the decrease in fair market value. This can be difficult to do, so it is recommended that consult an appraiser. Once you have calculated this amount, you must … Read More