One of the best freebies in the tax code has gotten better—for people who don’t abuse it. The shift springs from a recent Tax Court decision. The freebie is tax code section 280A(g), often called the Masters’ exemption, which is worth reviewing on its own. It’s a longstanding provision allowing people to rent out their homes for two weeks or less and pocket the rental income free of federal taxes.

As a beneficiary, how should you navigate these waters? Asking a few key questions can help ensure that you make the right choices in line with your values and life situation.

Ask these questions for an inheritance of any size

For more than five million Americans, even a dollar of extra income can boost annual Medicare premiums by hundreds or thousands of dollars—but refunds of these surcharges are sometimes available.

Choosing MFS severs joint liability, meaning each spouse isn’t responsible for the information on the other’s return. This can be a deciding factor for some couples who are separated but not divorced and others who don’t want to commingle finances, even if it raises their taxes.

In the past, the IRS only required electronic filing of 1099s if filing over 250 returns. They have reduced this amount to 10 returns and are combining all tax forms to get this number, including W-2's. Our office has obtained the Transmitter Control Code (TCC) and we are ready to assist all of our clients with this process.

The most common argument against starting Sec. 529 college savings programs (529 plans) for young children is the uncertainty surrounding whether the child will even attend college and, if they do, whether they will need the funds in the event of qualifying for scholarships or other financial aid.