Tax Tips

Something to keep in mind when planning to sell

forsalePlanning on selling your home? On top of packing and cleaning, you’ll need to determine whether you have a gain on the sale of your home.

To do this, you must figure out your adjusted basis (i.e., the original purchase price of the residence, purchase expenses, improvements, additions, assessments and more). Take the final selling price and reduce it by your adjusted basis to calculate your gain or loss from the sale.

If you have a gain, you may qualify for an exclusion of income for all or part of the gain. In general, if you have owned and used your home as your main residence for two out of the last five years, you are eligible to exclude up to $250,000 of gain from income ($500,000 for married taxpayers filing jointly).

You are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.

Be sure to consult me to help determine the items that may affect your home’s adjusted basis.

Avoid penalties for not having minimum essential coverage

To avoid a penalty for not having health insurance, you must be enrolled in a plan that qualifies as minimum essential coverage (MEC). You won’t be subject to a penalty as long as you have coverage under any of the following:

  • A health plan bought through the Health Insurance Marketplace.
  • An individual health plan bought outside the Health Insurance Marketplace, if it meets the standard for qualified health plans.
  • A “grandfathered” individual insurance plan you’ve had since March 23, 2010, or earlier.
  • A job-based plan, including a retiree plan and COBRA coverage.
  • Medicare Part A or Part C (Part B coverage by itself doesn’t qualify).
  • Most Medicaid coverage, except for limited coverage plans.
  • The Children’s Health Insurance Program (CHIP).
  • A parent’s plan.
  • A student health plan (check with your school to see if the plan counts as minimum essential coverage).
  • A health care plan for Peace Corps volunteers.
  • A health care plan through the Department of Veterans Affairs.
  • Most TRICARE plans.
  • Department of Defense Nonappropriated Fund Health Benefits Program.
  • Refugee Medical Assistance.
  • State high-risk pools for plan or policy years that started on or before December 31, 2014 (check with your high-risk pool plan to see if it qualifies as minimum essential coverage).

If you don’t have MEC, you are required to pay a fee called the individual shared responsibility payment for being uninsured. Examples of health plans that don’t count as coverage include:

  • Coverage only for vision care or dental care.
  • Workers’ compensation.
  • Coverage only for a specific disease or condition.
  • Plans that offer discounts on medical services.

You’ll owe the shared responsibility payment for any month you, your spouse or your tax dependent don’t have health insurance that qualifies as MEC. This fee will be paid when you file your federal tax return for the year you don’t have coverage.


Do you use your car for business purposes?

If you use an automobile for business, you may be able to receive a tax deduction to lower your income tax. Deducting auto expenses requires diligent record keeping and accurate calculations. There are two ways to calculate your auto deductions:

  • automobile-expensesActual expenses. Track all eligible deductions, such as the cost of gas, oil, repairs, insurance, maintenance, tires, washing, licenses and depreciation or lease payments.
  • Standard mileage rate. Instead of tracking the above expenses, track the business mileage you accrue and use a standard rate. For 2015, the standard mileage rate is 57.5 cents per mile.

Whether you own or lease your vehicle, both of these methods are viable options.

Taxpayers who wish to use the standard mileage rate in lieu of actual expenses for computing deductible vehicle expenses must elect to do so in the first year of business use. Switching to the standard mileage rate in a later year is not an option.

To receive these deductions, you must keep accurate records of the miles incurred for business, dates of business use, destinations and the business purpose. You’ll also need to note the odometer readings at the beginning and end of the year to determine the total miles for all uses. If records are not accurate enough and you are not able to substantiate your claim, the IRS may disallow a deduction for mileage.

Please note that you cannot deduct commuting mileage— that is, mileage from your home to your regular job. However, if you’re self-employed and maintain an eligible office in your home, you can deduct the mileage to and from your clients, as well as between jobs. You can also deduct mileage between jobs or to a temporary assignment. If you don’t have a regular place of business, you can only deduct your transportation expenses to a temporary location outside of your general area of employment.