One per year rollover rule also applies to ESA's!

• Americans have opened Coverdell ESA accounts to pay for qualified educational expenses for a designated beneficiary.
  
• An ESA must be established and contributions made while the beneficiary is under age 18 (unless a special needs beneficiary).
• ESA distributions that aren’t more than the beneficiary’s adjusted qualified education expenses for the year are tax-free.
• ESA assets may be rolled over to another ESA. However, the IRS has clarified that the one per year rollover rule also applies to rollovers of ESA accounts. Trustee to trustee transfers are still unlimited.

Source: www.irs.gov & Tax Tips Americas Tax Solutions  Photo credit Wikimedia Commons

Who will be in charge of your assets after you’re gone? This is an important decision that comes with planning your estate. No one can tell who to trust but here are some guidance tips to help you break down the process of choosing a successor trustee.

1. Trustworthy
Consider if the person you have in mind to choose is financially responsible, stable, capable and trustworthy.

2. Consider a Co-Personal Trustee
Maybe you want two people as trustees which is fine but when choosing make sure these two can work together. Having more than one person gives checks and balance. Not to mention having a co-trustee serves as a back up in the even the first one dies.

3. Family
If you have several beneficiaries who don’t get along you may consider a personal representative who is independent of all parties. Where there is little chance of a contest many people choose a family member.

4. They Don’t Have To Live Near
People sometimes get scared if there trustee needs to live near them or in the same state. Well that isn’t the case. Whomever you choose can live in another state to fill that role.

5. Someone with Time
Handling an estate or trust takes up a lot of time and work. So who ever you’re considering make sure they are capable of handling all the work that comes along.

Source: Elder Law News Photo: Pexels

​Crowdfunding has grown in the last 20 years raising billions of dollars from hundreds of projects being launched on a daily basis. Crowdfunding is the practice of soliciting financial contributions from a large number of people over the internet. These contributions can be used for a verity of projects. By doing this individuals and organizations can gain access to funds outside of the traditional sources like banks.
Lets say you were involved in a terrible crash and needed to raise money to cover expenses so your sister opens a GoFundMe account online. You raise enough money thinking its a tax free gift. You don’t report the income on your tax return. Later on the IRS says you owe money in taxes, consisting of back taxes, penalties and interest.

So is the money you receive from a GoFundMe fundraising campaign taxable income or tax free as a gift? Money raised in a GoFundMe account for the benefit of someone in need isn’t deductible as a charitable contribution. That shouldn’t effect whether the funds raised are taxable to the recipient. For another example think of a parent, parents aren’t a tax exempt charity. Yet there is no question that cash gifts from a parent to a child are tax free to the child. A GoFundMe account meets the definition of gifts under the Internal Revenue Code and would not be taxable to the recipient. But that doesn’t mean every donation qualifies as a gift. This is seen differently depending on what the donations are for. Money raised to support a profit motive, such as business are taxable to the recipient. But donations made to support disadvantaged individual would be considered a tax-free gift.

Source: The Tax Book Photo: Pexels

Don’t be surprised when your employer withholds taxes from your paychecks. That’s how you pay your taxes when you’re an employee. If you’re self employed you may have to pay estimated taxes directly to the IRS on certain dates during the year. This is how a you pay as you go tax system works
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New employees need to fill out a W-4 form. An employee’s withholding allowance certificate is used to figure out how much federal income tax to withhold from your pay. The IRS withholding calculator tool on IRS.gov can help you fill out the form.
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Remember tip income is taxable. If you get tips, you must keep a daily log as you can report them . You must report $20 or more in cash tips in any one month to your employer. You must report all of your yearly tips on your tax return. A deduction may help lower your tax return.

Money you earn doing work for others is taxable. Some work you do can count as self employment, like babysitting or mowing the lawn. Keep accurate records of expenses related to work. You may be able to deduct those costs from your income on your tax return. A deduction may help lower your taxes.

If you’re in ROTC, your active duty pay, such as pay you get for summer camp, is taxable. A subsistence allowance you get while in advanced training isn’t taxable.

You may not earn enough from a summer job to owe income tax. But your employer usually must withhold social security and medicare taxes from your pay. If you’re self employed you must pay them yourself. They count toward your coverage under the social security system.

If you’re a newspaper carrier or distributor, special rules apply. If you meet certain conditions you’re considered self employed. If you don’t meet those conditions and are under the age of 18 you are usually exempt from social security and medicare taxes.

You may not earn enough money from your summer job to be required to file a tax return. Even if that’s true you may still want to file. For example, if your employer withheld income tax from your pay you’ll have to file a return to get your taxes refunded. 

Source: IRS.gov Photo:Pexels