Sell Your Home – Federal Income Tax Free

Tax Resource Center No Comments »

You can sell your primary residence at a tax-free gain of up to $250,000 ($500,000 on a joint return). You just need to have lived in it for 2 of the prior 5 years. These time requirements can be relaxed in certain situations.Bergerson Tax Services - Sell Your Home Income Tax Free

Partial Federal Income Tax Exclusion. If a sale occurs prior to satisfying the two-year test, a partial federal income tax exclusion can be claimed if the sale was because of a change in work, health reasons, or an unforeseen circumstance. For example, a federal taxpayer who sold his home in order to acquire the space needed to care for his disabled mother was entitled to a partial federal income tax exclusion.

The IRS ruled that the sale in this case was because of the health of a qualifying individual. IRS Federal Regulations contain several situations that constitute unforeseen circumstances, including divorce, casualty, or multiple births from the same pregnancy. The IRS continues to expand the definition of unforeseen circumstance in regards to federal income tax exclusion.

More recently, the IRS has held that a move caused by crime in the neighborhood was an unforeseen circumstance, allowing the homeowner to claim a partial federal income tax exclusion. One such case involved a homeowner who was held up at gunpoint while leaving his residence and forced to drive an assailant to ATM machines. The homeowner moved from the residence, renting it out and subsequently selling it, because of the traumatic and violent nature of the crime.

A partial federal income tax exclusion is figured by multiplying the dollar limit (ex:$500,000 for a married couple) by a fraction, the numerator of which is the number of days of ownership and use (ex:365) and the denominator of which is 730 days.

To learn more about federal tax laws with selling your home or federal tax regulation changes, contact the Bergerson Federal Income Tax Preparation Offices at

The Wash Sale Rule

Tax Resource Center No Comments »

This rule disallows a deduction for losses on a stock, if you purchase the same stock within 30 days before or after a sale. Any losses suspended by this rule are added to the tax basis of the replacement stock.

Capital Gains Taxes

Tax Resource Center No Comments »

Long term capital gains (held 1 year or more) are now taxed at a maximum rate of 15%. People in the 10% and 15% brackets get a 5% return rate on long term gains up to the point that their gains lift their income beyond the 15% bracket.

For complete tax return filing preparation questions, please contact Bergerson Tax today!

Donating Appreciated Stock to Charity

Tax Resource Center No Comments »

Bergerson Tax Services - Donate Appreciated Stock to CharityThis is an excellent tax saving strategy. If you have owned stock more than 1 year, you can deduct the full value of your donation and escape paying any income tax on the appreciation. That is a double tax break.

Giving appreciated stock is also a good way to make gifts to your children. If the child is 14 or older when the gift stock is sold and more than a year has passed since you acquired the stock, the gain would likely be at 5%.

Converting a Traditional IRA to a Roth IRA

Tax Resource Center No Comments »

Converting a traditional IRA to a Roth IRA before the end of the year is a no-lose situation. The value of the traditional IRA (minus the amount of non-deductible contributions) is taxed as income upon conversion. If you think the value of the IRA might increase, it is better to make the conversion now rather than later.

However, if the value of the IRA decreases after the conversion, you can revoke the conversion as late as October 15th of the following year, and make another conversion at lower cost. This is a unique situation since the IRS allows you to make an election with hindsight – effectively giving a choice of times to make it on the best terms.

Copyright © 2013 Bergerson Tax Services - Tax Preparation - All Rights Reserved
Entries RSS Comments RSS Log in