ISO vs. NSO – Employee Stock Options Basics


ISO and NSO, what do these terms mean? These terms stand for incentive stock options (ISOs) and non-qualified stock options (NSOs or NQSOs) respectively. They are mostly common among companies which use their company stocks as part of the employee’s compensation and/or retirement benefit packages.

NSO or NQSO are options to buy shares of company stock at a stated price and can be exercised over a specific period, i.e. over 10 years. The exercise price is normally 100% of fair market value on the date the option is granted, but it can be set lower.

ISO is an option to buy shares of company stock at a set price on the date of grant and can be exercised over a period of up to 10 years. Like NSO, the exercise price of ISO is normally set at the fair market value on the date the option is granted.

After reading the above definitions of ISO and NSO you are probably wondering: what are the differences of these two options? The differences mostly lie in the employer tax deductions and income tax treatment of exercising ISO and NSO options to the employees.

With most NSOs, if the employee opts to exercise the options to hold the shares of company stock, then the employee must recognize as ordinary income the amount of difference between the option grant (exercise) price and the fair market value of the underlying stock at the time of exercise. This income is subject to social security (FICA) and federal unemployment (FUTA) taxes. Subsequently, the employee will recognize either capital gains or losses on any appreciation or depreciation in the stock value from the day of exercise until the day the employee sells the stock. Alternatively, the employee can opt to exercise to sell, and then the employee will pay income and social security taxes on the amount realized on the sale of the stock minus the option price.

Unlike NSO, where the employee has to pay ordinary income taxes when he or she exercises the options to hold the stock, an employee who receives ISOs does not have to pay regular income tax at the time of exercise. If, after the exercise the shares are held for at least one year from the date of exercise and two years from the date of grant of the options (1year/2year holding period requirements), the sale of the shares will result in long-term capital gain from the date of the option grant to the date of sale of the stock. If, the 1year/2year holding periods are not met, then the sale becomes a disqualifying disposition and the ISO is treated like a NSO, where the difference between the option price and the fair market value at the time of exercise will be taxed as ordinary income.  

The difference between the taxation of a disqualifying disposition of an ISO and that of an NSO is that the recognized ordinary income from the disqualifying ISO is not subject to social security and federal unemployment taxes.

Here are two examples explaining how ISO and NSO work:

  • Adam received 100 shares of NSOs from his employer ABC Industry, Inc. on February 8, 2017. The option exercise price is $5 per share. On the date of grant, there is no taxation to Adam. On March 15, 2018, when the fair market value of the ABC’s stock is $10 per share, Adam exercised his options. Adam would recognize $500 ($10-$5=$5 times 100 shares) as ordinary income. On March 20, 2019 when the ABC’s stock price rises to $20, Adam sells all of his 100 shares of ABC stock. Adam would recognize $1,000 as long-term capital gain and would pay capital gain taxes because he has held the stocks for more than 12 months after he exercise his NSOs. If, instead of exercising the NSOs on March 15, 2018, Adam waited until March 20, 2019 to exercise the option and simultaneously sell the underlying stock, then, Adam would recognize all proceeds from the sale, $20 stock price/share – $5 option price times 100 shares = $1,500, as ordinary income and would pay regular income tax and social security taxes on this $1,500.

  • Eve received 100 ISOs from XYZ Industry Inc. on January 28, 2017. The option exercise price is $5 per share. If Eve exercised her ISOs on January 31, 2018 when the fair market value of the stock was $10 per share, she would recognize no income for regular tax purposes. If subsequently, Eve sells the stocks when its price rises to $20 on February 9, 2019, she would be able to recognize the entire gain of $ 1,500 as long-term capital gain because she has met the 1year(from exercise)/2 year(from grant) holding period requirements. If,  Eve sells the stocks on December 31, 2018, then she has not met the 1year/2year holding period requirements. In this case, the $500 from the exercise of the options on January 31, 2018 would be treated as ordinary income and the subsequent gain of $1,000 from sale of the stocks on December 31, 2018 would be recognized as short-term capital gains.

With NSO, the employer can take a deduction in the amount of income that is taxed to the employee. With ISO, however, if the employee complies with the 1year/2year holding period requirements, the employer gets no tax deduction from it.

If an employee is given stock options, he or she needs to be clear what kind of options they are. There is an employment requirement for employees who receive ISOs. That is, the employee who receives ISOs must remain employed with the same employer from the time of the grant of the options until at least 3 months before the exercise.

Another difference between these two employee stock options is that ISOs are not transferable except at death, while NSOs are transferable during the employee’s lifetime.

Your 2021 Essential Financial To-do List


2020 is finally behind us. What is your plan for year 2021? Here I outlined some financial tips for you to put on your early 2021 to-do list to jump start the year to be a successful and prosperous one for you and your loved ones. Below are some of the essential personal financial information you will want to save and keep in handy as your reference guide throughout the year.

