Answers to Questions we hear Now and Again.

Can I ever save tax by filing a separate return instead of jointly with my spouse?

Sometimes you may benefit from filing separately instead of jointly.  You should consider filing separately if the following criteria applies: one spouse has large medical expenses, miscellaneous itemized deductions, or casualty losses, and the spouses’ incomes are about equal.

I have a large capital gain this year.  What should I do?

If you have an investment on which you have an accumulated loss, it would be advantageous to sell it prior to year-end.  Capital losses are deductible up to the amount of your capital gains plus $3,000.  If you are planning on selling an investment on which you have an accumulated gain, it may be best to wait until after the end of the year to defer payment of the taxes for another year.

When should I take a lump sum distribution from my retirement plan?

Your personal needs should decide whether you take a lump sum or not.  You may need a lump sum to buy a retirement home or retirement business.  Or perhaps your employer makes you take it that way or you want personal control over your assets.  In these cases, an IRA rollover may be a good way to go.

What types of tax relief are available for costs of my children’s higher education?

In some cases, you will have to choose which relief to claim, based on what each is worth in your tax situation.  There are tax exclusions, tax deferrals, tax credits, and relief from tax penalties.  However, you may not be able to take more than one type of relief at a time.