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Overview of tax documents and when to use them

Financial Planning Dentist

Common Tax Documents:

  1. W-2 Form: Issued by employers to employees, showing wages earned and taxes withheld throughout the year. Used for reporting income on personal tax returns.
  2. 1099 Forms: Various types including:
    • 1099-INT: Reports interest income earned from bank accounts.
    • 1099-DIV: Reports dividend income from investments.
    • 1099-MISC: Reports miscellaneous income, such as freelance earnings or rent payments.
    • 1099-R: Reports distributions from retirement accounts.
  3. 1098 Form:
    • 1098 Mortgage Interest Statement: Shows mortgage interest paid during the year, used for deducting mortgage interest on tax returns.
  4. Bank and Investment Statements: Summarizes interest, dividends, and capital gains earned from bank accounts, brokerage accounts, and investment funds.
  5. Property Tax Statements: Documenting property taxes paid on real estate owned, which may be deductible on tax returns.
  6. Receipts for Charitable Contributions: Used to claim deductions for charitable donations made throughout the year.
  7. Health Insurance Forms:
    • Form 1095-A: For individuals who obtained health insurance through the Health Insurance Marketplace.
    • Form 1095-B or 1095-C: Provided by insurers or employers to report health insurance coverage.
  8. Educational Documents:
    • Form 1098-T: Reports tuition payments and other educational expenses for claiming education-related tax credits.

Less Common Tax Documents:

  1. K-1 Forms: Received by partners in partnerships, shareholders in S corporations, and beneficiaries of trusts and estates, reporting income, deductions, and credits from these entities.
  2. SSA-1099 Form: Reports Social Security benefits received during the year.
  3. Unemployment Compensation Statements: Reporting income received from unemployment benefits, potentially taxable.
  4. 1099-C Form: Issued by lenders when canceling debt, potentially taxable as income.
  5. Foreign Income Documents:
    • Form 2555: For individuals claiming the Foreign Earned Income Exclusion
    • Form 1116: For claiming the Foreign Tax Credit.
  6. HSA or FSA Statements: Detailing contributions and withdrawals from Health Savings Accounts (HSA) or Flexible Spending Accounts (FSA).
  7. Rental Income and Expense Records: Including rental income, expenses, and depreciation for reporting rental property income or loss.
  8. Gains and Losses Records: Documentation of gains and losses from the sale of assets such as stocks, bonds, or real estate.

More related articles:

Where to start?

Take a step. Big changes especially long term changes to things like health and finance take time. Don’t make sweeping changes to start, take one step, in the right direction and build off that.  Don’t build a budget immediately because that will most likely lead to a negative experience and most people’s experience with money is already negative. So instead start to save and have those savings go into an investment account that does everything for you to start. If you find that you want to dedicate some more time to it then do it, but first just make it really easy on yourself. What you’ll find over time your account is growing a lot more than your bank account.  Quick tip: Don’t begin reading investment articles or start watching the news to hear market updates, and don’t log into the account frequently because you’ll most likely let emotion get in the way of your new plan. So, find out how much you can save with your income (read our Common Questions section for best practices). Then take that dollar amount and divide it by 12 to figure out how much you need to save monthly. If you get paid bi-weekly divide your annual savings amount by 24 and automate your savings. Log into your payroll provider with your employer and automate that amount to go directly to an investment account.  For more information and resources check out our Education Library!

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December 22, 2020 No Comments

Can manufactured homes can be considered like-kind property for tax purposes under IRC Section 1031

Q: I was wondering if manufactured homes can be considered like-kind property for tax purposes under IRC Section 1031. A: It turns out that the classification of manufactured homes depends on whether they are classified as real property or personal property. If a manufactured home is permanently affixed to land that the homeowner owns, it can be classified as real property. Just like traditional site-built homes, these manufactured homes are tangible structures that are permanently attached to the land. They have an APN number assigned by the county tax assessor for identification and record keeping. If you receive an annual property tax bill from the county, it confirms that your home is considered real estate and can be used for a 1031 exchange. On the other hand, if a manufactured home is considered personal property, it means that it is often installed on a temporary foundation on leased land. In this case, the homeowner has the option to move the home to another location. This classification is similar to that of a vehicle, and the homeowner receives an annual registration renewal from the DMV. Since mobile homes classified as personal property are not considered real estate, they do not qualify for tax deferral treatment under IRC Section 1031. If you want to confirm whether your home is classified as real or personal property, it’s a good idea to reach out to a Title Insurance company. They can provide you with the necessary information about the classification of your property. Hope this helps you understand the distinction between manufactured homes classified as real property and personal property for tax purposes!

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January 20, 2023 No Comments
Articles
Kevin Taylor

Tenant Mix one of the six critical factors in Real Estate investing

One of the six critical factors that can make or break a real estate investment is the tenant mix. Tenant mix refers to the types of businesses or individuals that occupy a property. It can impact the near-term cash flows and long-term appreciation potential of an investment. In this blog post, we will discuss why tenant mix is an important component of investing better in real estate and how it can improve an investor’s asset. What is Tenant Mix? Tenant mix refers to the variety of tenants that occupy a property. It includes the types of businesses, the sizes of the units, and the lease terms. The goal of tenant mix is to create a balanced mix of tenants that will generate the highest possible returns for the property owner. The ideal tenant mix will vary depending on the type of property and its location. Why is Tenant Mix important? Tenant mix is important because it affects the performance of the property. A good tenant mix can improve the cash flow of a property, while a poor tenant mix can lead to high vacancy rates and lower rental income. Additionally, tenant mix can impact the long-term appreciation potential of an investment. If the property has a mix of strong, stable tenants, it is more likely to retain its value over time. How Tenant Mix improves near-term cash flows Tenant mix can impact the near-term cash flows of a property. A good tenant mix will attract a variety of businesses that will generate a steady stream of rental income. For example, a retail property with a mix of anchor tenants (large retailers that draw customers to the property) and smaller specialty stores will create a diverse stream of rental income. This will help to stabilize the property’s cash flow and reduce the risk of high vacancy rates. Conversely, a poor tenant mix can lead to high vacancy rates, which can hurt cash flows. For example, a retail property with several tenants in the same industry can become over-saturated. If one of these tenants closes or moves out, it can lead to a domino effect where other tenants follow suit. This can leave the property owner with a high vacancy rate and reduced rental income. How Tenant Mix improves long-term appreciation Tenant mix can also impact the long-term appreciation potential of a property. A good tenant mix can create a more valuable property over time. For example, a commercial property with a mix of national and local tenants is more likely to retain its value over time. National tenants are typically more stable and have longer lease terms, while local tenants can bring a unique flavor to the property. A diverse tenant mix can help to create a more resilient property that can withstand economic downturns. Conversely, a poor tenant mix can lead to a decline in property value over time. If the property has a high vacancy rate, it can become less attractive to potential investors. Additionally, if the tenant mix is overly concentrated in one industry or tenant type, it can lead to a decline in property value. For example, a retail property with several tenants in the same industry may struggle to attract new tenants if that industry experiences a downturn. In conclusion, tenant mix is a crucial component of investing in real estate. A good tenant mix can improve the near-term cash flows and long-term appreciation potential of a property. Investors should carefully consider the types of tenants that will occupy their property and strive to create a diverse tenant mix that will generate the highest possible returns. By doing so, investors can maximize their chances of success in the real estate market.

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November 11, 2022 No Comments

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