Are Unemployment Benefits Taxable?

Article Highlights: 

  • CARES and COVID Tax Relief Acts
  • Unemployment Benefits
  • American Rescue Plan
  • Tax-Exempt Portion of Unemployment
  • Bogus Forms 1099-G
  • Kiddie Tax and Unemployment
  • States’ Taxation of Unemployment

With the passage of the CARES Act stimulus package early in 2020, the federal government began supplementing the normal state weekly unemployment benefits by adding $600 per week through the end of July 2020. When this provision ran out, and with Congress at a stalemate, President Trump issued an executive order in early August that extended the supplement, but at $400 per week, with the federal government providing $300 and the state the other $100. Then, the COVID Tax Relief Act that was enacted in late December of 2020 extended the federal unemployment supplement through March 14, 2021, but at $300 per week. Now, President Biden’s American Rescue Plan that Congress enacted in March of 2021 has extended the $300 benefit through September 9, 2021, and...

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entities llc tax planning Jul 07, 2021

Today's Member Forum question spotlight deals with entities and married couples:

Q: If a married couple owns an LLC together, can they be considered a single member? 

A: Yes, if they live in a community property state.  This is important because it means the LLC will be considered disregarded versus a partnership, both of which trigger various tax implications.  Check to see if your state falls into this category.

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7 Personal Finance Tips for Freelancers and Gig Workers

Freelance work and the gig economy have taken the nation by storm. A study commissioned by the Freelancers Union and freelance platform Upwork revealed that the gig economy’s work force reached an eye-popping 57 million Americans in 2019, with increasing numbers likely to join in the future. You can choose freelancing as your sole source of income or you can do it in your spare time for extra money, but whatever path you choose, you need to pay attention to how you’re managing your money — otherwise you’re liable to end up facing costly consequences. Here are seven personal finance tips that can benefit every person working as part of the freelance economy.

  1. Always start with a budget

Being your own boss is a common dream, but it isn’t easy. When you go out on your own as a freelancer or gig worker, you need to be able to gauge how much income you need in order to make it both worthwhile and feasible. To make that determination, you start with how...

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Personal Finance 101: Holistic Financial Planning


In this video, we begin taking a closer look at certain financial planning basics and other personal finance 101 topics.

Most financial advisors just focus on investment management and product sales -- after all, that's how they make money, and unfortunately, too often they're looking out for themselves first.

This is why you have to learn financial planning basics, which includes tax planning strategies and wealth planning, and be able to synthesize it all into a holistic financial planning approach.

Wealth planning involves understanding asset allocation strategies; tax planning strategies involve income and estate tax minimization.

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Do You Know About Roth IRA Conversions?

For those of you who’ve been following the ProPublica series on taxes and the wealthy class in America, you would have likely seen the article that dropped last week about Peter Thiel and his $5 billion Roth IRA.  You also probably thought, “how the heck can he do that?” 

In short, Thiel assigned a very low value to his shares of PayPal stock in the late 1990’s, placed them into a Roth at a total valuation under $2000, then watched as the company went public and was eventually acquired by eBay.  His IRA value exploded commensurately, and is now worth around $5B.  A debate could be had about whether this was an appropriate use of a Roth in the first place, but that’s for another discussion.

You might then ask, “what does this have to do with me, Manish?”  Well, the answer lies in another part of the article that discusses Roth IRA conversions.  Check out this excerpt from the article:

“[A Roth IRA...

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Offensive Planning -- Tax & Retirement Planning Strategies


Offensive financial planning encompasses several key areas, including tax planning strategies, retirement income strategies, estate planning strategies, and investment and education planning.

Once you've built your financial foundation (see our videos on defensive financial planning), you can turn your attention to playing "offense" so to speak, and start building on that foundation.

Our Wealth.GPS system helps guide you through all of these stages of planning, and allows you to model various future-based scenarios to get a sense of how different planning strategies create different outcomes.

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Working from Home? Is there a Tax Deduction?

Article Highlights:  

  • COVID Work from Home Requirements
  • Employee Versus Self-employed
  • Qualifications
  • Actual Expense Method
  • Simplified Method
  • Home Office Expenses for Renters vs. Homeowners
  • How Moving Affects the Home-Office Deduction
  • Other Issues
  • Gross Income Limitation

Many individuals, because of the COVID pandemic, have been forced to work from home in order to curtail the spread of the virus. A frequent question is do they qualify for a special tax deduction for using their home as a workplace? 

The tax law includes  a deduction when you use part of your home for business; however, the bad news is the home office deduction for employees was suspended through 2025 by the Tax Cuts and Jobs Act (TCJA) that went into effect in 2018. So, currently employees cannot take a home office deduction.

Employees may want to discuss with their employers the possibility of being reimbursed for the costs associated with using the home for the benefit of the employer, such as a...

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Defensive Planning -- Financial & Tax Planning Strategies


Defensive financial planning encompasses a few key areas: financial planning basics, tax planning strategies, tax planning and management, insurance planning, and estate planning basics.

It's crucial that you examine and analyze where you stand in relation to each of these areas as you start to get serious about your financial planning efforts.

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Understanding Tax-Filing Status

Article Highlights:

  • Single
  • Married Filing Jointly
  • Surviving Spouse
  • Married to a Nonresident Alien
  • Head of Household
  • Married Filing Separate

Filing status is determined on the last day of the year and most often is based on marital status. The two most prevalent are as follows:

  • Single – Unmarried individuals without dependents.
  • Married Taxpayers Filing Jointly (MFJ) – The couple combines their incomes, deductions, and credits on a jointly filed return. They are jointly and separately liable for the tax determined on the return. Because filing status is based on the taxpayers’ marital status on December 31 of each year, this means that couples who marry during the year, regardless of the date of the marriage, are eligible to file MFJ (but a special rule applies for nonresident aliens – see below). Likewise, those who divorce during the year are not qualified to file MFJ for the year when the divorce is made final. A couple that is separated but still married...
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Special Rules Apply to 2020 EITC and Child Credit

Article Highlights

  • Employment (Earned) Income
  • Earned Income Tax Credit (EITC)
  • Child Tax Credit (CTC)
  • 2019 or 2020 Earned Income
  • Credit Qualifications

Because of the pandemic, many individuals have seen their employment (earned) income plummet. In that situation, two very important tax credits, the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC), which are based in part on earned income, will be adversely affected, hitting lower-income taxpayers with a double whammy.

Not wanting those who normally rely on those credits to make ends meet to suffer further economically, Congress came up with a special way to calculate the two credits for 2020. So, when figuring these 2020 credits, taxpayers are allowed to use the amount of their 2019 or 2020 earned income, whichever produces the better result. This will only affect the computation of the EITC and CTC and does not impact the gross income used for determining an individual’s income tax for 2020. The option...

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