Best ways for kids to invest gift money: Parents can teach their children to invest their gift money in stocks, mutual funds and other investments by creating a custodial account under the Uniform Transfers to Minors Act or the Uniform Gifts to Minors Act, according to Kiplinger. Children will face the "kiddie tax" if the interest, dividends and capital gains exceed $1,050, with the parents' rate to apply if total earnings is higher than $2,100. – Kiplinger
The skinny on paying estimated taxes: Taxpayers need to pay estimated taxes if they have earnings that are not included to withholding taxes, according to Bankrate. They have to file Form 1040-ES vouchers four times a year to make estimated tax payments. Not complying with estimated tax requirements could mean penalties and interest, an expert says: "The IRS wants people to be paying their taxes during the year." -- Bankrate
Tax examiner unveils tax tips for hobbyists: Taxpayers need to include their income from hobbies in their tax returns and understand the rules and limitations about making tax deductions for this source of income. Clients need to determine if it is simply a hobby or a business meant to generate profit, and can subtract the amount of earnings from the hobby as well as expenses from their taxable income based on rules in IRS Publication 535. Clients are advised to file their returns online since taxes can be more complicated if income from hobbies are included. -- Digital Journal
Which account should you use to pay off a mortgage? A client may consider cashing in some investment accounts to pay off his home mortgage if his after-tax earnings rate is lower than his after-tax borrowing costs, according to MarketWatch. He may tap his savings account since he is not earning much from it and leave his IRA and other retirement account untouched since penalties on distributions could be greater than the interest he has saved. The after-tax cost of borrowing is considered the effective rate of return for paying off mortgage. --MarketWatch
Tax Secrets: Tax magic to enrich your charity: Charitable gifts are a little-known tax strategy that can entitle a taxpayer to a full tax deduction equal to the gift's fair market value at the time the property was given, according to the Naples Daily News. It is a good tax strategy for a taxpayer's closely held corporation "without getting killed by taxes." However, the taxpayer must involve competent professionals who can correctly value the properties gifted and help in implementing the transaction. -- Naples Daily News
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