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Annette Di Bello, CPA, CFP®

May
08
Avoiding hobby-loss restrictions
Like many of us, you've probably dreamed of turning a hobby or avocation into a regular business. You won't have any unusual tax headaches if your new business is profitable. However, if the new enterprise consistently generates losses (deductions exceed income), IRS may step in and say it's a hobby—an activity not engaged in for profit—rather than a business. What are the practical consequences? Under the so-called hobby loss rules, you'll be able to claim those deductions that are available whether or not the enterprise is engaged in for profit (such as state and local property taxes). However, your deductions for business-type expenses (such as rent or advertising) will be limited to the excess of your gross income from the hobby over...
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May
07
3.8% Net Investment Income Tax and 0.9% Additional Medicare Tax on Wage and Self-Employment Income
High-income taxpayers face two special taxes—a 3.8% net investment income tax and a 0.9% additional Medicare tax on wage and self-employment income. Here's an overview of these two taxes and what they mean to you. 3.8% net investment income tax. This tax applies, in addition to income tax, on your net investment income. The tax only affects taxpayers whose adjusted gross income (AGI) exceeds $250,000 for joint filers and surviving spouses, $200,000 for single taxpayers and heads of household, and $125,000 for a married individuals filing separately. These threshold amounts aren't indexed for inflation. Thus, as time goes by, inflation will cause more taxpayers to become subject to the 3.8% tax. Your AGI is the bottom line on Page...
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These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

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