Q. Do I have to pay
capital gains taxes on the sale of my
A. You do not have to pay capital gains taxes on the sale of your primary residence if the gain does not exceed $250,000 for a single taxpayer or $500,000 for married filing joint tax payers. For 2020 going forward the house must have been your primary residence for 5 of the last 8 years. It does not matter whether or not you buy another house. NOTE: The capital gain is calculated by subtracting the original purchase price plus the cost of major improvements from the selling price. The balance you owe on any loans has NO direct bearing on your gain or loss.
Q. How much money can my
child make before they have to pay taxes?
A. Many children hold summer jobs but do not work during the school year. If you claim them as a dependent they can earn up to the standard deduction amount, $12,400 for 2020 forward and 12,550 for 2021, without paying taxes. If that is the case they should claim "exempt" on their W4. NOTE: If they are paid on a 1099 they will be held responsible for the social security taxes. Make sure they are filling out a W4.
Q. I'm a single taxpayer. How much can I make before I have to file a return?
A. If you are under 65 you must file if you make over $12,400 for 2020. If you are a dependent of someone else see above.
Q. What is the Standard Mileage Rate for my business vehicle this year?
A. 2020 57.5 cents business miles, 18 cents medical and moving miles and 14 cents charitable miles.
A. 2021 has been reduced to 56 cents. Medical and moving miles still 18 cents and still 14 cents charitable miles.
Q. When do I have to make my IRA contribution?
A. Any IRA contributions you wish to be counted for 2020 must be posted by April 15, 2021 even if you choose to file for an extension.
Q. How much can I contribute to my IRA?
A. Except for rollover contributions the maximum amount you can contribute to an IRA in 2020 is $6,000, assuming you have that much in earned income. If you turn 50 before the end of the tax year you may increase the amount by $1,000.
Q. What are the limits for employer based deferral plans (401K)
A. The maximum amount that can be contributed to a defined contribution plan (401k) is $57,000 for 2020 and $58,000 for 2021. The deferral limit is $19,500 for 2020 and 2021