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How is retirement income taxed?
Contributed by: LynR, FreeTaxUSA Agent, Tax Pro As you approach retirement, you may be wondering how your different sources of retirement income will be taxed. Understanding this can help you prepare so you avoid big surprises come tax time. Below are the main types of retirement income and how they’re taxed. Traditional…
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What is taxable and nontaxable income?
Contributed by: TriciaD, FreeTaxUSA Agent, Tax Pro When you file your federal tax return, one of the first things you’ll need to know is whether the money, property, or services you received count as taxable income. In general, the IRS treats income as taxable unless a law specifically excludes it. That means some income…
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Schedule K-1: What is it and how do I report it?
Contributed by: TriciaD, FreeTaxUSA Agent, Tax Pro A Schedule K-1 is a tax form that reports your share of income, losses, deductions, and credits from certain businesses, trusts, or estates. You may get one if you’re a partner in a partnership, a shareholder in an S corporation, a member of some LLCs, or a beneficiary of…
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How do I enter a Required Minimum Distribution (RMD) from an inherited retirement account?
Contributed by: Henry, FreeTaxUSA Agent, Tax Pro As the beneficiary of a retirement plan or IRA, you may become responsible for taking RMDs after the death of the original account owner. The distribution requirements depend on: Whether the account owner died before 2020 Who inherited the account: the rules may be different…
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What is tip income and can I deduct it?
Contributed by: AndyS, FreeTaxUSA Agent, Tax Pro The One Big Beautiful Bill Act (OBBBA) introduced a potentially valuable tax break: eligible taxpayers can now deduct up to $25,000 in qualifying tip income. But there’s a catch—not every tip counts, and the rules come with a few important limitations. So, how can you…
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What if I forgot to take a Required Minimum Distribution (RMD)?
Contributed by: Henry, FreeTaxUSA Agent, Tax Pro Did you miss an RMD? Maybe you overlooked the deadline, misunderstood the rules, or changed custodians. There are several common reasons why you might take too little or miss a required distribution altogether. If this applies to you, you’ll want to act quickly to correct…
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Figuring step-up basis for jointly owned home sales
Contributed by: BreeS, FreeTaxUSA Agent Selling a home after the death of a co-owner can raise important tax questions. Is the gain taxable, and if so, how much? Generally, the gain from a sale is calculated by subtracting the cost basis from the sales price. This Community article discusses how basis gets a step-up for…
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What happens if I contribute too much to my 401(k)?
Contributed by: WrenD, FreeTaxUSA Agent, Tax Pro A 401(k) retirement plan is a common way to save for retirement and enjoy tax benefits. However, contributing too much can create unforeseen tax issues. This article explains what happens if you overcontribute to a 401(k), how it affects your taxes, and what you can do to…
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How do capital gains and losses affect my tax return?
Contributed by: TriciaD, FreeTaxUSA Agent, Tax Pro Capital gains and losses play a significant role in determining your tax liability. Whether you’re selling stocks, real estate, or other investment assets, understanding how these transactions are taxed can help you plan smarter and potentially reduce your tax bill. We’ll…
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What is income in respect of the decedent, and how is it reported?
Contributed by: PhillipB, FreeTaxUSA Agent, Tax Pro When a loved one passes away, there’s a lot to manage — including figuring out which tax returns need to be filed. FreeTaxUSA only handles Form 1040, which covers the final tax return for the decedent as well as any individual tax returns for beneficiaries. However, it’s…