When individuals in Georgia buy and sell real estate or business assets, capital gains taxes could be a costly concern. Solutions could emerge with planning and patience because an Internal Revenue Code Section 1031 exchange or irrevocable trust provides the legal instrument for navigating around taxes under the right circumstances.
Many Georgians own vacation homes and might wonder if they might face tax consequences if they choose to rent them out when they are not using them. It can be smart to recoup some of the expenses that people incur with the maintenance costs, mortgages and property taxes of vacation homes through renting them when they are not in use. However, the owners should be aware of the ways that the IRS treats rental income that is derived from such rentals.
The gains generated by the sale of a primary residence can be significant, but this income is not subject to federal income tax in many situations. Georgia residents may qualify for this exclusion by establishing ownership and use. This is done by establishing that they have owned the property in question and used it as their primary residence for at least two of the five years preceding the sale.
Georgia residents sometimes enter into tax-sharing agreements through which two parties agree to be responsible for paying a certain percentage of the tax liabilities owed. These types of agreements or orders are common in divorce cases. As a 2017 case demonstrates, the agreements are not binding on the Internal Revenue Service.
Georgia residents who need more time to file their taxes may ask for an extension. This means that those who ask for an extension on their 2017 personal tax returns won't have to file until Oct. 16. One of the best reasons to ask for an extension is to cut down on potential late fees. The IRS charges a 5 percent late filing fee for each month that a return is late on top of any taxes owed.
Georgia residents may have heard about income tax identity theft. The act involves a criminal stealing a person's social security number and using it to file a fraudulent return. The criminal's goal is to trick the IRS into sending a refund based on that fraudulent return. In an effort to combat this problem, the IRS, state tax agencies and private companies have joined forces.
Georgia residents who have had all or part of their debt canceled by a lender normally have to report the amount as taxable income. However, for mortgage debt that has been canceled, homeowners may be able to take advantage of a tax exclusion.
As the owner of a small business, tax season is not likely to be your favorite time of year. Not only is it a complicated process to file your individual taxes, but now you must ensure that your business taxes meet federal guidelines and that you avoid an audit whenever possible. Fortunately, there are some tax breaks available to those who own businesses. Throughout the year and when you are filing during tax season, keep these in mind.
Georgia residents may be in the habit of filing a tax return each year. However, depending on an individual's filing status and income, that may not be necessary. Typically, people don't have to file if their income is less than the standard deduction and personal exemption combined. For a single filer over the age of 65, that amount would be $11,900.
In some cases, Georgia residents may want to give loved ones money for their IRAs. They may be concerned that doing so will be a taxable event, however. As long as the amount that is given is under the annual federal gift tax exclusion amount, people do not need to worry about that issue.