J.K. Lasser's Your Income Tax 2025, Professional Edition E-Book

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: J.K. Lasser
• Sprache: Englisch

Seitenzahl: 3692

Veröffentlichungsjahr: 2025

Beschreibung

The leading desk reference for US personal income tax return preparation for professionals

In J.K. Lasser's Your Income Tax 2025, Professional Edition, a team of veteran tax preparers and educators delivers an intuitive and comprehensive roadmap to helping your clients prepare their 2024 US personal income tax returns. In the book, you'll learn how to maximize your clients’ deductions and credits, legally shelter their personal income, and minimize their tax bills. The authors have included sample 2024 tax forms, brand-new tax law authorities with citations, binding IRS rulings, filing pointers, and tax planning strategies you can implement immediately to better serve your clients.

Fully updated to reflect the changes to the 2024 tax code, this book provides the step-by-step instructions, worksheets, and forms you need to prepare your clients’ taxes ethically and effectively. You’ll also find:

• Discussions of what it's like to practice before the Internal Revenue Service as an Enrolled Agent
• Strategies for identifying the best approach to tax planning based on your client's financial situation
• Checklists and sample forms to make preparing your next return simple and straightforward

Perfect for practicing and training Certified Public Accountants and Enrolled Agents, J.K. Lasser's Your Income Tax 2025 is the gold standard desk reference for tax preparers serving individuals in the United States.

Leseprobe

Table of Contents

Cover

Table of Contents

Title Page

Copyright

J.K. Lasser Institute Biographies

Editorial Acknowledgments

How To Use

Your Income Tax 2025

What’s New for 2024

PART 1: Filing Basics

INTRODUCTION Before you get Started

Do You Have to File a 2024 Tax Return?

Filing Tests for Dependents: 2024 Returns

Where Do You File Your 2024 Form 1040 or 1040-SR?

Filing Deadlines (on or before)

What Forms Do You Need to File?

