Fequently Asked Tax Questions
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Medical expenses are an itemized deduction and may be deductible if your net Itemized Deductions are higher than the Standard Deduction.
Medical expenses are any costs incurred in the prevention or treatment of injury or disease. Medical expenses include health and dental insurance premiums, doctor and hospital visits, co-pays, prescription and over-the-counter drugs, glasses and contacts, crutches, and wheelchairs, to name a few. Medical expenses that are not reimbursed are deductible within certain limits.
Medical expenses over 7.5% of your adjusted gross income will be included in the itemized deductions calculation. For example, if your AGI is $100K - medical expense over $7.5k may be deducted.
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Expenses directly incurred in order to run the business may be deductible - with limits. If you work out of your home, a portion of the homes expenses such as mortgage interest, utilities and internet may be deductible as well.
Please click on this link for a good explanation of the eligible expense:
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RMDs are required for all tax-deferred retirement accounts, including: Traditional IRAs, SEP-IRAs, and SIMPLE IRAs.
Roth IRA owners: Roth IRAs do not require RMDs
Inherited IRAs: Beneficiaries of an inherited Roth IRA, other than a surviving spouse, must take RMDs
Designated Roth accounts: Designated Roth accounts in a 401(k) or 403(b) plan are subject to RMD rules for 2022 and 2023, but not for 2024 and later years
If you're age 73 or older you must take RMDs from your retirement accounts before the end of the year. Otherwise, you may have to pay a 25% penalty on the amount not distributed.
If you turned 73 this year, you have until April 1 of next year to take your first RMD. However, if you wait until next year to start your RMDs, you'll have two distributions in the same year.
https://www.schwab.com/learn/story/6-questions-to-consider-when-prepping-tax-season
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You generally need to make quarterly estimated tax payments if you expect to owe $1,000 or more in federal taxes when you file your return, and your withholding does not cover it.
The Safe Harbor Rules
To avoid underpayment penalties, your total withholding and estimated tax payments must meet one of these rules:
90% Rule: Pay at least 90% of the tax you owe for the current year.
100% Rule: Pay 100% of the tax shown on your previous year's tax return.
110% Rule: Pay 110% of your prior year's tax if your adjusted gross income (AGI) was over $150,000 ($75,000 if married filing separately).
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April 15: For income earned from January 1 to March 31.
June 15: For income earned from April 1 to May 31.
September 15: For income earned from June 1 to August 31.
January 15 (next year): For income earned from September 1 to December
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Step 1 - Find the prior year AGI (line 11a on 1040)
Step 2 - Find the prior year total tax (line 24 on 1040)
Step 3 - Find the amount paid in payroll withholding in the prior year (Box 2 of W2). Add payments from Pension or Social Security as well.
Step 4 - Calculate the payment gap
Example:
Assume the 2025 AGI is over $150K
2025 Total Tax = $10,000
You must pay 110%
$10K * 110% = $11K total to be paid to avoid the penalty
Wife’s W2 Box 2 = $4,000
Hubby’s W2 Box 2 = $4,000
Total paid via payroll withholding = $8K
$11K total - $8K payroll = $3K gap.
Pay the $3,000 spread over the 4 quarterly payments.
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Higher Education Expenses
Tuition and Fees: Payments required to enroll at any eligible college, university, or trade school.
Room and Board: On-campus housing and meal plans, or off-campus rent and food, as long as the student is enrolled at least half-time and costs do not exceed the school's official allowance.
Books and Supplies: Mandatory textbooks, lab materials, and required course supplies.
Technology: Laptops, computers, required software, and internet access used primarily for school.
Expenses That Do Not Qualify
Transportation, parking passes, and travel flights to and from campus.
Health insurance premiums and routine medical care.
College application and entrance exam fees.
Personal items like clothing, general cell phones, and dorm furniture
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No, only qualified education expenses are eligible for deduction.
If the funds you withdrawn exceed the tuition, qualified expenses and scholarship deduciton, you may be charged a 10% penalty + tax
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When you withdraw more money from a 529 plan than your qualified education expenses, the excess portion is considered a non-qualified withdrawal and triggers ordinary income tax plus a 10% federal penalty on the earnings portion
The 60-Day Rollover: You can redeposit or roll the excess funds back into a 529 plan or another eligible account within 60 days to avoid taxes and penalties
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Smart Ways to Use Leftover 529 Funds
Pay for extended education: Use the money for graduate school, trade schools, professional certifications, or registered apprenticeships.
Change the beneficiary: Transfer the account to a sibling, parent, future grandchild, or yourself for your own continuing education.
Pay off student loans: Apply up to a lifetime limit of $10,000 of the funds toward the beneficiary's or their siblings' student loans.
Roll over to a Roth IRA: Transfer up to a lifetime cap of $35,000 into a Roth IRA for the beneficiary, provided the 529 account has been open for at least 15 years and strict contribution rules are met.
Fund K-12 tuition: Withdraw up to $10,000 to $20,000 per year (depending on federal and state rules) for private elementary or secondary school tuition for younger family members.
Roll into an ABLE account: Transfer the balance into an ABLE account for a beneficiary or family member with a disability.
Take a non-qualified withdrawal: Withdraw the cash for other purposes as a last resort, though you will pay ordinary income tax and a 10% penalty on the earnings portion.