![]() One of her clients in California, for example, had invested about $1 million in home renovations over the years but didn’t have the receipts to prove it, she says. However, you may be able to eliminate or reduce the tax bill if you’ve made significant upgrades to your home-and for that, you need documents.Ĭlients often panic when they realize they may owe taxes on a home sale and don’t have records of improvements, says Mari Adam, a certified financial planner for Mercer Advisors in Boca Raton, Fla. Any profits that exceed this amount are subject to a capital gains tax of 0%, 15% or 20%, depending on your taxable income. Taxpayers who sell a primary residence they’ve lived in for at least two out of the past five years can exclude up to $250,000 in profits from taxes, or $500,000 for a married couple filing jointly. Owners who have lived in their home for decades may be enticed to downsize and cash in their gains. Home prices logged a nearly 17% annual gain in 2021, with some cities seeing even faster price appreciation, according to the National Association of Realtors (go to “ Where Home Prices Are Headed in 2022 (opens in new tab),” for more on home prices). The housing market is still making headlines as it sizzles for sellers. IS DROPBOX SECURE ENOUGH FOR TAX RETURNS HOW TOFor advice on how to store documents in a digital format, see below. If you invest in stocks and mutual funds in taxable accounts, you may also need to keep documents showing your purchases until you sell-which may be much longer than three years. ![]() You might need to keep a W-2 for more than three years to document your income if you plan on buying a home. (opens in new tab)Įven if you’re confident you’ll never be audited, you may need to keep tax documents for other purposes. This sometimes happens to freelancers who lose track of a stray 1099 or individuals who win the lottery or some other type of cash prize and fail to report all of their winnings. The IRS has six years from the date you file your return to audit you if you underreport your income by more than 25%. There are important exceptions to the three-year audit rule. Box.com, for example, takes a similar approach.Make the Most of Your Charitable Donations It also gives access to anyone who manages to breach their security. This is a common problem with cloud storage. ![]() It not only gives Dropbox access to your files. It also means that if you ever have a problem with your account, they can help you to get your files back. From a security standpoint, however, this is problematic. This makes the service significantly faster. When you upload files to Dropbox, they keep a copy of your encryption key. If somebody wants to launch a phishing website to steal personal, financial, or business data, it just makes sense that they would target that website to Dropbox users. ![]() IS DROPBOX SECURE ENOUGH FOR TAX RETURNS WINDOWSMuch like malware developers are more likely to target Windows than iOS, Dropbox is the cloud storage provider of choice for those trying to steal confidential files. This number is great for PR, not to mention profitability. Dropbox Is a Target for Cybercrimeĭropbox has over 15 million paying users. This is particularly problematic because many of the files that reappeared were a number of years old. ![]()
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