  • Adjust your retirement plan contributions for 2021

2021 retirement plan contribution limits

Plan Maximum
Age 50
and Over
401(k)/403(b) $19,500 $6,500  

Deductible IRA
$6,000 $1,000
Non-Deductible IRA $6,000 $1,000  
Roth IRA $6,000 $1,000

The individual IRA contribution deadline for 2020 is April 15, 2021.

Phase out range for deductible IRA is $105,000-$125,000 for joint filing if covered by a workplace retirement plan; Phase out range for Roth IRA is modified AGI from $198,000-208,000 for joint filers.

Health Savings Account Contribution Limit for 2021:

  Self-only Family Coverage
Contribution Limit $3600 $7200
Contribution Limit over age 55 $4600 $8200
High-deductible health plan
minimum deductible  
$1400 $2800
High-deductible health plan
out-of-pocket maximum  
$7000 $14,000
  • Keep in mind these important income tax facts for 2021:

2021 Income Tax Brackets and Rates:

Single Filer
Income Range
Married File Jointly
Income Range
10% $9,950 or less $19,900 or less
12% $9,951- $40,525 $19,901 – $81,050
22% $40,526 and $86,375 $81,051 and $172,750
24% $86,376 and $164,925 $172,751 and $329,850
32% $164,926 and $209,425 $329,851 and $418,850
35% $209,426 and $523,600 $418,851 and $628,300
37% $523,601 or more $628,301 or more

The standard deduction is $12,550 for individuals and $25,100 for married couples filing jointly.

2021 Alternative Minimum Tax (AMT) Exemption Amounts:

  Single or
Head of
Married File Jointly
Qualified Widow
Married File
$ 73,600 $ 114,600 $ 57,300
25% reduction
if over:
523,600 1,047,200 523,600          
818,000 1,505,600 752,800

2021 Qualified Dividend and Long-term Capital Gain Tax Rate:

Income Range:
Single filer
Income Range:
Married file jointly
Capital Gain Tax Rate
$0-$40,400 $0-$80,800 0%
$40,401-$445,850 $80,801-$501,600 15%
Over $445,850 Over $501,600 20%

Net Investment Income Tax:

Individuals will owe the tax if they have Net Investment Income and also have modified adjusted gross income over the following thresholds:

Filing Status Threshold Amount
Married filing jointly $250,000
Married filing separately $125,000
Head of household (with qualifying person) $200,000
Qualifying widow(er) with dependent child $250,000
Single $200,000

The Net Investment Income Tax (NIIT) applies at a rate of 3.8% to certain net investment income of individuals, estates and trusts that have income above the statutory threshold amounts.

  • Annual Exclusion for Estates and Gifts

In 2021, the first $15,000 of gifts to any person is excluded from tax.

Since 2018, the Tax Cuts and Jobs Act temporarily increased the basic exclusion amount for estate and gift taxes for tax years 2018 through 2025, with both dollar amounts adjusted for inflation. For 2021 the exclusion amount is $11,700,000 per individual, and $23,400,000 for a couple.

  • Review your Insurance policies

If your situation has changed during 2020, such as change of job, birth of a new child, or purchases of new car, house, etc., you need to review your insurance coverage or talk to your financial adviser to help you come up with proper coverage amount for your current insurance needs.

Don’t forget the deadline for individual tax filing is Thursday April 15, 2021.

Gather and organize all your paperwork such as W-2 forms, bank statements, mortgage payment statements, property tax receipt, business expenses, investment statements from your broker-dealers, charity donation receipts, etc. for your 2020 tax filing.

  • A couple of events that you might want to keep an eye on:
    • House Ways and Means Committee Chairman Richard Neal plans to reintroduce in the new Congress the Securing a Strong Retirement Act of 2020, which would boost the required minimum distribution age from 72 to 75. In 2019, the Secure Act passed by congress has pushed the age that retirement plan participants need to take the required minimum distributions (RMD) from 701/2 to 72. If this new bill passes, it would create more favorable financial planning opportunities to people contributing to various retirement plans.
    • Another thing to watch for is for families with kids applying for college in the fall 2021. The dates and places of taking the SAT/ACT had been changed a couple of times last year by the institutions which offer these tests due to the pandemic. Since the pandemic is still going on parents need to make sure their high school kids know the exact dates and places of taking these tests. Parents and students can go to to check out the latest updates on SAT test or for ACT tests.

A Simple Tax Move to Make by the End of 2020


It is that time of a year again: holidays and shopping. I bet tax is probably the last thing on your mind right now. Or, you may think that it is a bit late to make any tax move by now. Well, that is not the case this year.

