Earning side income: Is it a hobby or a business?

  Whether it’s something they’ve been doing for years or something they just started to make extra money, taxpayers must report income earned from hobbies in 2020 on next year’s tax return. What the difference between a hobby and a business? A business operates to make a profit. People engage in a hobby for sport or recreation, not to make a profit. Here are nine things taxpayer must consider when determining if an activity is a hobby or a business: … Continued

New taxes on forgiven mortgage debt to hit owners – CBS News

  (MoneyWatch) Soon homeowners facing a short sale or foreclosure will have to pay federal income tax on any portion of the loan that is forgiven unless Congress intervenes. The Mortgage Debt Relief Act Congress, passed in 2007, will expire at the end of the year. For the past five years, homeowners who conducted a short sale, are in foreclosure or restructured their mortgage and had part of the principal balance forgiven didn’t have to pay any income tax on … Continued

Obama Estate Tax Budget Proposal Keeps Wealthy Jumpy – Bloomberg

  Those who manage the wealth of the rich and super-rich are warily eyeing an Obama administration budget proposal for 2013 that would require people who create trusts, known as grantors, to include the assets of their trusts in their own estates for estate tax purposes. While it sounds like a fairly logical proposal, in reality it would undo years of tax policy in which the income tax rules and the estate tax rules have been kept separate. More importantly, … Continued

Year-End Tax Planning Tips for Seniors –

  1. See if you qualify for tax credits under programs for certain elderly or disabled taxpayers. 2. Check the tax treatment of Social Security benefits. 3. If your child, or a friend under some conditions, provides at least half of your financial support, he or she may be able to get a tax benefit by claiming you as a dependent on their tax return. Your income cannot exceed $3,700 to qualify for this deduction. 4. Check any 1099-R forms … Continued