Do you know the 5 Year plus One Day Rule ?

For homeowners, this tax law rule is critical for you to understand. Why ?…..well, just about everyone knows that when you sell your primary residence, you are entitled to exclude the first $250K/$500K of gain, depending on whether you file your taxes as a single taxpayer or Married Filing Joint.  There, of course, is a mathematical calculation you must complete ( and a Form to file with your personal income tax return.

https://www.irs.gov/publications/p523/index.html

What most of us do not know is that we can receive this capital gain exclusion again, and again, and again, as long as we abide by the 5 years plus 1-day rule. This rule essentially states that, as long as you lived in your primary residence for two (any two) of the last five years, you can again utilize this wonderful tax benefit.

On the opposite side,  losses resulting from the sale of your primary residence are not deductible, and if you meet a portion of the 5 years plus 1-day rule, you are eligible to receive a pro-rata share of the exclusion. Working with an expert Tax Accounting firm like Core Performance is the ideal way to ensure you achieve the maximum benefit from the tax code. Let us know how we can assist you? we are truly here to help in any way we can. http://coreperformance.net/contact/

Hello People – Important Consideration – Did you Receive a raise or are you expecting one?

Here are some important reminders as you think about compensation, tax planning, savings and retirement planning.

The amount of tax withheld from your paycheck should increase automatically along with your higher income. But if you’re working two jobs, have significant outside income (from investments or self-employment), or you and your spouse file a joint tax return, the raise could push you into a higher tax bracket that may not be accounted for in the Form W-4 on file with your employer. Even if you aren’t getting a raise, ensuring that your withholding lines up closely with your anticipated tax liability is smart tax planning. Use the IRS Withholding Calculator; then, if necessary, tell your employer you’d like to adjust your W-4. We can help you navigate through this process if you prefer guidance.

Another thing to consider is using some of the additional income from your raise to increase your contribution to a 401(k) or similar qualified retirement plan. That way, you’re reducing your taxable income and saving more for retirement at the same time. Please contact us at peterc@coreperformance.net to review or discuss and we will get back to you promptly. Here’s hoping you have an awesome summer.

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