Tax Document Sources for Individual Taxpayers

CHAPTER 1: Filing Status

1.1 Which Filing Status Should You Use?

1.2 Tax Rates Based on Filing Status

1.3 Filing Separately Instead of Jointly

1.4 Filing a Joint Return

1.5 Nonresident Alien Spouse

1.6 Community Property Rules

1.7 Innocent Spouse Rules

1.8 Separate Liability Relief for Former Spouses

1.9 Equitable Relief

1.10 Death of Your Spouse in 2024

1.11 Qualifying Surviving Spouse Status for 2024 If Your Spouse Died in 2023 or 2022

1.12 Qualifying as Head of Household

1.13 Filing for Your Child

1.14 Return for Deceased

1.15 Return for an Incompetent Person

1.16 How a Nonresident Alien Is Taxed

1.17 How a Resident Alien Is Taxed

1.18 Who Is a Resident Alien?

1.19 Certificate of Tax Compliance for Alien Leaving the United States

1.20 Expatriation Tax

CHAPTER 2: Dependents

2.1 No Exemption Deductions Are Allowed

2.2 How Many Dependents Do You Have?

2.3 Qualifying Children

2.4 Qualifying Relatives

2.5 Meeting the Support Test for a Qualifying Relative

2.6 Multiple Support Agreements

2.7 Special Rule for Divorced or Separated Parents

2.8 Reporting Social Security Numbers of Dependents

CHAPTER 3: Wages, Salary and Other Compensation

3.1 Salary and Wage Income

3.2 Constructive Receipt of Year-End Paychecks

3.3 Pay Received in Property Is Taxed

3.4 Commissions Taxable When Credited

3.5 Unemployment Benefits

3.6 Strike Pay Benefits and Penalties

3.7 Nonqualified Deferred Compensation

3.8 Did You Return Wages Received in a Prior Year?

3.9 Waiver of Executor's and Trustee's Commissions

3.10 Life Insurance Benefits

3.11 Educational Benefits for Employees' Children

3.12 Sick Pay Is Taxable

3.13 Workers' Compensation Is Tax Free

3.14 Disability Pay and Pensions

3.15 Stock Appreciation Rights (SARs)

3.16 Stock Options

3.17 Election to Defer Income on Qualified Equity Grants from Private Companies (Section 83(i) election)

3.18 Restricted Stock

CHAPTER 4: Fringe Benefits

4.1 Tax-Free Health and Accident Coverage Under Employer Plans

4.2 Health Savings Accounts (HSAs) and Archer MSAs

4.3 Reimbursements and Other Tax-Free Payments From Employer Health and Accident Plans

4.4 Group-Term Life Insurance Premiums

4.5 Dependent Care Assistance

4.6 Adoption Benefits

4.7 Education Assistance Plans

4.8 Company Cars, Parking, and Transit Passes

4.9 Working Condition Fringe Benefits

4.10

De Minimis

Fringe Benefits

4.11 Employer-Provided Retirement Advice

4.12 Employee Achievement Awards

4.13 Employer-Furnished Meals or Lodging

4.14 Minister's Housing or Housing Allowance

4.15 Cafeteria Plans Provide Choice of Benefits

4.16 Flexible Spending Arrangements

4.17 Company Services Provided at No Additional Cost

4.18 Discounts on Company Products or Services

CHAPTER 5: Dividend and Interest Income

5.1 Reporting Dividends and Mutual Fund Distributions

5.2 Qualified Corporate Dividends Taxed at Favorable Capital Gain Rates

5.3 Dividends From a Partnership, S Corporation, Estate, or Trust

5.4 Real Estate Investment Trust (REIT) Dividends

5.5 Taxable Dividends of Earnings and Profits

5.6 Stock Dividends on Common Stock

5.7 Dividends Paid in Property

5.8 Taxable Stock Dividends

5.9 Who Reports the Dividends

5.10 Year Dividends Are Reported

5.11 Distribution Not Out of Earnings: Return of Capital

5.12 Reporting Interest on Your Tax Return

5.13 Interest on Frozen Accounts Not Taxed

5.14 Interest Income on Debts Owed to You

5.15 Reporting Interest on Bonds Bought or Sold

5.16 Forfeiture of Interest on Premature Withdrawals

5.17 Amortization of Bond Premium

5.18 Discount on Bonds

5.19 Reporting Original Issue Discount on Your Return

5.20 Reporting Income on Market Discount Bonds

5.21 Discount on Short-Term Obligations

5.22 Stripped Coupon Bonds and Stock

5.23 Sale or Retirement of Bonds and Notes

5.24 State and City Interest Generally Tax Exempt

5.25 Taxable State and City Interest

5.26 Tax-Exempt Bonds Bought at a Discount

5.27 Treasury Bills, Notes, and Bonds

5.28 Interest on United States Savings Bonds

5.29 Deferring United States Savings Bond Interest

5.30 Minimum Interest Rules

5.31 Interest-Free or Below-Market-Interest Loans

5.32 Minimum Interest on Seller-Financed Sales

CHAPTER 6: Reporting Property Sales

6.1 General Tax Rules for Property Sales

6.2 How Property Sales Are Classified and Taxed

6.3 Capital Gains Rates and Holding Periods

6.4 Capital Losses and Carryovers

6.5 Capital Losses of Married Couples

6.6 Losses May Be Disallowed on Sales to Related Persons

6.7 Special Treatment of Gain on Sale of Small Business Stock or Qualified Opportunity Zone Investment

6.8 Reporting Capital Asset Sales on Form 8949 and on Schedule D

6.9 Counting the Months in Your Holding Period

6.10 Holding Period for Securities

6.11 Holding Period for Real Estate

6.12 Holding Period: Gifts, Inheritances, and Other Property

6.13 Calculating Gain or Loss

6.14 Amount Realized Is the Total Selling Price

6.15 Finding Your Cost

6.16 Unadjusted Basis of Your Property

6.17 Basis of Property You Inherited or Received as a Gift

6.18 Joint Tenancy Basis Rules for Surviving Tenants

6.19 Allocating Cost Among Several Assets

6.20 How To Find Adjusted Basis

6.21 Tax Advantage of Installment Sales

6.22 Figuring the Taxable Part of Installment Payments

6.23 Electing Not To Report on the Installment Method

6.24 Restriction on Installment Sales to Relatives

6.25 Contingent Payment Sales

6.26 Using Escrow and Other Security Arrangements

6.27 Minimum Interest on Deferred Payment Sales

6.28 Dispositions of Installment Notes

6.29 Repossession of Personal Property Sold on Installment

6.30 Boot in Like-Kind Exchange Payable in Installments

6.31 “Interest” Taxed if Sales Price Exceeds $150,000 With Over $5 Million Debt

6.32 Worthless Securities

6.33 Tax Consequences of Bad Debts

6.34 Four Rules To Prove a Bad Debt Deduction

6.35 Family Bad Debts

CHAPTER 7: Tax-Free Exchanges of Property

7.1 Like-Kind Exchanges of Real Property Used for Investment or Business

7.2 Receipt of Cash and Other Property—“Boot”

7.3 Time Limits and Security Arrangements for Deferred Exchanges

7.4 Qualified Exchange Accommodation Arrangements (QEAAs) for Reverse Exchanges

7.5 Exchanges Between Related Parties

7.6 Property Transfers Between Spouses and Ex-Spouses

7.7 Tax-Free Exchanges of Stock in Same Corporation

7.8 Joint Ownership Interests

7.9 Setting up Closely Held Corporations

7.10 Tax-Free Exchanges of Insurance Policies

CHAPTER 8: Retirement and Annuity Income

8.1 Retirement Distributions on Form 1099-R

8.2 Lump-Sum Distributions

8.3 Lump-Sum Options If You Were Born Before January 2, 1936

8.4 Lump-Sum Payments Received by Beneficiary

8.5 Tax-Free Rollovers From Qualified Plans

8.6 Direct Rollover or Personal Rollover

8.7 Rollover of Proceeds From Sale of Property

8.8 Distribution of Employer Stock or Other Securities

8.9 Survivor Annuity for Spouse

8.10 Court Distributions to Former Spouse Under a QDRO

8.11 When You Must Begin Receiving Required Minimum Distributions (RMDs)

8.12 Payouts to Beneficiaries

8.13 Penalty for Distributions Before Age 59½

8.14 Restrictions on Loans From Company Plans

8.15 Tax Benefits of 401(k) Plans

8.16 Limit on Salary-Reduction Deferrals

8.17 Withdrawals From 401(k) Plans Restricted

8.18 Designated Roth Account Within 401(k), 403(b), or Governmental 457 Plans

8.19 403(b) Plans (Tax-Sheltered Annuity Plans) for Employees of Tax-Exempts and Schools and Ministers

