book

J.K. Lasser's Your Income Tax 2022

Name: J.K. Lasser's Your Income Tax 2022
Author: J.K. Lasser Institute
ISBN: 9781119839217

by J.K. Lasser Institute

December 2021

Beginner

928 pages

46h 18m

English

Wiley

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Cover
Title Page
Copyright
How To Use Your Income Tax 2022
What's New for 2021
PART 1: Filing Basics
Do You Have to File a 2021 Tax Return?Filing Tests for Dependents: 2021 ReturnsWhere to File Your 2021 Form 1040 or 1040-SRFiling Deadlines (on or before)What Forms Do You Need to File?
CHAPTER 1: Filing Status
1.1 Which Filing Status Should You Use?1.2 Tax Rates Based on Filing Status1.3 Filing Separately Instead of Jointly1.4 Filing a Joint Return1.5 Nonresident Alien Spouse1.6 Community Property Rules1.7 Innocent Spouse Rules1.8 Separate Liability Relief for Former Spouses1.9 Equitable Relief1.10 Death of Your Spouse in 20211.11 Qualifying Widow/Widower Status for 2021 If Your Spouse Died in 2020 or 20191.12 Qualifying as Head of Household1.13 Filing for Your Child1.14 Return for Deceased1.15 Return for an Incompetent Person1.16 How a Nonresident Alien Is Taxed1.17 How a Resident Alien Is Taxed1.18 Who Is a Resident Alien?1.19 Certificate of Tax Compliance for Alien Leaving the United States1.20 Expatriation Tax
PART 2: Reporting Your Income
CHAPTER 2: Wages, Salary, and Other Compensation
2.1 Salary and Wage Income2.2 Constructive Receipt of Year-End Paychecks2.3 Pay Received in Property Is Taxed2.4 Commissions Taxable When Credited2.5 Unemployment Benefits2.6 Strike Pay Benefits and Penalties2.7 Nonqualified Deferred Compensation2.8 Did You Return Wages Received in a Prior Year?2.9 Waiver of Executor's and Trustee's Commissions2.10 Life Insurance Benefits2.11 Educational Benefits for Employees' Children2.12 Sick Pay Is Taxable2.13 Workers' Compensation Is Tax Free2.14 Disability Pay and Pensions2.15 Stock Appreciation Rights (SARs)2.16 Stock Options2.17 Election to Defer Income on Qualified Equity Grants from Private Companies (Section 83(i) election)2.18 Restricted Stock
CHAPTER 3: Fringe Benefits
3.1 Tax-Free Health and Accident Coverage Under Employer Plans3.2 Health Savings Accounts (HSAs) and Archer MSAs3.3 Reimbursements and Other Tax-Free Payments From Employer Health and Accident Plans3.4 Group-Term Life Insurance Premiums3.5 Dependent Care Assistance3.6 Adoption Benefits3.7 Education Assistance Plans3.8 Company Cars, Parking, and Transit Passes3.9 Working Condition Fringe Benefits3.10 De Minimis Fringe Benefits3.11 Employer-Provided Retirement Advice3.12 Employee Achievement Awards3.13 Employer-Furnished Meals or Lodging3.14 Minister's Housing or Housing Allowance3.15 Cafeteria Plans Provide Choice of Benefits3.16 Flexible Spending Arrangements3.17 Company Services Provided at No Additional Cost3.18 Discounts on Company Products or Services

