You’re almost done with your federal income tax return, and you’re already thinking of ways to spend your refund. Then, the unthinkable happens — instead of a refund, you find that you owe $3,000. Or perhaps you’ve just received an IRS notice in the mail claiming that you owe $9,000 for the retirement plan distribution you took two years ago. You thought it was tax free at the time. Whatever the reason, you’re now in the unenviable position of owing money to the IRS — and you don’t have the cash. What do you do now?
Buying a home can be a major expenditure. Fortunately, federal tax benefits are still available, even after recent tax reform legislation, to help make homeownership more affordable. There may also be tax benefits under state law.
The days when you could convert your rental property or vacation home to a principal residence and then use the full $250,000/$500,000 home-sale exclusion to avoid taxes are gone.
Here’s the updated strategy: deduct your client and business meals as if tax reform never took place.