8.20 Government and Exempt Organization Deferred Pay Plans

8.21 Figuring the Taxable Part of Commercial Annuities

8.22 Life Expectancy Tables for Figuring Expected Return for Commercial Annuities

8.23 When You Convert Your Endowment Policy

8.24 Reporting Employee Annuities

8.25 Simplified Method for Calculating Taxable Employee Annuity

8.26 Withdrawals From Employer's Qualified Retirement Plan Before Annuity Starting Date

CHAPTER 9: IRAs

9.1 Starting a Traditional IRA

9.2 Contribution Limit for Traditional IRAs

9.3 Contributions to a Traditional IRA If You Are Married

9.4 Restrictions on Traditional IRA Deduction for Active Participants in Employer Plans

9.5 Active Participation in an Employer Plan

9.6 Nondeductible Contributions to Traditional IRAs

9.7 Penalty for Excess Contributions to Traditional IRAs

9.8 Distributions From Traditional IRAs

9.9 Partially Tax-Free Traditional IRA Distributions Allocable to Nondeductible Contributions

9.10 Tax-Free Direct Transfer or Rollover From One Traditional IRA to Another

9.11 Transfer of Traditional IRA to Spouse at Divorce

9.12 Penalty for Traditional IRA Withdrawals Before Age 59½

9.13 Required Minimum Distributions (RMDs) From a Traditional IRA

9.14 Beneficiaries of Traditional IRA Owners Who Died Before 2020

9.15 Beneficiaries of Traditional IRA Owners Who Die After 2019

9.16 SEP Basics

9.17 Salary-Reduction SEP Set Up Before 1997

9.18 Who Is Eligible for a SIMPLE IRA?

9.19 SIMPLE IRA Contributions and Distributions

9.20 Roth IRA Advantages

9.21 Annual Contributions to a Roth IRA

9.22 Recharacterizing a Traditional IRA Contribution to a Roth IRA and Vice Versa

9.23 Converting a Traditional IRA to a Roth IRA

9.24 Conversions Made After 2017 to a Roth IRA Cannot Be Recharacterized

9.25 Distributions From a Roth IRA

9.26 Distributions to Roth IRA Beneficiaries

CHAPTER 10: Income From Real Estate Rentals and Royalties

10.1 Reporting Rental Real Estate Income and Expenses

10.2 Checklist of Rental Deductions

10.3 Distinguishing Between a Repair and an Improvement

10.4 Reporting Rents From a Multi-Unit Residence

10.5 Depreciation on Converting a Home to Rental Property

10.6 Renting a Residence to a Relative

10.7 Personal Use and Rental of a Residence During the Year

10.8 Counting Personal-Use Days and Rental Days for a Residence

10.9 Allocating Expenses of a Residence to Rental Days

10.10 IRS May Challenge Loss Claimed on Temporary Rental of Residence Before Sale

10.11 Reporting Royalty Income

10.12 Production Costs of Books and Creative Properties

10.13 Deducting the Cost of Patents or Copyrights

10.14 Intangible Drilling Costs

10.15 Depletion Deduction

10.16 Oil and Gas Percentage Depletion

10.17 Qualified Business Income Deduction for Real Estate Activities

CHAPTER 11: Loss Restrictions: Passive Activities and At-Risk Limits

11.1 Rental Activities Generally Treated as Passive

11.2 Rental Real Estate Loss Allowance of up to $25,000

11.3 Real Estate Professionals

11.4 Business Participation May Avoid Passive Loss Restrictions

11.5 Classifying Business Activities as One or Several

11.6 Material Participation in a Business

11.7 Tax Credits of Passive Activities Limited

11.8 Determining Passive or Nonpassive Income and Loss

11.9 Passive Income Recharacterized as Nonpassive Income

11.10 Working Interests in Oil and Gas Wells

11.11 Partners and Members of LLCs and LLPs

11.12 Form 8582 and Other Tax Forms

11.13 Suspended Losses Allowed on Disposition of Your Interest

11.14 Suspended Tax Credits

11.15 Personal Service and Closely Held Corporations

11.16 Sales of Property and Passive Activity Interests

11.17 At-Risk Limits

11.18 What Is At Risk?

11.19 Amounts Not At Risk

11.20 At-Risk Investment in Several Activities

11.21 Carryover of Disallowed Losses

11.22 Recapture of Losses Where At Risk Is Less Than Zero

CHAPTER 12: Other Income

12.1 Prizes and Awards

12.2 Lottery and Sweepstake Winnings

12.3 Gambling Winnings and Losses

12.4 Gifts and Inheritances

12.5 Refunds of State and Local Tax Deductions

12.6 Other Recovered Deductions

12.7 How Legal Damages Are Taxed

12.8 Cancellation of Debts You Owe

12.9 Schedule K-1

12.10 How Partners Report Partnership Profit and Loss

12.11 When a Partner Reports Income or Loss

12.12 Partnership Loss Limitations

12.13 Tax Audits of Partnerships

12.14 Stockholder Reporting of S Corporation Income or Loss

12.15 How Beneficiaries Report Estate or Trust Income

12.16 Reporting Income in Respect of a Decedent (IRD)

12.17 Deduction for Estate Tax Attributable to IRD

12.18 How Life Insurance Proceeds Are Taxed to a Beneficiary

12.19 A Policy with a Family Income Rider

12.20 Selling or Surrendering Life Insurance Policy

12.21 Jury Duty Fees

12.22 Foster Care Payments

12.23 Digital Assets

PART 2: Claiming Deductions

CHAPTER 13: Deductions Allowed in Figuring Adjusted Gross Income

13.1 Determining Adjusted Gross Income (AGI)

13.2 Claiming Deductions from Gross Income

13.3 Moving Costs Are Deductible Only by Qualifying Members of the U.S. Armed Forces

CHAPTER 14: Claiming the Standard Deduction or Itemized Deductions

14.1 Does Your Standard Deduction for 2024 Exceed Your Itemized Deductions?

14.2 Basic Standard Deduction

14.3 Spouses Filing Separate Returns

14.4 Standard Deduction If 65 or Older or Blind

14.5 Standard Deduction for Dependents

14.6 Prepaying or Postponing Itemized Expenses

14.7 Itemized Deductions No Longer Reduced for Higher-Income Taxpayers

CHAPTER 15: Medical and Dental Expense Deductions

15.1 Medical and Dental Expenses Must Exceed AGI Threshold

15.2 Allowable Medical and Dental Care Costs

15.3 Nondeductible Medical Expenses

15.4 Reimbursements Reduce Deductible Expenses

15.5 Expenses of Your Spouse

15.6 Expenses of Your Dependents

15.7 Decedent's Medical Expenses

15.8 Premiums for Health Insurance

15.9 Travel Costs May Be Medical Deductions

15.10 Schooling for the Mentally or Physically Disabled

15.11 Nursing Homes

15.12 Nurses' Wages

15.13 Home Improvements as Medical Expenses

15.14 Costs Deductible as Business Expenses

15.15 Long-Term Care Premiums and Services

15.16 Life Insurance Used by Chronically ill or Terminally ill Person

CHAPTER 16: Deductions for Taxes

16.1 Overall Limit on Deduction for State and Local Taxes

16.2 Nondeductible Taxes

16.3 State and Local Income Taxes or General Sales Taxes

16.4 Deducting Real Estate Taxes

16.5 Assessments

16.6 Tenants' Payment of Taxes

16.7 Allocating Taxes When You Sell or Buy Realty

16.8 Automobile License Fees

16.9 Taxes Deductible as Business Expenses

16.10 Foreign Taxes

CHAPTER 17: Itemized Deduction for Interest Expenses

17.1 Deduction for Home Mortgage Interest

17.2 Home Acquisition Loans

17.3 Home Equity Loans

17.4 Home Construction Loans

17.5 Mortgage Insurance Premiums and Other Payment Rules

17.6 Interest on Refinanced Loans

17.7 “Points”