CHAPTER 4: Dividend and Interest Income
4.1 Reporting Dividends and Mutual Fund Distributions4.2 Qualified Corporate Dividends Taxed at Favorable Capital Gain Rates4.3 Dividends From a Partnership, S Corporation, Estate, or Trust4.4 Real Estate Investment Trust (REIT) Dividends4.5 Taxable Dividends of Earnings and Profits4.6 Stock Dividends on Common Stock4.7 Dividends Paid in Property4.8 Taxable Stock Dividends4.9 Who Reports the Dividends4.10 Year Dividends Are Reported4.11 Distribution Not Out of Earnings: Return of Capital4.12 Reporting Interest on Your Tax Return4.13 Interest on Frozen Accounts Not Taxed4.14 Interest Income on Debts Owed to You4.15 Reporting Interest on Bonds Bought or Sold4.16 Forfeiture of Interest on Premature Withdrawals4.17 Amortization of Bond Premium4.18 Discount on Bonds4.19 Reporting Original Issue Discount on Your Return4.20 Reporting Income on Market Discount Bonds4.21 Discount on Short-Term Obligations4.22 Stripped Coupon Bonds and Stock4.23 Sale or Retirement of Bonds and Notes4.24 State and City Interest Generally Tax Exempt4.25 Taxable State and City Interest4.26 Tax-Exempt Bonds Bought at a Discount4.27 Treasury Bills, Notes, and Bonds4.28 Interest on United States Savings Bonds4.29 Deferring United States Savings Bond Interest4.30 Minimum Interest Rules4.31 Interest-Free or Below-Market-Interest Loans4.32 Minimum Interest on Seller-Financed Sales
CHAPTER 5: Reporting Property Sales
5.1 General Tax Rules for Property Sales5.2 How Property Sales Are Classified and Taxed5.3 Capital Gains Rates and Holding Periods5.4 Capital Losses and Carryovers5.5 Capital Losses of Married Couples5.6 Losses May Be Disallowed on Sales to Related Persons5.7 Special Treatment of Gain on Sale of Small Business Stock or Qualified Opportunity Zone Investment5.8 Reporting Capital Asset Sales on Form 8949 and on Schedule D5.9 Counting the Months in Your Holding Period5.10 Holding Period for Securities5.11 Holding Period for Real Estate5.12 Holding Period: Gifts, Inheritances, and Other Property5.13 Calculating Gain or Loss5.14 Amount Realized Is the Total Selling Price5.15 Finding Your Cost5.16 Unadjusted Basis of Your Property5.17 Basis of Property You Inherited or Received as a Gift5.18 Joint Tenancy Basis Rules for Surviving Tenants5.19 Allocating Cost Among Several Assets5.20 How To Find Adjusted Basis5.21 Tax Advantage of Installment Sales5.22 Figuring the Taxable Part of Installment Payments5.23 Electing Not To Report on the Installment Method5.24 Restriction on Installment Sales to Relatives5.25 Contingent Payment Sales5.26 Using Escrow and Other Security Arrangements5.27 Minimum Interest on Deferred Payment Sales5.28 Dispositions of Installment Notes5.29 Repossession of Personal Property Sold on Installment5.30 Boot in Like-Kind Exchange Payable in Installments5.31 “Interest” Taxed if Sales Price Exceeds $150,000 With Over $5 Million Debt5.32 Worthless Securities5.33 Tax Consequences of Bad Debts5.34 Four Rules To Prove a Bad Debt Deduction5.35 Family Bad Debts
CHAPTER 6: Tax-Free Exchanges of Property
6.1 Like-Kind Exchanges of Real Property Used for Investment or Business6.2 Receipt of Cash and Other Property—”Boot”6.3 Time Limits and Security Arrangements for Deferred Exchanges6.4 Qualified Exchange Accommodation Arrangements (QEAAs) for Reverse Exchanges6.5 Exchanges Between Related Parties6.6 Property Transfers Between Spouses and Ex-Spouses6.7 Tax-Free Exchanges of Stock in Same Corporation6.8 Joint Ownership Interests6.9 Setting up Closely Held Corporations6.10 Tax-Free Exchanges of Insurance Policies
CHAPTER 7: Retirement and Annuity Income
7.1 Retirement Distributions on Form 1099-R7.2 Lump-Sum Distributions7.3 Lump-Sum Options If You Were Born Before January 2, 19367.4 Lump-Sum Payments Received by Beneficiary7.5 Tax-Free Rollovers From Qualified Plans7.6 Direct Rollover or Personal Rollover7.7 Rollover of Proceeds From Sale of Property7.8 Distribution of Employer Stock or Other Securities7.9 Survivor Annuity for Spouse7.10 Court Distributions to Former Spouse Under a QDRO7.11 When You Must Begin Receiving Required Minimum Distributions (RMDs)7.12 Payouts to Beneficiaries7.13 Penalty for Distributions Before Age 59½7.14 Restrictions on Loans From Company Plans7.15 Tax