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medical bills and taxes - can you deduct them?

Do you have a lot of medical bills that you pay on each month? Could those medical bills be deducted from your tax bill this year? I was helping my mother take care of all of her finances after my dad passed away. I didn't realize how many bills she had coming in each month for medical treatments that my dad had undergone months, even a year earlier. I started doing some research about medical bills and tax deductions. If you have medical bills, take a minute to read through this blog to gain some knowledge that can help you decide what you can do when tax time comes around.


medical bills and taxes - can you deduct them?

Planning A House Flip? Here's How It Affects Your Taxes

by Don Walters

Like many new business ventures, the process of buying, renovating and selling a house for profit -- so-called "flipping" a home -- is both exciting and fraught with potential pitfalls. If you're looking to get into the flipping business, it's important to understand the taxes involved so that you ensure your best profit. Here is a quick primer on home flipping tax treatment. 

Business or Investment

There are two major questions that determine how your profit from home flipping is taxed. The first such question is, "is it a business or an investment?" While the difference may not matter much to you, it matters a lot to your taxes. This is because business income is taxed at your normal tax rate and is subject to the self-employment tax (15.3% in 2014). Investment income, in contrast, may be taxed at a lower rate and is not subject to the additional self-employment tax. Additionally, business losses can count against your other income at tax time, whereas investment losses are limited to $3,000 annually

How do you decide if your flipping is a business or an investment? Unfortunately, there's no strict set of rules by the IRS. Generally, if your flipping is your primary source of income, you flip multiple houses at a time or it takes up most of your time, the IRS is more likely to consider it your business. If it's merely something you do once in a while, you spend little of your own time and energy on the project or you hold the homes longer, it's probably an investment. 

Length of Holding

If your income is considered an investment, how long you own the home will determine the rate at which it's taxed. If you hold the asset for less than a year, the profit is a short-term capital gain and is taxed at your normal rate. Holding it for longer than year results in a long-term capital gain and may be taxable at as little as 0% depending on your tax rate for your other income. 

How to Report It

So, now that you know what taxes you'll be paying, how do you go about reporting the income and paying them? Again, it depends on whether you're reporting the profit as a business or an investment. Business flippers file Schedule C with their personal income taxes and investors file Schedule D

If you're still unsure whether to file your flipping adventure as a business or investment or how to calculate the profit or taxes, it may be best to work with a qualified tax accountant, like Hy Appelbaum CPA. This will allow you to sit back, relax and focus on the fun part of home flipping rather than the necessary but complicated taxation part.