Questions About the
- QUESTION: My husband and I bought a home for $ 83,000. We had to put $5,000 into the home to make it livable. Now, we are considering selling it and moving. If we sell for $99,000 and buy a home for $65,000, what part will wehave to pay taxes on? And how much will our taxes be?
ANSWER: You will have to pay taxes on $11,000 ($99K – $83K-$5K). But you have a big exclusion, once in a lifetime – $250,000 for you and your spouse – off the capital gains. The form to fill out is IRS Form 2119.
- QUESTION: Do you know how much each withholding on your W-4 will drop your salary? I’m getting 41% taken out of my paycheck for S-1.
ANSWER: Each withholding is about $750.00 to $1,000 less withholding over the course of a year. Again, as you move through the wage brackets, you can jump from 15% withholding to 28% withholding to 31% withholding + state 2 to 5% (or more), and FICA and Medicare withholding (7.65% withheld). It all depends upon your individual wage situation as to how much Tax the government wants from you. Remember, the FICA is enforced retirement savings for YOU.
- QUESTION: Last year I started a small business. I only grossed $1,000 over that period. I’ve spent roughly $10,000 on equipment What can I deduct on my taxes?
ANSWER: In this case, you can deduct only up to the earned net income of the business in that first year. If you elect to expense all $10,000, you can carry forward $9000 to the next year of net income. If you do this, you would not get a depreciation deduction, since you are expensing the whole amount in the first year , and carrying over the remaining balance until the second year.