Congress and the IRS made inheriting an IRA a very complicated, confusing event. Inherited IRAs are accompanied by a host of little-known rules that are traps for the unwary, and that’s before considering the end of the Stretch IRA and the creation of the 10-year rule that were enacted in the Setting Every Community Up for Retirement Enhancement Act in 2019 and the accompany regulations that were finalized in 2024. There’s a host of under-the-radar rules beneficiaries need to know to minimize taxes and penalties and maximize the benefits of inherited IRAs. Here’s a review of them. Don’t contribute to…

This is a published version of our weekly Forbes Tax Breaks newsletter. You can sign-up to get Tax Breaks in your inbox here. Thanksgiving is one of my favorite holidays. I am one of *those* hosts–I cook a zillion dishes and welcome as many guests as we can fit through the door (including international students from our local university who don’t have the opportunity to go home during fall break—if you have a spare chair at your table, I highly recommend it). I’m already looking forward to this coming week. Thanksgiving conversations can be tricky, especially in an election year.…

Prepaying income tax on a retirement account might be a good idea. Or it could be a really bad idea. Read this before pulling the trigger. By William Baldwin, Senior Contributor Your financial advisor may be all fired up about prepaying tax on an IRA, converting it into a totally tax-free Roth IRA. Is this a great idea? Sometimes. Not always. The recent election of a tax-cutter to the White House should have diminished the fervor of Roth fans. One of their arguments was that low tax rates passed in 2017 under then President Trump are scheduled to expire at…

The 3.8% Medicare surcharge, more widely known as the Net Investment Income Tax or NIIT, has been a point of confusion and controversy since its enactment in 2013. Originally designed to help fund “Obamacare” health coverage, it primarily targets high-income earners. Because the NIIT thresholds aren’t adjusted for inflation, however, more taxpayers are finding themselves subject to the tax over time. Here’s a breakdown of what you need to know about this tax, especially if you work abroad, pay taxes to a foreign jurisdiction, have a foreign spouse, own foreign companies, or deal with complex investments. What Is the Net…

Last week, the House of Representatives rejected H.R. 9495, Stop Terror-Financing and Tax Penalties on American Hostages Act, legislation that would allow the incoming administration to unilaterally shut down certain nonprofit organizations. This week, the bill was reintroduced by House Republicans, where it passed, 219-184. The vote was largely partisan, with 204 Republicans voting yea and 183 Democrats voting nay (an equal number of Republicans and Democrats—15 each—sat this one out). You can see how your Representative voted here. The Bill The bill has two parts. The first part would amend the tax code to postpone tax deadlines and provide…

Nothing is forever—including tax amnesty. The IRS’ second employee retention credit (ERC) voluntary disclosure program for businesses who want to pay back the money they received after filing ERC claims in error is ending. The program will run through November 22, 2024. First Crack Of Disclosure The current opportunity is the second iteration of the IRS’ ERC program. In the program’s first iteration—which ended on March 22, 2024—businesses who were accepted into the program had to pay just 80% of the credit received. In addition, the IRS did not charge interest or penalties on any credits you repay. And, if…

Should sexual assault and abuse legal settlements be taxed by the IRS? Most people would answer no, yet the tax law has long been unclear. How lawsuit settlements are taxed is complex. Under the tax code, compensatory damages for personal physical injuries or physical sickness are tax free. In contrast, damages for emotional injuries are fully taxable. It’s confusing, making taxing emotional distress and physical sickness a kind of chicken and egg issue. If you’ve been through an ordeal and eventually collect a settlement or judgment, the last thing you want is uncertainty about taxes. You do not want to…

More than 103,223 men, women, and children are currently on the national transplant waiting list. Seventeen of them will die today. And another 17 will die tomorrow. The reason? There aren’t enough organ donors saying yes. A new tax credit in Michigan aims to change that. Deceased Donors When we think of organ donation, we tend to think about donations after death. That’s because some organs, like your heart, can’t be transplanted by a live donor. Last year, just over half (about 57%) of all organ transplants were from deceased donors. Deceased donation is exactly what it sounds like—giving organs,…

One of the campaign promises made by President-Elect Trump was a new Department of Government Efficiency or DOGE. Trump has tapped two successful businessmen in Elon Musk and Vivek Ramaswamy to head the effort. Trump has also said that the efforts of Elon and Vivek will allow his administration to dismantle the government bureaucracy and cut wasteful spending. How much waste there is in Washington is unknown, but many believe it is significant. While the two appointed leaders would dig into the details and come up with recommendations for Trump, it’s unlikely Musk and Ramaswamy would have the power to…

In this episode of Tax Notes Talk, Professor Afton Titus of the University of Cape Town explains her view on how the tax initiatives of the OECD and United Nations affect developing nations. Tax Notes Talk is a podcast produced by Tax Notes. This transcript has been edited for length and clarity. David D. Stewart: Welcome to the podcast. I’m David Stewart, editor in chief of Tax Notes Today International. This week: the view from the global south. At the end of October the podcast team traveled to Cape Town, South Africa, for the International Fiscal Association Annual Congress. While…