17.8 Cooperative and Condominium Apartments

17.9 Investment Interest Limitations

17.10 Debts To Carry Tax-Exempt Obligations

17.11 Earmarking Use of Loan Proceeds For Investment or Business

17.12 Year To Claim an Interest Deduction

17.13 Prepaid Interest

CHAPTER 18: Charitable Contribution Deductions

18.1 Deductible Contributions

18.2 Nondeductible Contributions

18.3 Contributions That Provide You With Benefits

18.4 Unreimbursed Expenses of Volunteer Workers

18.5 Support of a Student in Your Home

18.6 What Kind of Property Are You Donating?

18.7 Cars, Clothing, and Other Property Valued Below Cost

18.8 Bargain Sales of Appreciated Property

18.9 Art Objects

18.10 Interests in Real Estate

18.11 Life Insurance

18.12 Business Inventory

18.13 Donations Through Trusts

18.14 Records Needed To Substantiate Your Contributions

18.15 Form 8283 and Written Appraisal Requirements for Property Donations

18.16 Penalty for Substantial Overvaluation of Property

18.17 Ceiling on Charitable Contributions

18.18 Carryover for Excess Donations

18.19 Election To Reduce Fair Market Value by Appreciation

CHAPTER 19: Casualty and Theft Losses and Involuntary Conversions

19.1 Casualty or Theft Losses for Personal-Use Property Must Be Due to a Federally Declared Disaster

19.2 When To Deduct a Casualty or Theft Loss

19.3 Prior-Year Election for Disaster Losses

19.4 Gain Realized From Insurance Proceeds for Damaged or Destroyed Principal Residence

19.5 Who May Deduct a Casualty or Theft Loss

19.6 Proving a Casualty Loss

19.7 Theft Losses

19.8 Floors for Personal-Use Property Losses

19.9 Figuring Your Loss on Form 4684

19.10 Personal and Business Use of Property

19.11 Repairs May Be a “Measure of Loss”

19.12 Excess Living Costs Paid by Insurance Are Not Taxable

19.13 Do Your Casualty or Theft Losses Exceed Your Income?

19.14 Defer Gain from Involuntary Conversion by Replacing Property

19.15 Involuntary Conversions Qualifying for Tax Deferral

19.16 How to Elect to Defer Gain

19.17 Types of Qualifying Replacement Property

19.18 Time Period for Buying Replacement Property

19.19 Cost of Replacement Property Determines Postponed Gain

19.20 Special Assessments and Severance Damages from Condemnation

CHAPTER 20: Other Itemized Duductions

20.1 Only a Few Expenses Are Allowed as “Other” Itemized Deductions

20.2 Deductions for Job Costs and Other Miscellaneous Expenses No Longer Allowed

CHAPTER 21: Travel and Meal Expense Deductions

21.1 Who May Deduct Travel and Transportation Expenses

21.2 Commuting Expenses

21.3 Overnight-Sleep Test Limits Deduction of Meal Costs

21.4 IRS Meal Allowance

21.5 Business Trip Deductions

21.6 When Are You Away From Home?

21.7 Tax Home of Married Couple Working in Different Cities

21.8 Deducting Living Costs on Temporary Assignment

21.9 Business-Vacation Trips Within the United States

21.10 Business-Vacation Trips Outside the United States

21.11 Deducting Expenses of Business Conventions

21.12 Restrictions on Foreign Conventions and Cruises

21.13 Entertainment Expenses Generally Not Deductible

21.14 Business Meals Are Generally Deductible

21.15 Limitation on Some Deductible Meals

21.16 Substantiating Travel Expenses

21.17 Employee Reporting of Unreimbursed Expenses

21.18 Are You Reimbursed Under an Accountable Plan?

21.19

Per Diem

Travel Allowance Under Accountable Plans

21.20 Automobile Mileage Allowance

21.21 Reimbursements Under Non-Accountable Plans

PART 3: Personal Tax Computations

CHAPTER 22: Figuring Your Regular Income Tax Liability

22.1 Taxable Income and Regular Income Tax Liability

22.2 Using the Tax Table

22.3 Tax Computation Worksheet

22.4 Tax Calculation If You Have Net Capital Gain or Qualified Dividends

22.5 Foreign Earned Income Tax Worksheet

22.6 Income Averaging for Farmers and Fishermen

22.7 Tax Credits

22.8 Additional Medicare Tax and Net Investment Income Tax

CHAPTER 23: Alternative Minimum Tax (AMT)

