Taxes

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Arizona Tax Credits Help the Community

Arizona tax credits help the community through programs like PetSmart Charities emergencyNovember 29 is Giving Tuesday this year, Arizonans who pay state income tax have a unique and easy opportunity to give by directing where some of those dollars are spent. Arizona tax credits help the community. The state offers a number of dollar-for-dollar credits you can specify on your income-tax return to benefit schools, registered charitable organizations and military families.

  • Public schools: You can donate up to $400 married ($200 for singles) to any public or charter school in Arizona for after-school activities. Effective in 2016, donations can be made up to April 15 of the next year (Use Form 322).
  • Private school tuition organizations: You can give up to $1,090 married ($545 single) to a tuition organization that awards scholarships for children in Arizona private schools (Form 323). If you wish to donate more than the Form 323 maximum, you can give up to another $1,083 married ($542 single), but this must be claimed on Form 348. Donations can be made up to April 15 of the next year. Click here for more information.
  • Qualified Charitable Organization (formerly Working Poor): You can donate up to $800 married ($400 single) to any Arizona-registered charity that helps the poor (Form 321, organization must be approved by the Department of Revenue). You must also itemize your deductions on your Arizona form to claim this credit. Effective in 2016, donations can be made up to April 15 of the next year. Click here for more information.
  • Military family relief: You can contribute $400 married ($200 single) to benefit Arizona service members and their families. The assistance goes to those who are deployed or to the families of those injured or killed. The credit is capped at $1 million annually so it’s important to get this money in as early as possible. Any money received after $1 million is reached (usually sometime in December) is returned (Use Form 340). Click here for more information. 
By |November 29th, 2016|Charitable Giving, Taxes|

Tax Loss Harvesting for Fall

Eng-WEBAs the weather cools and seasons change from summer to fall, farmers are looking to harvest. Much like the farmer, we at Perspective Financial are turning our thoughts to harvesting – from a financial perspective. Tax loss harvesting, capital gains distributions and required minimum distributions (RMDs) from IRAs are areas of tax planning we review and monitor for our clients throughout the year. During the fourth quarter, we pay particular attention to how these aspects of their portfolios may impact their individual tax situations.


The practice of selling a security that has experienced a loss is called tax loss harvesting.


By realizing (or “harvesting”) a loss, investors are able to offset taxes on both gains and income. The sold security is replaced, at lower cost by a similar one, while maintaining the investor’s asset allocation. We were able to do some tax loss harvesting earlier this year when the markets were very volatile and weak, where it was appropriate for clients with taxable accounts. We continue to look for such opportunities as the year comes to a close.

By |October 10th, 2016|Financial Planning, Investing, Taxes|

Deduct Home Sale Gains from Income Tax

Selling your home? You may be able to deduct home sale gains from income tax.http://www.dreamstime.com/stock-photography-happy-family-near-new-house-real-estate-concept-image31414402

For U.S. federal income tax purposes, you may be able to exclude from income any gain up to $250,000 for a single taxpayer and $500,000 for a married couple filing a joint return. Generally, to exclude the gain, you must have owned and lived in the property as your main home for two of the five years prior to the date of the sale. If you lose money on a sale, the loss is not tax deductible.

Adjusted Basis

A dollar amount known as your adjusted basis determines whether you experience a gain or a loss. If you purchased or built your home, your initial cost basis typically is the cost to you at the time of purchase. If you inherit a home, the cost basis is the fair market value on the date of the decedent’s death or on a later valuation date selected by a representative of the estate.

The formula for determining your gain or loss is as follows:

selling price – selling expenses = amount realized

amount realized – adjusted basis = gain or loss

The cost basis may be adjusted over time due to a number of conditions. For example:

  • Additions and other improvements that have a useful life of more than one year and that add to the value of your home (e.g., swimming pool, heating and air conditioning systems, interior improvements). Repairs that keep your house in good condition do not apply.
  • Money spent to restore damaged property.
  • Payments for granting an easement or right-or-way.
  • Depreciation if the home was used for business or rental purposes.

 

By |December 2nd, 2015|Real Estate, Taxes|

A Custodial IRA for Your Child

Farmers Asleep in the HayDoes your child need a retirement account?

A custodial IRA can give children a head start on saving for future needs. The objective of an IRA is to save for retirement, but IRS rules permit penalty-free withdrawals for higher-education expenses, a first-time home purchase and other reasons.

Watch the video below to learn about a custodial IRA for your child. It’s less than two minutes, and you can contact your financial advisor if you would like to learn more.

Select photos in A Custodial IRA for Your Child video courtesy of num_skyman at freedigitalphotos.net