Sec. 529 plans have been a widely used tool to help taxpayers save money for college, presuming they distribute that money for qualified higher-education costs. Depending on your Sec. 529 plan, you may be eligible for a state tax deduction for contributions to the plan. The TCJA expanded the opportunities available for education tax planning by permitting $10,000 per year to be distributed from Sec. 529 plans to pay for private elementary and secondary tuition. Contact us to learn how these new rules may help you pay for private school tuition for your family.
Contact us to learn how these new rules may help you pay for private school tuition for your family. 262-358-8297
What is Passive Foreign Investment Firm?
A Passive Foreign Investment Corporation is any foreign investment company where 75% or more of its gross income for the tax year is from passive income or 50% or more of its assets produce passive income or are held to produce passive income.
What Type of Income is Included in Passive Foreign Income?
Passive Income includes most investments income i.e. Interest, dividends, rents, annuities, and the sale or exchange of capital assets. Almost all foreign mutual funds are Passive Foreign Investment Firms (Corporation). Stock you hold directly in a corporation can also be a Passive Foreign Investment Firm/Corporation stock if the foreign corporation's activities meet one of the test to the left.
*this list is not exhaustive.
When you convert your existing traditional IRA into a Roth IRA and then reverse the transaction by switching the account back to traditional IRA status, the reversal is called a recharacterization in the IRS world.. If you had a sizable accumulation in your traditional IRA, the ability to convert that traditional IRA to a Roth IRA and also change your mind when things were backfiring was a terrific tax and financial planning break.
However, if you make a Roth conversion transaction in 2018 and beyond, the Tax Cuts and Jobs Act (TCJA) permanently eliminates your ability to recharacterize the account back to traditional IRA status.
Look at the new TCJA rule this way: when you make the decision to convert your existing traditional IRA or other retirement plan to a Roth, that’s a final decision for 2018 and beyond.
There was a time when you could convert your rental property or vacation home to a principal residence and then use the full $250,000/$500,000 home-sale exclusion to avoid taxes, those days are gone!
Today the $250,000/$500,000 exclusion works quite different. You are required to divide your period of home ownership into the following two categories:
It is important to note the exception to the nonqualified use is that nonqualified use doesn't include rental use during the five-year period that's after the last date you and or your spouse used the property as your principal residence.
If you will like to discuss this further please don't hesitate to contact us!
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Spencer Accounting Group, LLC does not provide investment, tax, legal, or retirement advice or recommendations in these blogs. The information presented here is not specific to any individual's personal circumstances.
Keana Spencer is an Accountant, Entrepreneur, and Educator to her clients, with a strong passion. Keana has over 10 years of experience and through her practice, she is a source of knowledge and strategies to her clients.