23.1 Computing Alternative Minimum Tax on Form 6251

23.2 Adjustments and Preferences for AMT

23.3 Tax Credits Allowed Against AMT

23.4 Regular Tax Credit for Prior-Year AMT

23.5 Avoiding AMT

CHAPTER 24: Computing the “Kiddie Tax” on Your Child’s Unearned Income

24.1 Filing Your Child’s Return

24.2 Children Subject to “Kiddie Tax” for 2024

24.3 Computing “Kiddie Tax” on Child’s Return

24.4 Parent’s Election To Report Child’s Dividends and Interest

CHAPTER 25: Personal Tax Credits Reduce Your Tax Liability

25.1 Overview of Personal Tax Credits

25.2 Child Tax Credit for Children Under Age 17

25.3 Figuring the Child Tax Credit and Additional Child Tax Credit

25.4 Credit for Other Dependents

25.5 Qualifying for the Child and Dependent Care Credit

25.6 Figuring the Child and Dependent Care Credit

25.7 Qualifying Tests for EIC

25.8 Income Tests for Earned Income Credit (EIC)

25.9 Qualifying for the Adoption Credit

25.10 Claiming the Adoption Credit on Form 8839

25.11 Eligibility for the Saver’s Credit

25.12 Figuring the Saver’s Credit

25.13 Premium Tax Credit

25.14 Mortgage Interest Credit

25.15 Residential Energy Credits

25.16 Clean Vehicle Credits

25.17 Repayment of the First-Time Homebuyer Credit

CHAPTER 26: Tax Withholdings

26.1 Withholdings Should Cover Estimated Tax

26.2 Income Taxes Withheld on Wages

26.3 Low Earners May Be Exempt From Withholding

26.4 Are You Withholding the Right Amount?

26.5 Voluntary Withholding on Government Payments

26.6 When Tips Are Subject to Withholding

26.7 Withholding on Gambling Winnings

26.8 FICA Withholdings

26.9 Withholding on Distributions from Retirement Plans and Commercial Annuities

26.10 Backup Withholding

CHAPTER 27: Estimated Tax Payments

27.1 Do You Owe an Estimated Tax Penalty for 2024?

27.2 Planning Estimated Tax Payments for 2025

27.3 Dates for Paying Estimated Tax Installments for 2025

27.4 Estimates by Married Taxpayers

27.5 Adjusting Your Payments During the Year

CHAPTER 28: Additional Medicare Tax and Net Investment Income Tax

28.1 Higher-Income Taxpayers May be Subject to Additional Taxes

28.2 Additional 0.9% Medicare Tax on Earnings

28.3 Additional 3.8% Tax on Net Investment Income

PART 4: Tax Planning

CHAPTER 29: Tax Savings for Residence Sales

29.1 Avoiding Tax on Sale of Principal Residence

29.2 Meeting the Ownership and Use Tests for Exclusion

29.3 Home Sales by Married Persons

29.4 Reduced Maximum Exclusion

29.5 Figuring Gain or Loss

29.6 Figuring Adjusted Basis

29.7 Personal and Business Use of a Home

29.8 No Loss Allowed on Personal Residence

29.9 Loss on Residence Converted to Rental Property

29.10 Loss on Residence Acquired by Gift or Inheritance

CHAPTER 30: Tax Rules for Investors in Securities

30.1 Planning Year-End Securities Transactions

30.2 Earmarking Stock Lots

30.3 Sale of Stock Dividends

30.4 Stock Rights

30.5 Short Sales of Stock

30.6 Wash Sales

30.7 Convertible Stocks and Bonds

30.8 Stock Options

30.9 Sophisticated Financial Transactions

30.10 Investing in Tax-Exempts

30.11 Ordinary Loss for Small Business Stock (Section 1244)

30.12 Series EE Bonds

30.13 I Bonds

30.14 Trader, Dealer, or Investor?

30.15 Mark-to-Market Election for Traders

30.16 Cryptocurrency Transactions

CHAPTER 31: Tax Savings for Investors in Real Estate

31.1 Real Estate Ventures

31.2 Sales of Subdivided Land—Dealer or Investor?

31.3 Exchanging Real Estate Without Tax

31.4 Timing Your Real Property Sales

31.5 Cancellation of a Lease

31.6 Sale of an Option

31.7 Granting of an Easement

31.8 Special Tax Credits for Real Estate Investments

31.9 Foreclosures, Repossessions, Short Sales, and Voluntary Conveyances to Creditors

31.10 Restructuring Mortgage Debt

31.11 Abandonments

31.12 Seller’s Repossession After Buyer’s Default on Mortgage

31.13 Foreclosure on Mortgages Other Than Purchase Money

31.14 Foreclosure Sale to Third Party

31.15 Transferring Mortgaged Realty

31.16 QBI Deduction for REIT Dividends

CHAPTER 32: Tax Rules for Investors in Mutual Funds

32.1 Timing of Your Investment Can Affect Your Taxes

32.2 Reinvestment Plans

32.3 Mutual Fund Distributions Reported on Form 1099-DIV

32.4 Tax-Exempt Bond Funds

32.5 Fund Expenses

32.6 Tax Credits From Mutual Funds

32.7 How to Report Mutual Fund Distributions

32.8 Redemptions and Exchanges of Fund Shares

32.9 Basis of Redeemed Shares

32.10 Comparison of Basis Methods

32.11 Mutual Funds Compared to Exchange-Traded Funds

CHAPTER 33: Educational Tax Benefits

33.1 Scholarships and Grants

33.2 Tuition Reductions for College Employees

33.3 How Fulbright Awards Are Taxed

33.4 United States Savings Bond Tuition Plans

33.5 Contributing to a Qualified Tuition Program (Section 529 Plan)

33.6 Distributions From Qualified Tuition Programs (Section 529 Plans)

33.7 Education Tax Credits

33.8 American opportunity tax credit

33.9 Lifetime learning credit

33.10 Contributing to a Coverdell Education Savings Account (ESA)

33.11 Distributions From Coverdell ESAs

33.12 Tuition and Fees Deduction No Longer Allowed

33.13 Student Loan Interest Deduction

33.14 Types of Deductible Education Costs Related to Work

33.15 Work-Related Tests for Education Costs

33.16 Local Transportation and Travel Away From Home To Take Courses

CHAPTER 34: Special Tax Rules for Senior Citizens and the Disabled

34.1 Senior Citizens Get Certain Filing Breaks

34.2 Social Security Benefits Subject to Tax

34.3 Computing Taxable Social Security Benefits

34.4 Election for Lump-Sum Social Security Benefit Payment

34.5 Retiring on Social Security Benefits

34.6 How Tax on Social Security Reduces Your Earnings

34.7 Eligibility for the Credit for the Elderly or the Disabled

34.8 Figuring the Credit for the Elderly or Disabled

34.9 Tax Effects of Moving to a Continuing Care Facility

34.10 Medicare Part B and Part D Premiums for 2024

34.11 Special Tax Rules for Individuals with a Disability

