Tax Laws

Since data shows that 39% of people in the U.S. report real estate as part of their past or expected inheritance, it is no surprise that subject comes up a lot at the tax desk.  While most people decide to sell it, there are others who turn it into a rental while others decided to move into it.  The big question always is 'What am going to have to pay in taxes when I receive this?'  After you read this, you should have a better understanding of that question.

What if you inherit a house

First of all, you’ll need to decide what to do with the property. Whether you sell it, keep it, or turn it into a rental, each option has different tax implications.

One of the most important tax rules for inherited property is the step-up in basis. A home’s basis is the amount the IRS uses as the starting point for calculating your capital gains tax.

One of the question I get in the tax office every year concerns if you will owe tax for giving large gifts or for receiving large gifts.  The answer is that most people will never come close to exceeding the lifetime estate and gift tax exemption, which, due to the new 2025 Trump/GOP tax law, will remain extraordinarily high for the average household. 

An while giving gifts to your family may apply to these rules, the IRS has several categories of financial gifts that don’t count toward annual gift tax limits, no matter how much you give. But before we dive into which gifts the IRS treats as tax-free, it helps to know a little bit about the federal gift tax.

According to a recent analysis by Self Financial, the average American will pay an estimated $762,272 in total taxes over their lifetime. (This actually represents a roughly 45% increase from the 2024 estimate of $524,625 in lifetime taxes and I'm sure it will go up form there.) The study looked at various taxes Americans pay throughout their lifetimes across several major categories: Federal and state income taxes, Property taxes, Sales taxes and Vehicle-related taxes.

As no surprise, income taxes make up the largest share of the lifetime tax burden. (Their analysis estimates that the average U.S. taxpayer pays about $532,910 in federal and state income taxes over a lifetime.) 

According to the study, Property taxes add roughly more than $145,000 over a lifetime. 

One of the common problems I face helping people with there taxes is helping them get their withholding correct so they don't end up owning the IRS at the end of the year.  So how can you fine-tune your withholding and estimated tax payments for 2026?

The IRS now has a withholding estimator on its website to help you figure out whether you are having the right amount of federal income tax withheld from wages, pensions, IRS distributions, etc. This tool asks about various sources of income, gives tips on credits and deductions, and estimates how much withholding to request.

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Review #1: Review by Stephen Christopher

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Stephen Christopher

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5 Stars - Congratulations on your 5-star review!

Reviewed by Stephen Christopher for Readers’ Favorite

When doing the taxes for people that have just started to dip their toes into the world of investing in stocks, I have found that very few knew about the wash sale rules.  Yet, this could cause you to pay a lot more in taxes than you need to if you don’t watch the calendar.

I have a few tax clients that enjoy visiting the casinos around the country and one of the issues I will discussing next spring will be is the new gambling provision that could reshape how millions of U.S. gamblers are taxed on their bets.   That is because the so-called "One Big Beautiful Bill" (OBBB), signed into law on July 4, 2025, introduced a cap on deductions for gambling losses.

Starting January 1, 2026, people will be able to deduct only 90% of their gambling losses against their winnings on federal taxes. (The previous policy allowed a full 100% deduction of gambling losses up to the amount of winnings.).  This is projected to will raise roughly $1.1 billion in additional taxes over ten years. 

The One Big Beautiful Bill, as the new tax bill is called, makes some significant changes to Americans’ personal finances.

At close to 1,000 pages, the legislation makes permanent the 2017 tax cuts and introduces new tax breaks—including deductions for tips, overtime pay, and auto loan interest—and gives a special $6,000 deduction for seniors who receive Social Security.  (I figured it will save me about $1,400 a year in taxes.  WooHoo!)

The bill makes cuts to begin eliminating fraud in social programs such as Medicaid and food assistance, eliminates tax incentives for clean energy, and overhauls the federal student loan system.

So, what does it mean for your wallet?

After doing people''s taxes for over two decades, one of the worst parts of it is when your client''s die and you have to help pick up the pieces.   It is sad that in so many households only one of the spouses does all the accounting and taxes. If that spouse dies first, time and again I have found that the remaining spouse has no clue where to even start to put all the financial pieces together again.

It gets to be an even bigger challenge if the remaining spouse dies and the siblings have to figure things out, like distributing the assets or filing the final tax returns. So what happens when someone dies during the year and has a tax filing obligation?