Tax Tips: Potential break for retirees

All the stock market turmoil has created an interesting situation for many retirees in America. Those age 70½ or older must withdraw certain minimum amounts from their retirement accounts each year under the Internal Revenue Service rules. (The purpose behind forcing those withdrawals is the fact that they become taxable when taken out, so the IRS gets a cut.)

Many retirees have seen their retirement account values drop in recent months, and would rather not take a distribution this year if they don't have to. Assets like stocks, bonds, and mutual funds would have to be sold to make the distributions, and since the value of those investments are down, selling them locks in a loss for the seniors.

Lobbyists are encouraging Congress to pass legislation that would temporarily halt the minimum distribution requirements. By not forcing withdrawals this year, the IRS would allow retirees to hold their investments, waiting for them to regain at least some of their value over the next year. Retirees must play a bit of a waiting game, however, as lawmakers have not made a decision on this issue.

Those who haven't taken a minimum distribution this year would do well to hold off. Wait until closer to the end of the year to see if there will be a temporary change to the rules that may benefit you.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

Top Five Ways to Avoid a Tax Audit

If the IRS does decide to audit you, there is little you may do to stop it. You may, however, reduce the odds that you will be singled out for that extra attention in the first place.

Read More

Brought to you by TurboTax.com

What Filing Status Deducts the Most Taxes?

Your filing status can make a big difference in how much income tax you pay. If you make $40,000 a year, for instance, the amount of tax you will pay depends on which filing status you qualify for. The difference in tax rates are significant and can mean the difference between paying up to 15 percent or 25 percent. Your decision to file single, jointly or as head of household will also affect the size of your standard deduction.

Read More

Brought to you by TurboTax.com

Are College Entrance Exams Tax Deductible?

The fees for taking SAT, ACT and other college entrance exams are not tax-deductible, but the federal government does allow a number of educational deductions and tax credits. Find out more about these educational deductions and credits and how they can benefit you.

Read More

Brought to you by TurboTax.com
Read Full Story