Benefits of 401(k) Plans7.16 Limit on Salary-Reduction Deferrals7.17 Withdrawals From 401(k) Plans Restricted7.18 Designated Roth Account Within 401(k), 403(b), or Governmental 457 Plans7.19 403(b) Plans (Tax-Sheltered Annuity Plans) for Employees of Tax-Exempts and Schools and Ministers7.20 Government and Exempt Organization Deferred Pay Plans7.21 Figuring the Taxable Part of Commercial Annuities7.22 Life Expectancy Tables7.23 When You Convert Your Endowment Policy7.24 Reporting Employee Annuities7.25 Simplified Method for Calculating Taxable Employee Annuity7.26 Employee's Cost in Annuity7.27 Withdrawals From Employer's Qualified Retirement Plan Before Annuity Starting Date7.28 Coronavirus-Related Distributions7.29 Qualified Disaster Distributions
CHAPTER 8: IRAs
8.1 Starting a Traditional IRA8.2 Contribution Limit for Traditional IRAs8.3 Contributions to a Traditional IRA If You Are Married8.4 Restrictions on Traditional IRA Deduction for Active Participants in Employer Plans8.5 Active Participation in an Employer Plan8.6 Nondeductible Contributions to Traditional IRAs8.7 Penalty for Excess Contributions to Traditional IRAs8.8 Distributions From Traditional IRAs8.9 Partially Tax-Free Traditional IRA Distributions Allocable to Nondeductible Contributions8.10 Tax-Free Direct Transfer or Rollover From One Traditional IRA to Another8.11 Transfer of Traditional IRA to Spouse at Divorce8.12 Penalty for Traditional IRA Withdrawals Before Age 59½8.13 Required Minimum Distributions (RMDs) From a Traditional IRA8.14 Beneficiaries of Traditional IRA Owners Who Died Before 20208.15 Beneficiaries of Traditional IRA Owners Who Die After 20198.16 SEP Basics8.17 Salary-Reduction SEP Set Up Before 19978.18 Who Is Eligible for a SIMPLE IRA?8.19 SIMPLE IRA Contributions and Distributions8.20 Roth IRA Advantages8.21 Annual Contributions to a Roth IRA8.22 Recharacterizing a Traditional IRA Contribution to a Roth IRA and Vice Versa8.23 Converting a Traditional IRA to a Roth IRA8.24 Conversions Made After 2017 to a Roth IRA Cannot Be Recharacterized8.25 Distributions From a Roth IRA8.26 Distributions to Roth IRA Beneficiaries8.27 Coronavirus-Related IRA Distributions and Qualified Disaster Distributions
CHAPTER 9: Income From Real Estate Rentals and Royalties
9.1 Reporting Rental Real Estate Income and Expenses9.2 Checklist of Rental Deductions9.3 Distinguishing Between a Repair and an Improvement9.4 Reporting Rents From a Multi-Unit Residence9.5 Depreciation on Converting a Home to Rental Property9.6 Renting a Residence to a Relative9.7 Personal Use and Rental of a Residence During the Year9.8 Counting Personal-Use Days and Rental Days for a Residence9.9 Allocating Expenses of a Residence to Rental Days9.10 IRS May Challenge Loss Claimed on Temporary Rental of Residence Before Sale9.11 Reporting Royalty Income9.12 Production Costs of Books and Creative Properties9.13 Deducting the Cost of Patents or Copyrights9.14 Intangible Drilling Costs9.15 Depletion Deduction9.16 Oil and Gas Percentage Depletion9.17 Qualified Business Income Deduction for Real Estate Activities
CHAPTER 10: Loss Restrictions: Passive Activities and At-Risk Limits
10.1 Rental Activities Generally Treated as Passive10.2 Rental Real Estate Loss Allowance of up to $25,00010.3 Real Estate Professionals10.4 Business Participation May Avoid Passive Loss Restrictions10.5 Classifying Business Activities as One or Several10.6 Material Participation in a Business10.7 Tax Credits of Passive Activities Limited10.8 Determining Passive or Nonpassive Income and Loss10.9 Passive Income Recharacterized as Nonpassive Income10.10 Working Interests in Oil and Gas Wells10.11 Partners and Members of LLCs and LLPs10.12 Form 8582 and Other Tax Forms10.13 Suspended Losses Allowed on Disposition of Your Interest10.14 Suspended Tax Credits10.15 Personal Service and Closely Held Corporations10.16 Sales of Property and of Passive Activity Interests10.17 At-Risk Limits10.18 What Is At Risk?10.19 Amounts Not At Risk10.20 At-Risk Investment in Several Activities10.21 Carryover of Disallowed Losses10.22 Recapture of Losses Where At Risk Is Less Than Zero
CHAPTER 11: Other Income