34.12 ABLE Accounts

CHAPTER 35: Members of the Armed Forces

35.1 Taxable Armed Forces Pay and Benefits

35.2 Tax Breaks for Armed Forces Members

35.3 Deductions for Armed Forces Personnel

35.4 Tax-Free Pay for Service in Combat Zone

35.5 Tax Deadlines Extended for Combat Zone or Contingency Operation Service

35.6 Tax Forgiveness for Combat Zone or Terrorist or Military Action Deaths

35.7 Extension To Pay Your Tax When Entering the Service

35.8 Tax Information for Reservists

CHAPTER 36: How To Treat Foreign Earned Income

36.1 Claiming the Foreign Earned Income Exclusion

36.2 What Is Foreign Earned Income?

36.3 Qualifying for the Foreign Earned Income Exclusion

36.4 How To Treat Housing Costs

36.5 Meeting the Foreign Residence or Physical Presence Test

36.6 Claiming Deductions

36.7 Exclusion Not Established When Your Return Is Due

36.8 Tax-Free Meals and Lodging for Workers in Camps

36.9 U. S. Virgin Islands, Samoa, Guam, and Northern Marianas

36.10 Earnings in Puerto Rico

36.11 Tax Treaties With Foreign Countries

36.12 Exchange Rates and Blocked Currency

36.13 Foreign Tax Credit or Deduction for Foreign Taxes Paid

CHAPTER 37: Planning Alimony and Marital Settlements

37.1 Rules for Post-2018 Divorce and Separation Agreements

37.2 Rules for Pre-2019 Divorces or Separation Agreements

37.3 Decree or Agreement Required

37.4 Cash Payments Required

37.5 Payments Must Stop at Death

37.6 Child Support Payments Are Not Alimony

37.7 No Minimum Payment Period for Alimony

CHAPTER 38: Other Taxes

38.1 Overview of Household Employment Taxes

38.2 Social Security and Medicare (FICA) Taxes for Household Employees

38.3 Filing Schedule H To Report Household Employment Taxes

38.4 Federal Unemployment Taxes (FUTA) for Household Employees

CHAPTER 39: Gift and Estate Tax Planning Basics

39.1 Gifts of Appreciated Property

39.2 Gift Tax Basics

39.3 Filing a Gift Tax Return

39.4 Gift Tax Credit

39.5 Custodial Accounts for Minors

39.6 Trusts in Family Planning

39.7 What is the Estate Tax?

39.8 Take Inventory and Estimate the Value of Your Potential Estate

39.9 Estate Tax for 2024

39.10 Planning for a Potential Estate Tax

PART 5: Business Tax Planning

CHAPTER 40: Income or Loss From Your Business or Profession

40.1 Forms of Doing Business

40.2 Reporting Self-Employed Income

40.3 Accounting Methods for Reporting Business Income

40.4 Tax Reporting Year for Self-Employed

40.5 Reporting Certain Payments and Receipts to the IRS

40.6 Filing Schedule C

40.7 Deductions for Professionals

40.8 Nondeductible Expense Items

40.9 How Authors and Artists May Write Off Expenses

40.10 Deducting Expenses of a Sideline Business or Hobby

40.11 Deducting Expenses of Looking for a New Business

40.12 Home Office Deduction

40.13 Write-Off Methods for Home Office Expenses

40.14 Allocating Expenses to Business Use

40.15 Business Income May Limit Home Office Deductions

40.16 Home Office for Sideline Business

40.17 Depreciation of Office in Cooperative Apartment

40.18 Net Operating Losses (NOLs)

40.19 How To Report a Net Operating Loss

40.20 Excess Business Losses

40.21 Business Credits

40.22 Filing Schedule F

40.23 Farming Expenses

40.24 Qualified Business Income Deduction

CHAPTER 41: Retirement and Medical Plans for Self-Employed

41.1 Overview of Retirement and Medical Plans

41.2 Choosing a Qualified Retirement Plan

41.3 Choosing a SEP

41.4 Deductible Contributions

41.5 How To Qualify a Retirement Plan or SEP Plan

41.6 Tax Credits for Setting Up a Retirement Plan

41.7 Annual Qualified Retirement Plan Reporting

41.8 How Qualified Retirement Plan Distributions Are Taxed

41.9 SIMPLE IRA Plans

41.10 Health Savings Account (HSA) Basics

41.11 Limits on Deductible HSA Contributions

41.12 Distributions From HSAs

41.13 Archer MSAs

41.14 Health Reimbursement Arrangements (HRAs)

41.15 Small Employer Health Insurance Credit

CHAPTER 42: Claiming Depreciation Deductions

42.1 What Property May Be Depreciated?

42.2 Claiming Depreciation on Your Tax Return

42.3 First-Year Expensing Deduction

42.4 MACRS Recovery Periods

42.5 MACRS Rates

42.6 Half-Year Convention for MACRS

42.7 Last Quarter Placements—Mid-Quarter Convention

42.8 150% Rate Election

42.9 Straight Line Depreciation

42.10 Listed Property

42.11 Assets in Service Before 1987

42.12 MACRS for Real Estate Placed in Service After 1986

42.13 Demolishing a Building

42.14 Qualified Improvement Property

42.15 Depreciating Real Estate Placed in Service After 1980 and Before 1987

42.16 Amortizing Goodwill and Other Intangibles (Section 197)

42.17 Amortizing Research and Experimentation Costs

42.18 Bonus Depreciation

CHAPTER 43: Deducting Car and Truck Expenses

43.1 Standard Mileage Rate

43.2 Expense Allocations

43.3 Depreciation Restrictions on Cars, Trucks, and Vans

43.4 Annual Ceilings on Depreciation

43.5 MACRS Rates for Cars, Trucks, and Vans

43.6 Straight Line Method

43.7 Depreciation for Year Vehicle Is Disposed Of

43.8 Depreciation After Recovery Period Ends

43.9 Trade-in of Business Vehicle

43.10 Recapture of Deductions on Business Car, Truck, or Van

43.11 Keeping Records of Business Use

43.12 Leased Business Vehicles: Deductions and Income

CHAPTER 44: Sales of Business Property

44.1 Depreciation Recaptured as Ordinary Income on Sale of Personal Property

44.2 Depreciation Recaptured as Ordinary Income on Sale of Real Estate

44.3 Recapture of First-Year Expensing and Bonus Depreciation

44.4 Gifts and Inheritances of Depreciable Property

44.5 Involuntary Conversions and Tax-Free Exchanges

44.6 Installment Sale of Depreciable Property

44.7 Sale of a Proprietorship

44.8 Property Used in a Business (Section 1231 Assets)

44.9 Sale of Property Used for Business and Personal Purposes

44.10 Should You Trade in Business Equipment?

44.11 Corporate Liquidation

44.12 Additional Taxes on Higher-Income Taxpayers

