Tax Questions
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How is Cost Basis Calculated for Digital Assets?
On Form 1099-DA, basis reporting is mandatory after 2025 for covered transactions, i.e., any digital asset acquired on or after January 1, 2025.
Section 897 Ordinary Dividends and Capital Gains
IRC Section 897 requires foreign investors to pay U.S. tax on gains from U.S. real property interests, including dividends and capital gains derived from such assets.
Section 179 Business Income Limitation
The Section 179 deduction is limited to the taxpayer’s taxable income from the active conduct of trades or businesses.
What is Basis?
A taxpayer's basis in property is the amount they have invested in it.
Form 1040: Why has $0 income tax calculated if there is taxable income?
Generally, when an individual tax return with taxable income calculates $0 of income tax, the tax calculation is being done using one or more of several worksheets rather than using the tax tables.
Printing: Why is Social Security Benefits Worksheet Line 8 blank?
In Tax Processors Plus, an individual tax return that includes Social Security income will include in the printed return the Social Security Benefits Worksheet.
Why is Self-Employment Tax Not Reduced by Nonrefundable Credits?
Self-employment (SE) tax liability is not reduced by nonrefundable credits.
Form 9465 Installment Agreement Fees
When a taxpayer applies for an installment agreement with the IRS, the IRS charges them a setup fee.
Minister's Tax Return - Frequently Asked Questions (FAQ)
Whether a minister is an employee or an independent contractor is determined under the same common law rules that apply to other taxpayers.
Contribution Limits: 60%, 50%, 30%, and 20%
Charitable contributions, whether in the form of cash or property, are deductible if they are made to a qualified organization.
Form 5329: What does RC mean on line 54?
In Form 5329 Part IX, Additional Tax on Excess Accumulation in Qualified Retirement Plans (including IRAs), the additional tax of 25% can be reduced to 10% if the taxpayer meets certain requirements as outlined in the Form 5329 instructions for Line 55.
Form 8936: New Clean Vehicle vs Qualified Commercial Clean Vehicle
For the purpose of calculating the clean vehicle credit on Form 8936, a vehicle may qualify for both the new clean vehicle credit and the qualified commercial clean vehicle credit.
Other Income: Scholarship and Fellowship Grants Not Reported on Form W-2
Taxpayers should review IRS guidance to determine how to report fellowship income and whether scholarship or fellowship grants are taxable.
Other Income: Taxable Distributions from an ABLE Account (1099-QA)
The Achieving a Better Life Experience (ABLE) Act of 2014 allows states to create tax-advantaged savings programs for eligible people with disabilities (designated beneficiaries).
Other Income: Olympic and Paralympic Medals and USOC Prize Money
The value of Olympic and Paralympic medals and the amount of United States Olympic Committee (USOC) prize money a taxpayer receives on account of their participation in the Olympic or Paralympic Games may be nontaxable.
Other Income: Personal Property Rental Income But Not in the Rental Business
Personal property rental income that is not part of a rental business is generally reported on Schedule 1 under Other Income.
Other Income - Activities Not Engaged in for Profit
An activity is presumed for profit if it makes a profit in at least three of the last five tax years, including the current year (or at least two of the last seven years for activities that consist primarily of breeding, showing, training or racing horses).
Other Income - Prizes and Awards
If you win a prize in a lucky number drawing, television or radio quiz program, beauty contest, or other event, you must include it in your income.
Why did my client receive a letter from the IRS reducing the penalty calculated on Form 2210?
When preparing Form 2210 in Tax Processors Plus, the maximum underpayment penalty is calculated.
Form 8995: Why Is QBI $0 or less?
Thus, while the net profit from all qualifying business might be greater than $0, QBI (before any loss carryforward from the prior year) may calculate to $0 or a loss.
Is Income on Schedule K-1 From an S Corporation Considered Self-Employment Income?
Ordinary income reported to an individual shareholder on Schedule K-1 from an S corporation is not considered self-employment income.
Is Income on an S Corporation K-1 Considered Earned Income?
Ordinary income reported to an individual shareholder on Schedule K-1 from an S-Corporation is not considered earned income.
In the Tax Return, How Old is an Individual Born on January 1?
In a tax return, credits related to dependents generally include the dependent's age in determining whether or not the taxpayer qualifies for the credit.
Hobby Income vs Business Income
Sometimes it's not clear if an activity that a taxpayer is engaged in that also produces income is a business or a hobby, but it's important to correctly determine which category the activity falls under.
Where Do I Report Income From Flipping Houses?
When preparing the tax return for a taxpayer who buys and sells real estate, it is important for tax purposes to determine if the taxpayer is an investor in real estate or is operating a business that buys and sells real estate.