11.1 Prizes and Awards11.2 Lottery and Sweepstake Winnings11.3 Gambling Winnings and Losses11.4 Gifts and Inheritances11.5 Refunds of State and Local Tax Deductions11.6 Other Recovered Deductions11.7 How Legal Damages Are Taxed11.8 Cancellation of Debts You Owe11.9 Schedule K-111.10 How Partners Report Partnership Profit and Loss11.11 When a Partner Reports Income or Loss11.12 Partnership Loss Limitations11.13 Tax Audits of Partnerships11.14 Stockholder Reporting of S Corporation Income or Loss11.15 How Beneficiaries Report Estate or Trust Income11.16 Reporting Income in Respect of a Decedent (IRD)11.17 Deduction for Estate Tax Attributable to IRD11.18 How Life Insurance Proceeds Are Taxed to a Beneficiary11.19 A Policy with a Family Income Rider11.20 Selling or Surrendering Life Insurance Policy11.21 Jury Duty Fees11.22 Foster Care Payments11.23 Third Round of Economic Impact Payments
PART 3: Claiming Deductions
CHAPTER 12: Deductions Allowed in Figuring Adjusted Gross Income
12.1 Figuring Adjusted Gross Income (AGI)12.2 Claiming Deductions from Gross Income12.3 Moving Costs Are Deductible Only by Qualifying Members of the U.S. Armed Forces
CHAPTER 13: Claiming the Standard Deduction or Itemized Deductions
13.1 Does Your Standard Deduction for 2021 Exceed Your Itemized Deductions?13.2 Basic Standard Deduction13.3 Spouses Filing Separate Returns13.4 Standard Deduction If 65 or Older or Blind13.5 Standard Deduction for Dependents13.6 Prepaying or Postponing Itemized Expenses13.7 Itemized Deductions No Longer Reduced for Higher-Income Taxpayers
CHAPTER 14: Charitable Contribution Deductions
14.1 Deductible Contributions14.2 Nondeductible Contributions14.3 Contributions That Provide You With Benefits14.4 Unreimbursed Expenses of Volunteer Workers14.5 Support of a Student in Your Home14.6 What Kind of Property Are You Donating?14.7 Cars, Clothing, and Other Property Valued Below Cost14.8 Bargain Sales of Appreciated Property14.9 Art Objects14.10 Interests in Real Estate14.11 Life Insurance14.12 Business Inventory14.13 Donations Through Trusts14.14 Records Needed To Substantiate Your Contributions14.15 Form 8283 and Written Appraisal Requirements for Property Donations14.16 Penalty for Substantial Overvaluation of Property14.17 Ceiling on Charitable Contributions14.18 Carryover for Excess Donations14.19 Election To Reduce Fair Market Value by Appreciation
CHAPTER 15: Itemized Deduction for Interest Expenses
15.1 Deduction for Home Mortgage Interest15.2 Home Acquisition Loans15.3 Home Equity Loans15.4 Home Construction Loans15.5 Mortgage Insurance Premiums and Other Payment Rules15.6 Interest on Refinanced Loans15.7 “Points”15.8 Cooperative and Condominium Apartments15.9 Investment Interest Limitations15.10 Debts To Carry Tax-Exempt Obligations15.11 Earmarking Use of Loan Proceeds For Investment or Business15.12 Year To Claim an Interest Deduction15.13 Prepaid Interest
CHAPTER 16: Deductions for Taxes
16.1 Overall Limit on Deduction for State and Local Taxes16.2 Nondeductible Taxes16.3 State and Local Income Taxes or General Sales Taxes16.4 Deducting Real Estate Taxes16.5 Assessments16.6 Tenants' Payment of Taxes16.7 Allocating Taxes When You Sell or Buy Realty16.8 Automobile License Fees16.9 Taxes Deductible as Business Expenses16.10 Foreign Taxes
CHAPTER 17: Medical and Dental Expense Deductions
17.1 Medical and Dental Expenses Must Exceed AGI Threshold17.2 Allowable Medical and Dental Care Costs17.3 Nondeductible Medical Expenses17.4 Reimbursements Reduce Deductible Expenses17.5 Expenses of Your Spouse17.6 Expenses of Your Dependents17.7 Decedent's Medical Expenses17.8 Premiums for Health Insurance17.9 Travel Costs May Be Medical Deductions17.10 Schooling for the Mentally or Physically Disabled17.11 Nursing Homes17.12 Nurses' Wages17.13 Home Improvements as Medical Expenses17.14 Costs Deductible as Business Expenses17.15 Long-Term Care Premiums and Services17.16 Life Insurance Used by Chronically ill or Terminally ill Person
CHAPTER 18: Casualty and Theft Losses and Involuntary Conversions
