income

Factor in State and Local Taxes When Deciding Where to Live in Retirement

Many Americans relocate to another state when they retire. If you’re thinking about such a move, state and local taxes should factor into your decision.

Income, property and sales tax

Choosing a state that has no personal income tax may appear to be the best option. But that might not be the case once you consider property taxes and sales taxes.

For example, suppose you’ve narrowed your decision down to two states: State 1 has no individual income tax, and State 2 has a flat 5% individual income tax rate. At first glance, State 1 might appear to be much less expensive from a tax perspective. What happens when you factor in other state and local taxes?

Let’s say the property tax rate in your preferred locality in State 1 is 5%, while it’s only 1% in your preferred locality in State 2. That difference could potentially cancel out any savings in state income taxes in State 1, depending on your annual income and the assessed value of the home.

Also keep in mind that home values can vary dramatically from location to location. So if home values are higher in State 1, there’s an even greater chance that […]

By |June 6th, 2018|income tax, retirement, tax|0 Comments

March Madness News- How Do I Report Fantasy Sports Winnings?

It’s that time of year again- March Madness is upon us, as is the time to file your taxes. A pressing question on the minds of many Americans this time of year is how to report fantasy sports income on their tax returns. The answer is relatively simple.  Assuming your involvement in fantasy sports does not rise to the level of a trade or business, this income is reported as hobby income. You claim the winnings (net of any entry fees) as other income on line 21 of your Form 1040, and if you are able to take advantage of itemized deductions, you can write off related expenses (i.e. entry fees which did not result in any winnings) on Schedule A, subject to a few important limitations: First, your expenses are deductible only to the extent of the related income you report on line 21. Second, like investment adviser fees, any related expenses are reported as miscellaneous itemized deductions, and you only benefit to the extent your total miscellaneous itemized deductions exceed 2% of your adjusted gross income. Additionally, these deductions may be eliminated completely if you are subject to alternative minimum tax. Also […]

By |April 1st, 2016|income tax, report|0 Comments