CHAPTER 45: Figuring Self-Employment Tax

45.1 What Is Self-Employment Income?

45.2 Partners Pay Self-Employment Tax

45.3 Schedule SE

45.4 How Wages Affect Self-Employment Tax

45.5 Optional Method If 2024 Was a Low-Income or Loss Year

45.6 Self-Employment Tax Rules for Certain Positions

PART 6: Filing Your Return and the Process After You File

CHAPTER 46: Filing Your Return

46.1 Keeping Tax Records

46.2 Getting Ready to File Your Return

46.3 Applying for an Extension

46.4 Getting Your Refund

46.5 Paying Taxes Due

46.6 Handling Identity Theft

46.7 Notify the IRS of Address Changes

46.8 Interest on Tax Underpayments

46.9 Tax Penalties for Late Filing and Late Payment

CHAPTER 47: Filing Refund Claims, and Amended Returns

47.1 Filing an Amended Return

47.2 When to File a Refund Claim

47.3 Stating the Reasons for Refund Claim

47.4 Quick Refund Claims

47.5 Interest Paid on Refund Claims

47.6 Refunds Withheld to Cover Debts

47.7 Amended Returns Showing Additional Tax

47.8 Penalty for Filing Excessive Refund Claim

CHAPTER 48: If the IRS Examines Your Return

48.1 Odds of Being Audited

48.2 When the IRS Can Assess Additional Taxes

48.3 Audit Overview

48.4 Preparing for the Audit

48.5 Handling the Audit

48.6 Tax Penalties for Inaccurate Returns

48.7 Penalties for Not Reporting Foreign Financial Accounts

48.8 Agreeing to the Audit Changes

48.9 Disputing the Audit Changes

48.10 Offer in Compromise

48.11 Recovering Costs of a Tax Dispute

48.12 Suing the IRS for Unauthorized Collection

PART 7: 2024 Tax Forms

Form 1040

Form 2441

Form 8863

2024 Tax Table

2024 Tax Computation Worksheet

2024 Earned Income Credit (EIC) Table

PART 8: Tax Law Authorities

Legislative Authorities

Administrative Authorities

Judicial Authorities

PART 9: Citations of Authority

Key to Citations

Filing Basics

PART 10: Practice Before the IRS

How Returns Are Examined

Audit Rules for Partnerships

The Time Limits Within Which the IRS Must Act for Additional Taxes

Filing Refund Claims

How to Arrange Closing Agreements and Compromises

How to Get the IRS' Opinion on a Tax Problem

Circular 230: Practice Before the IRS

Tax Return Preparer Penalties

PART 11: Written Information Security Plan

Written Information Security Plan (WISP)

Written Information Security Plan Sample Template

Glossary

A

B

C

D

E

F

G

H

I

J

K

L

M

N

O

P

Q

R

S

T

U

W

Index

End User License Agreement

List of Tables

Chapter 1

Table 1-1 Taxable Income Brackets for 2024 Assuming You Have Only Ordinary I...

Chapter 3

Table 3-1 Understanding Your Form W-2 for 2024 Wages and Tips

Chapter 4

Table 4-1 Are Your Fringe Benefits Tax Free?

Table 4-2 Taxable Premiums for Group-Term Insurance Coverage Over $50,000

Table 4-3 Are Your Meals and Lodging Tax Free?

Chapter 5

Table 5-1 Minimum Interest Rate for Seller Financing

Chapter 6

Table 6-1 Capital or Ordinary Gains and Losses From Sales and Exchanges of P...

Table 6-2 Rates and Brackets for 2024 Net Capital Gain and Qualified Dividen...

Table 6-3 Figuring Gain or Loss on Form 8949 and Schedule D

Chapter 8

Table 8-1 Key to Tax-Favored Retirement Plans

Table 8-2 Life Expectancy for Single Life Annuity

Table 8-3 Multiple Adjustment Table

Chapter 9

Table 9-1 Can You Deduct Traditional IRA Contributions for 2024?

Table 9-2 Joint Life and Last Survivor Life Expectancy*—See “Thr...

Table 9-3 Uniform Lifetime Table*—

see

Step 2

Table 9-4 Joint Life and Last Survivor Expectancy Table—See Step 2

Table 9-5 Beneficiary's Single Life Expectancy Table for 2022 and Later Year...

Table 9-6 MAGI Limits for 2024 Roth IRA Contributions

Chapter 10

Table 10-1 Depreciation for Residential Rental Property: Use the Row for the...

Chapter 12

Table 12-1 2023 Standard Deduction for Non-Dependents**

Chapter 14

Table 14-1 Itemized Deductions and the Standard Deduction for 2024

Chapter 15

Table 15-1 Deductible Medical Expenses

Table 15-2 Nondeductible Medical Expenses

Chapter 16

Table 16-1 Checklist of Taxes

Table 16-2 Who Claims the Deduction for Real Estate Taxes?

Chapter 18

Table 18-1 What You Need To Substantiate Your Donations

Chapter 19

Table 19-1 Proving a Casualty Loss

Chapter 21

Table 21-1 Deductible Travel and Transportation Expenses

Chapter 22

Table 22-1 Sample Section from 2024 Tax Computation Worksheet for Married Fi...

Chapter 23

Table 23-1 Key to AMT Rules for 2024

Chapter 25

Table 25-1 Allowable Dependent Care Credit*

Table 25-2 Saver’s Credit Based on AGI for 2024

Table 25-3 Repayment Limit on Excess Advances for 2024

Table 25-4 Qualified Energy Efficient Home Improvement Expenses and limits.

Chapter 30

Table 30-1 Tax results from calls

Table 30-2 Tax results from puts

Table 30-3 Savings Bond Maturity Dates

Chapter 32

Table 32-1 Reporting Mutual Fund Distributions for 2024

Chapter 34

Table 34-1 Base Amount and Adjusted Base Amount*

Chapter 38

Table 38-1 Key to Other Taxes

Chapter 39

Table 39-1 Unified Estate and Gift Tax Schedule for 2022 and Later Years

Chapter 40

Table 40-1 Key to Reporting Business and Professional Income and Loss

Table 40-2 Nonresidential Real Property (39 years—Property placed in service...

Chapter 41

Table 41-1 Rate Table for Self-Employed.

Chapter 42

Table 42-1 MACRS Depreciation Rates

Table 42-2 Half-Year Convention—150% Rate

Table 42-3 Half-Year Convention—Straight Line Rate

Table 42-4 MACRS Real Estate Depreciation

Chapter 43

Table 43-1 Deducting Car and Truck Expenses

Table 43-2 Maximum Depreciation Deduction for Cars(Caution: The ceiling mus...

Table 43-3 Maximum Depreciation Deduction for Trucks and Vans(Caution: The...

Table 43-4 MACRS Deduction: Half-Year Convention

Table 43-5 MACRS Deduction: Mid-Quarter Convention

Table 43-6 Straight Line Half-Year Convention*

Table 43-7 Straight Line Mid-Quarter Convention*

Chapter 45

Table 45-1 Self-Employed or Employee?