18.1 Casualty or Theft Losses for Personal-Use Property Must Be Due to a Federally Declared Disaster18.2 When To Deduct a Casualty or Theft Loss18.3 Prior-Year Election for Disaster Losses18.4 Gain Realized From Insurance Proceeds for Damaged or Destroyed Principal Residence18.5 Who May Deduct a Casualty or Theft Loss18.6 Proving a Casualty Loss18.7 Theft Losses18.8 Floors for Personal-Use Property Losses18.9 Figuring Your Loss on Form 468418.10 Personal and Business Use of Property18.11 Repairs May Be a “Measure of Loss”18.12 Excess Living Costs Paid by Insurance Are Not Taxable18.13 Do Your Casualty or Theft Losses Exceed Your Income?18.14 Defer Gain from Involuntary Conversion by Replacing Property18.15 Involuntary Conversions Qualifying for Tax Deferral18.16 How to Elect to Defer Gain18.17 Types of Qualifying Replacement Property18.18 Time Period for Buying Replacement Property18.19 Cost of Replacement Property Determines Postponed Gain18.20 Special Assessments and Severance Damages from Condemnation
CHAPTER 19: Other Itemized Deductions
19.1 Only a Few Expenses Are Allowed as “Other” Itemized Deductions19.2 Deductions for Job Costs and Other Miscellaneous Expenses No Longer Allowed
CHAPTER 20: Travel and Meal Expense Deductions
20.1 Who May Deduct Travel and Transportation Expenses20.2 Commuting Expenses20.3 Overnight-Sleep Test Limits Deduction of Meal Costs20.4 IRS Meal Allowance20.5 Business Trip Deductions20.6 When Are You Away From Home?20.7 Tax Home of Married Couple Working in Different Cities20.8 Deducting Living Costs on Temporary Assignment20.9 Business-Vacation Trips Within the United States20.10 Business-Vacation Trips Outside the United States20.11 Deducting Expenses of Business Conventions20.12 Restrictions on Foreign Conventions and Cruises20.13 Entertainment Expenses Generally Not Deductible20.14 Business Meals Are Generally Deductible20.15 Limitation on Some Deductible Meals20.16 Substantiating Travel Expenses20.17 Employee Reporting of Unreimbursed Expenses20.18 Are You Reimbursed Under an Accountable Plan?20.19 Per Diem Travel Allowance Under Accountable Plans20.20 Automobile Mileage Allowance20.21 Reimbursements Under Non-Accountable Plans
PART 4: Personal Tax Computations
CHAPTER 21: Dependents
21.1 No Exemption Deductions Are Allowed21.2 How Many Dependents Do You Have?21.3 Qualifying Children21.4 Qualifying Relatives21.5 Meeting the Support Test for a Qualifying Relative21.6 Multiple Support Agreements21.7 Special Rule for Divorced or Separated Parents21.8 Reporting Social Security Numbers of Dependents
CHAPTER 22: Figuring Your Regular Income Tax Liability
22.1 Taxable Income and Regular Income Tax Liability22.2 Using the Tax Table22.3 Tax Computation Worksheet22.4 Tax Calculation If You Have Net Capital Gain or Qualified Dividends22.5 Foreign Earned Income Tax Worksheet22.6 Income Averaging for Farmers and Fishermen22.7 Tax Credits22.8 Additional Medicare Tax and Net Investment Income Tax
CHAPTER 23: Alternative Minimum Tax (AMT)
23.1 Computing Alternative Minimum Tax on Form 625123.2 Adjustments and Preferences for AMT23.3 Tax Credits Allowed Against AMT23.4 Regular Tax Credit for Prior-Year AMT23.5 Avoiding AMT
CHAPTER 24: Computing the “Kiddie Tax” on Your Child’s Unearned Income
24.1 Filing Your Child’s Return24.2 Children Subject to “Kiddie Tax” for 202124.3 Computing “Kiddie Tax” on Child’s Return24.4 Parent’s Election To Report Child’s Dividends and Interest
CHAPTER 25: Personal Tax Credits Reduce Your Tax Liability
25.1 Overview of Personal Tax Credits25.2 Child Tax Credit for Children Under Age 1825.3 Figuring the Child Tax Credit and Additional Child Tax Credit25.4 Credit for Other Dependents25.5 Child and Dependent Care Credit25.6 Figuring the Child and Dependent Care Credit25.7 Earned Income Credit25.8 Income Tests for Earned Income Credit25.9 Qualifying for the Adoption Credit25.10 Claiming the Adoption Credit on Form 883925.11 Eligibility for the Saver’s Credit25.12 Figuring the Saver’s Credit25.13 Premium Tax Credit25.14 Health Coverage Credit25.15 Mortgage Interest Credit25.16 Residential Energy Credits25.17 Credit for Qualified Plug-in Electric and Fuel Cell Vehicles25.18 Repayment of the First-Time Homebuyer Credit25.19 Recovery Rebate Credit
CHAPTER 26: Tax Withholdings
26.1 Withholdings Should Cover Estimated Tax26.2 Income Taxes Withheld on Wages26.3 Low Earners May Be Exempt From Withholding26.4 Are You Withholding the Right Amount?26.5 Voluntary Withholding on Government Payments26.6 When Tips Are Subject to Withholding26.7 Withholding on Gambling Winnings26.8 FICA Withholdings26.9 Withholding on Distributions from Retirement Plans and Commercial Annuities26.10 Backup Withholding
