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

Making Better Use of Transfer Tax Exemptions

Estate planning entails such rudimentary concepts as having documents in place, having family discussions about testamentary dispositions and bringing in the skill sets of advisors. There are still clients who may well have issues of actually incurring gift or estate tax. Transfers to grandchildren may also be an issue, but generation-skipping, the GST tax, is not our focus here. If transfer taxes are an issue, there is also the annual gifting concept – taking advantage of the $15,000 annual gift … Continued

citybizlist : Washington DC : 2020 Election: Prioritize Estate Planning

For some, now may be the best time to take advantage of estate planning for tax mitigation. With record high gift and estate tax exemption, near record low interest rates, and depreciated assets as a result of the pandemic, Americans are in a unique position to take advantage of the estate planning strategies. But there’s no guarantee how long it will last. Under the current law, an individual can give away USD 11.58 million (USD 23.16 million for married couples) … Continued

Taxpayers must pay no more than the correct amount of tax | Internal Revenue Service

  A taxpayer may owe money when they complete and file their tax return. They have the right to pay only the amount of tax legally due, including interest and penalties, and to have the IRS apply all tax payments properly. This is one of ten rights known collectively as the Taxpayer Bill of Rights. This right to pay no more than the correct amount of tax means taxpayers can: File for a refund if they believe they overpaid. Write … Continued

The (Only) 3 Reasons You Should Have an Irrevocable Trust | Kiplinger

The Bottom Line: Be Sure Before You Go This Route The lesson should be clear: Do not create an irrevocable trust unless you need estate tax savings, government benefits, or creditor protection, and make sure you will want to continue this benefit for the rest of your life. The (Only) 3 Reasons You Should Have an Irrevocable Trust | Kiplinger