Guide

Cover

Table of Contents

Title Page

Copyright

J.K. Lasser Institute Biographies

Editorial Acknowledgments

How To Use Your Income Tax 2025

What’s New for 2024

Begin Reading

Glossary

Index

End User License Agreement

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Prepared by theJ.K. LASSER INSTITUTE™

Staff for This Book

J.K. Lasser Editorial

J.T. Eagan, MBA, EA, Contributing EditorJaclyn Barkow, DBA, EA, CPA Contributing EditorDanielle R. Page, Macc, EA, Contributing EditorAngelo C. Jack, Production ManagerWilliam Hamill, Copyediting and ProofreadingIndex by WordCo Indexing Services

John Wiley & Sons, Inc.

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Library of Congress Cataloging-in-Publication Data:

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Eighty-Eighth Edition

J.K. Lasser Institute Biographies

J.T. Eagan, MBA, EA

For Elyse, Giada, and A.J., thank you for all your support. This book is not possible without your understanding and sacrifice!

Mr. Eagan has nearly 20 years of professional tax experience. He began his tax career in Big 4 serving large clients specializing in State and Local tax. His experience includes the development and implementation of tax technology solutions, individual and business compliance, controversy and planning, mergers and acquisitions due diligence, and tax education development for trainings and seminars. He serves as a contributor to McGraw-Hill Education's taxation textbooks, is the Gleim Publications Instruct Professor and Contributor to their Enrolled Agent and CPA review courses, is a frequent speaker on tax matters at various professional and academic seminars, and is published in the American Taxation Association Journal of Emerging Technologies in Accounting. He has served in numerous Board positions for various organizations and currently serves as Vice President of the Indiana Society of Enrolled Agents. Mr. Eagan is currently appointed Clinical Assistant Professor of Accounting at Purdue University Mitch Daniels School of Business. He is also an active practitioner as a partner in the firm NWI Tax, LLC.

Jaclyn Barkow, DBA, EA, CPA

For Christopher, Maddex, Adleigh, and Ryland. Thank you for your support and encouragement. I could never accomplish what I do without each of you.

Dr. Jaclyn Barkow has more than 15 years of experience teaching accounting in Higher Education and is currently a Clinical Assistant Professor of Accounting at Indiana University Northwest. In her work in the School of Business and Economics, she teaches tax and accounting courses, helps students gain access to internships and careers in the accounting and tax industry, and encourages student engagement in and out of the classroom. She holds a Doctor of Business Administration degree with a specialization in Accounting, an Enrolled Agent credential, and a Certified Public Accountant license in the state of Indiana. She has over 12 years of tax return preparation experience, including a primary focus on individuals and small businesses. She is a volunteer site coordinator for the IRS program “Volunteer Income Tax Assistance (VITA).” She is also an active practitioner as a partner in the firm NWI Tax, LLC, and currently serves as President of the Indiana Society of Enrolled Agents.

Danielle R. Page, Macc, EA

To Peyton Marie, you are my drive & the inspiration behind it all!

Danielle R. Page, Macc, EA, has 10 years of professional accounting and tax experience, of which the last 7 years have been in the public accounting sector. Her areas of concentration are: individual and corporate tax compliance, along with payroll processing and payroll tax. She is an active tax practitioner as a partner and the Director of Payroll Services at NWI Tax, LLC. Her educational background includes a Bachelor's Degree of Science in Business with a concentration in Accounting and a Masters of Accountancy with a specialization in Taxation. She holds an active Enrolled Agent credential and is a member of the National Association of Enrolled Agent and the Indiana Society of Enrolled Agents.

Editorial Acknowledgments

We are extraordinarily grateful to the folks who make this book a reality. We wish to thank Mrs. Mackenna Parks, EA, and Ms. Sandra Patino, CPA, for their efforts in drafting technical content updates. To Mr. Angelo Jack and Mr. Bill Hamill, we sincerely appreciate your tireless efforts in coordinating, organizing, editing, and synthesizing the incredible volume of information from cover to cover. Finally, we appreciate the opportunity from Mr. Kevin Harreld and John Wiley & Sons, Inc., to continue to publish J.K. Lasser's Your Income Tax, which has been in print for over 80 years.

—J.T., Jaclyn, & Danielle

How To Use Your Income Tax 2025

Tax alert symbols. Throughout the text of Your Income Tax, these special symbols alert you to advisory tips about filing your federal tax return and tax planning opportunities:

Filing Tip or Filing Instruction

A

Filing Tip

or

Filing Instruction

helps you prepare your 2024 return.

Planning Reminder

A

Planning Reminder

highlights year-end tax strategies for 2024 or planning opportunities for 2025 and later years.

Caution

A

Caution

points out potential pitfalls and areas where IRS opposition may be expected.

Law Alert

A

Law Alert

citets recent changes in the tax law and pending Congressional legislation.

Court Decision

A

Court Decision

highlights key rulings from the Tax Court and other federal courts.

IRS Alert

An

IRS Alert

highlights key rulings and announcements from the IRS.

State Consideration?

A

State Consideration

? calls attention to issues on State and Local tax returns which may enhance or limit tax saving opportunities.

Visit jklasser.com for FREE download of e-Supplement

You can download a free e-Supplement to Your Income Tax 2025 at jklasser.com. The e-Supplement will provide an update on tax developments from the IRS and Congress, including a look ahead to 2025.

On the homepage at jklasser.com, you will find free tax news, tax tips and tax planning articles.

The PROFESSIONAL EDITION of Your Income Tax is divided into two volumes.

Volume I includes the complete 2025 edition of J.K. Lasser's™ Your Income Tax, which for 88 years has helped subscribers solve their tax problems and has proven to be a solid reference work for tax professionals.

Volume II expands the usefulness of Your Income Tax for tax professionals by providing citations of tax authorities and sections devoted to practice before the IRS.

VOLUME I: YOUR INCOME TAX (Parts 1–7)

This volume includes the 2025 edition of Your Income Tax. The contents start on page vii, and the index begins on page 1039. Pages 3–12 alert you to filing requirements, filing addresses for IRS Service Centers, and a calendar with 2025 filing deadlines.

VOLUME II: PROFESSIONAL TAX PRACTICE (Parts 8–11)

This volume includes the following technical tax information:

TAX LAW AUTHORITIES (

Part 8

)

. Here is an explanation of tax authorities—legislative, administrative, and judicial—and their relative importance in the practice of tax law.

Part 8

begins on

page 857

.

CITATIONS OF AUTHORITY (

Part 9

)

. Here are key authorities for the text of

Your Income Tax