CHAPTER 27: Estimated Tax Payments
27.1 Do You Owe an Estimated Tax Penalty for 2021?27.2 Planning Estimated Tax Payments for 202227.3 Dates for Paying Estimated Tax Installments for 202227.4 Estimates by Married Taxpayers27.5 Adjusting Your Payments During the Year
CHAPTER 28: Additional Medicare Tax and Net Investment Income Tax
28.1 Higher-Income Taxpayers May be Subject to Additional Taxes28.2 Additional 0.9% Medicare Tax on Earnings28.3 Additional 3.8% Tax on Net Investment Income
PART 5: Tax Planning
CHAPTER 29: Tax Savings for Residence Sales
29.1 Avoiding Tax on Sale of Principal Residence29.2 Meeting the Ownership and Use Tests for Exclusion29.3 Home Sales by Married Persons29.4 Reduced Maximum Exclusion29.5 Figuring Gain or Loss29.6 Figuring Adjusted Basis29.7 Personal and Business Use of a Home29.8 No Loss Allowed on Personal Residence29.9 Loss on Residence Converted to Rental Property29.10 Loss on Residence Acquired by Gift or Inheritance
CHAPTER 30: Tax Rules for Investors in Securities
30.1 Planning Year-End Securities Transactions30.2 Earmarking Stock Lots30.3 Sale of Stock Dividends30.4 Stock Rights30.5 Short Sales of Stock30.6 Wash Sales30.7 Convertible Stocks and Bonds30.8 Stock Options30.9 Sophisticated Financial Transactions30.10 Investing in Tax-Exempts30.11 Ordinary Loss for Small Business Stock (Section 1244)30.12 Series EE Bonds30.13 I Bonds30.14 Trader, Dealer, or Investor?30.15 Mark-to-Market Election for Traders30.16 Cryptocurrency Transactions
CHAPTER 31: Tax Savings for Investors in Real Estate
31.1 Real Estate Ventures31.2 Sales of Subdivided Land—Dealer or Investor?31.3 Exchanging Real Estate Without Tax31.4 Timing Your Real Property Sales31.5 Cancellation of a Lease31.6 Sale of an Option31.7 Granting of an Easement31.8 Special Tax Credits for Real Estate Investments31.9 Foreclosures, Repossessions, Short Sales, and Voluntary Conveyances to Creditors31.10 Restructuring Mortgage Debt31.11 Abandonments31.12 Seller’s Repossession After Buyer’s Default on Mortgage31.13 Foreclosure on Mortgages Other Than Purchase Money31.14 Foreclosure Sale to Third Party31.15 Transferring Mortgaged Realty31.16 QBI Deduction for REIT Dividends
CHAPTER 32: Tax Rules for Investors in Mutual Funds
32.1 Timing of Your Investment Can Affect Your Taxes32.2 Reinvestment Plans32.3 Mutual Fund Distributions Reported on Form 1099-DIV32.4 Tax-Exempt Bond Funds32.5 Fund Expenses32.6 Tax Credits From Mutual Funds32.7 How to Report Mutual Fund Distributions32.8 Redemptions and Exchanges of Fund Shares32.9 Basis of Redeemed Shares32.10 Comparison of Basis Methods32.11 Mutual Funds Compared to Exchange-Traded Funds
CHAPTER 33: Educational Tax Benefits
33.1 Scholarships and Grants33.2 Tuition Reductions for College Employees33.3 How Fulbright Awards Are Taxed33.4 United States Savings Bond Tuition Plans33.5 Contributing to a Qualified Tuition Program (Section 529 Plan)33.6 Distributions From Qualified Tuition Programs (Section 529 Plans)33.7 Education Tax Credits33.8 American Opportunity Credit33.9 Lifetime Learning Credit33.10 Contributing to a Coverdell Education Savings Account (ESA)33.11 Distributions From Coverdell ESAs33.12 Tuition and Fees Deduction No Longer Allowed33.13 Student Loan Interest Deduction33.14 Types of Deductible Work-Related Costs33.15 Work-Related Tests for Education Costs33.16 Local Transportation and Travel Away From Home To Take Courses
CHAPTER 34: Special Tax Rules for Senior Citizens and the Disabled
34.1 Senior Citizens Get Certain Filing Breaks34.2 Social Security Benefits Subject to Tax34.3 Computing Taxable Social Security Benefits34.4 Election for Lump-Sum Social Security Benefit Payment34.5 Retiring on Social Security Benefits34.6 How Tax on Social Security Reduces Your Earnings34.7 Eligibility for the Credit for the Elderly or the Disabled34.8 Figuring the Credit for the Elderly or Disabled34.9 Tax Effects of Moving to a Continuing Care Facility34.10 Medicare Part B and Part D Premiums for 202234.11 Special Tax Rules for Individuals with a Disability34.12 ABLE Accounts
CHAPTER 35: Members of the Armed Forces
35.1 Taxable Armed Forces Pay and Benefits35.2 Tax Breaks for Armed Forces Members35.3 Deductions for Armed Forces Personnel35.4 Tax-Free Pay for Service in Combat Zone35.5 Tax Deadlines Extended for Combat Zone or Contingency Operation Service35.6 Tax Forgiveness for Combat Zone or Terrorist or Military Action Deaths35.7 Extension To Pay Your Tax When Entering the Service35.8 Tax Information for Reservists
CHAPTER 36: How To Treat Foreign Earned Income
36.1 Claiming the Foreign Earned Income Exclusion36.2 What Is Foreign Earned Income?36.3 Qualifying for the Foreign Earned Income Exclusion36.4 How To Treat Housing Costs36.5 Meeting the Foreign Residence or Physical Presence Test36.6 Claiming Deductions36.7 Exclusion Not Established When Your Return Is Due36.8 Tax-Free Meals and Lodging for Workers in Camps36.9 U. S. Virgin Islands, Samoa, Guam, and Northern Marianas36.10 Earnings in Puerto Rico36.11 Tax Treaties With Foreign Countries36.12 Exchange Rates and Blocked Currency36.13 Foreign Tax Credit or Deduction for Foreign Taxes Paid
CHAPTER 37: Planning Alimony and Marital Settlements
37.1 Rules for Post-2018 Divorce and Separation Agreements37.2 Rules for Pre-2019 Divorces or Separation Agreements37.3 Decree or Agreement Required37.4 Cash Payments Required37.5 Payments Must Stop at Death37.6 Child Support Payments Are Not Alimony37.7 No Minimum Payment Period for Alimony37.8 Legal Fees of Marital Settlements
CHAPTER 38: Other Taxes
38.1 Overview of Household Employment Taxes38.2 Social Security and Medicare (FICA) Taxes for Household Employees38.3 Filing Schedule H To Report Household Employment Taxes38.4 Federal Unemployment Taxes (FUTA) for Household Employees
CHAPTER 39: Gift and Estate Tax Planning Basics
39.1 Gifts of Appreciated Property39.2 Gift Tax Basics39.3 Filing a Gift Tax Return39.4 Gift Tax Credit39.5 Custodial Accounts for Minors39.6 Trusts in Family Planning39.7 What is the Estate Tax?39.8 Take Inventory and Estimate the Value of Your Potential Estate39.9 Estate Tax for 202139.10 Planning for a Potential Estate Tax
PART 6: Business Tax Planning
CHAPTER 40: Income or Loss From Your Business or Profession
40.1 Forms of Doing Business40.2 Reporting Self-Employed Income40.3 Accounting Methods for Reporting Business Income40.4 Tax Reporting Year for Self-Employed40.5 Reporting Certain Payments and Receipts to the IRS40.6 Filing Schedule C40.7 Deductions for Professionals40.8 Nondeductible Expense Items40.9 How Authors and Artists May Write Off Expenses40.10 Deducting Expenses of a Sideline Business or Hobby40.11 Deducting Expenses of Looking for a New Business40.12 Home Office Deduction40.13 Write-Off Methods for Home Office Expenses40.14 Allocating Expenses to Business Use40.15 Business Income May Limit Home Office Deductions40.16 Home Office for Sideline Business40.17 Depreciation of Office in Cooperative Apartment40.18 Net Operating Losses (NOLs)40.19 How To Report a Net Operating Loss40.20 Excess Business Losses40.21 Business Credits40.22 Filing Schedule F40.23 Farming Expenses40.24 Qualified Business Income Deduction
CHAPTER 41: Retirement and Medical Plans for Self-Employed
41.1 Overview of Retirement and Medical Plans41.2 Choosing a Qualified Retirement Plan41.3 Choosing a SEP41.4 Deductible Contributions41.5 How To Qualify a Retirement Plan or SEP Plan41.6 Tax Credits for Setting Up a Retirement Plan41.7 Annual Qualified Retirement Plan Reporting41.8 How Qualified Retirement Plan Distributions Are Taxed41.9 SIMPLE IRA Plans41.10 Health Savings Account (HSA) Basics41.11 Limits on Deductible HSA Contributions41.12 Distributions From HSAs41.13 Archer MSAs41.14 Health Reimbursement Arrangements (HRAs)41.15 Small Employer Health Insurance Credit
CHAPTER 42: Claiming Depreciation Deductions
42.1 What Property May Be Depreciated?42.2 Claiming Depreciation on Your Tax Return42.3 First-Year Expensing Deduction42.4 MACRS Recovery Periods42.5 MACRS Rates42.6 Half-Year Convention for MACRS42.7 Last Quarter Placements—Mid-Quarter Convention42.8 150% Rate Election42.9 Straight Line Depreciation42.10 Listed Property42.11 Assets in Service Before 198742.12 MACRS for Real Estate Placed in Service After 198642.13 Demolishing a Building42.14 Qualified Improvement Property42.15 Depreciating Real Estate Placed in Service After 1980 and Before 198742.16 Amortizing Goodwill and Other Intangibles (Section 197)42.17 Amortizing Research and Experimentation Costs42.18 Bonus Depreciation
CHAPTER 43: Deducting Car and Truck Expenses
43.1 Standard Mileage Rate43.2 Expense Allocations43.3 Depreciation Restrictions on Cars, Trucks, and Vans43.4 Annual Ceilings on Depreciation43.5 MACRS Rates for Cars, Trucks, and Vans43.6 Straight Line Method43.7 Depreciation for Year Vehicle Is Disposed Of43.8 Depreciation After Recovery Period Ends43.9 Trade-in of Business Vehicle43.10 Recapture of Deductions on Business Car, Truck, or Van43.11 Keeping Records of Business Use43.12 Leased Business Vehicles: Deductions and Income
CHAPTER 44: Sales of Business Property
44.1 Depreciation Recaptured as Ordinary Income on Sale of Personal Property44.2 Depreciation Recaptured as Ordinary Income on Sale of Real Estate44.3 Recapture of First-Year Expensing and Bonus Depreciation44.4 Gifts and Inheritances of Depreciable Property44.5 Involuntary Conversions and Tax-Free Exchanges44.6 Installment Sale of Depreciable Property44.7 Sale of a Proprietorship44.8 Property Used in a Business (Section 1231 Assets)44.9 Sale of Property Used for Business and Personal Purposes44.10 Should You Trade in Business Equipment?44.11 Corporate Liquidation44.12 Additional Taxes on Higher-Income Taxpayers
CHAPTER 45: Figuring Self-Employment Tax
45.1 What Is Self-Employment Income?45.2 Partners Pay Self-Employment Tax45.3 Schedule SE45.4 How Wages Affect Self-Employment Tax45.5 Optional Method If 2021 Was a Low-Income or Loss Year45.6 Self-Employment Tax Rules for Certain Positions45.7 Paying the Deferred Portion of Self-Employment Tax for 2021
PART 7: Filing Your Return and What Happens After You File
CHAPTER 46: Filing Your Return
46.1 Keeping Tax Records46.2 Getting Ready to File Your Return46.3 Applying for an Extension46.4 Getting Your Refund46.5 Paying Taxes Due46.6 Handling Identity Theft46.7 Notify the IRS of Address Changes46.8 Interest on Tax Underpayments46.9 Tax Penalties for Late Filing and Late Payment
CHAPTER 47: Filing Refund Claims, and Amended Returns
47.1 Filing an Amended Return47.2 When to File a Refund Claim47.3 Stating the Reasons for Refund Claim47.4 Quick Refund Claims47.5 Interest Paid on Refund Claims47.6 Refunds Withheld to Cover Debts47.7 Amended Returns Showing Additional Tax47.8 Penalty for Filing Excessive Refund Claim
CHAPTER 48: If the IRS Examines Your Return
48.1 Odds of Being Audited48.2 When the IRS Can Assess Additional Taxes48.3 Audit Overview48.4 Preparing for the Audit48.5 Handling the Audit48.6 Tax Penalties for Inaccurate Returns48.7 Penalties for Not Reporting Foreign Financial Accounts48.8 Agreeing to the Audit Changes48.9 Disputing the Audit Changes48.10 Offer in Compromise48.11 Recovering Costs of a Tax Dispute48.12 Suing the IRS for Unauthorized Collection
PART 8: 2021 Tax Forms
GLOSSARY
INDEX
End User License Agreement

Content preview from J.K. Lasser's Your Income Tax 2022

CHAPTER 40Income or Loss From Your Business or Profession

As a self-employed person, you report income and expenses from your business or profession separately from your other income, such as income from wages. On Schedule C, you report your business income and itemize your expenses. Any net profit is subject to self-employment tax, as well as regular tax. A net profit can also be the basis of deductible contributions to a SEP or qualified retirement plan, as discussed in Chapter 41.

If you work out of your home, you may deduct home office expenses (40.12).

If you claim a loss on Schedule C, be prepared to show that you regularly and substantially participate in the business.

Otherwise, your loss may be considered a passive loss deductible only from passive income, as discussed in Chapter 10.

If you show a profit, you may be eligible for a personal deduction of 20% of qualified business income (40.24). If you have a loss that you can't fully use on your 2021 return, you may be able to carry it forward to offset income in future years (40.18).

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J.K. Lasser's Your Income Tax 2022

by J.K. Lasser Institute

CHAPTER 40Income or Loss From Your Business or Profession

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