We know that many tax payers have stopped itemizing their charitable donation deductions due to substantially higher amount of standard deduction since the enactment of The Tax Cuts and Jobs Act (TCJA). But, there is a bonus to tax payers this year due to coronavirus relief bill passed by Congress. That is, your can deduct your eligible charitable contributions in the amount of $300 for individuals and $600 for a couple “above the line”. Above-the-line deductions benefit you whether or not you itemize your deductions. Above-the-line deductions refer to those deductions such as retirement plan contributions that reduce your adjusted gross income (AGI).

So, what is so special about adjusted gross income? Quite a lot according to a blog post by TaxAct. Every dollar that reduces your AGI reduces your taxable income.  And it may help you qualify for other deductions, too. Various credits are based on your adjusted gross income. In some cases, even a small adjustment may help you qualify for a credit or other tax perk that you would not receive otherwise.

To be eligible for this deduction, your charitable contributions must be in the form of cash, check, or credit card payments and you must have the proper documentation, i.e. receipts of your donations. Unfortunately, you may not deduct the clothes you donated to your local goodwill store after you cleaned your kid’s closet.

I know that you are making that holiday to do list, checking it twice, or several times. Be sure to put this simple tax move on that list. Not only will you help your fellow citizens, your generosity may also lower your tax bills in the coming year.

Maximize Health Insurance Benefits and Minimize Your Healthcare Spending in 2021


After some heavy rain and low-40 degree days fall has finally come to Dallas. It signals the coming of holiday shopping, family gathering, end-of-year to do list and, annual enrollment. November is the month that health insurance for individuals and families sponsored by either government or many private employers are open for enrollment.

For people who will not have private insurance, the 2021 Open Enrollment Period starts from Sunday, November 1 and runs through Tuesday, December 15, 2020. You can go to to get information on what Health Insurance Market Place is and how it works. The website also let you browse and compare health plans available for 2021 enrollment. Starting in 2014, taxpayers with low to moderate annual incomes may be eligible for a Premium Tax Credit if they purchase health insurance coverage through the Health Insurance Market Place.

If your employer continues to sponsor group health insurance as an employee benefit, you probably have already received enrollment notice from your employer by now. Whether this is your first enrollment or your fifth or tenth time, you need to take some steps to ensure you and your family get the maximum benefits while minimize future costs.

Many medium to large private employers offer their employees a benefit program including a flexible spending account(FSA) under which the employee can elect a reduction in compensation and requests those dollars be allocated to the purchase of specific benefits. The benefits that can be provided include health insurance premiums and out-of-pocket payments such as co-pays, coinsurance payments, eyeglasses, and dental care. The maximum employee contribution to health FSA will be capped at $2,750 for 2021.

The election to contribute to employee FSA is made annually before the beginning of the year for which the election will be effective. The salary reductions used to fund specific benefits in the flexible spending account are not included in the employee’s gross income and are not treated as wages for Social Security taxes. If the money allocated to your health care flexible spending account is not used by the end of the year, it is forfeited. So, the first thing you need to do is to look back and review your family’s health related costs in 2020. Or better if you can look back two to three years and detect a spending pattern for your family’s medical expenses. Doing so gives you an idea of how much you have spent on family’s healthcare and where those dollars went. Then you can elect the amount of FSA salary reductions more aligned with your family’s circumstance. Some employers, however, allow their employees up until March 15th of the following year to spend funds in their FSA. So, be sure to check your FSA’s spending deadline with your employer’s human resource department.    

Next, review your current coverage and elections, and then consider the available plans to determine your needs for 2021. All employer-sponsored health plans are required by law to provide their employees the disclosure of important plan information, called The Summary Plan Description (SPD). The SPD contains important information such as how the plan operates, what benefits are provided, when an employee becomes eligible to participate in the plan and how to file a claim, etc. Another piece of document you can obtain from your employer is Summary of Benefits and Coverage (SBC). SBC helps you compare your coverage options across different types of plans.

Among the plans sponsored by your employers, there probably is a type of plan called high-deductible health plan. If you are financially able I would argue for enrolling in this type of plan to take advantage of Health Savings Account (HSA). HSA combines a high deductible health plan with a savings account. According to, for 2020, the IRS defines a high deductible health plan (HDHP) as any plan with a deductible of at least $1,400 for an individual or $2,800 for a family. An HDHP’s total yearly out-of-pocket expenses (including deductibles, co-payments, and coinsurance) cannot be more than $6,900 for an individual or $13,800 for a family. (This limit doesn’t apply to out-of-network services.) In addition, to be an eligible individual and qualify for an HSA, you are not enrolled in Medicare.

 HSAs have several tax advantages. One of them is that the contributions are an above-the-line deduction reducing adjusted gross income, so taxpayers do not need to itemize their tax deductions to benefit from HSA. Another advantage is that earnings on the contributions to an HSA are not taxed currently, and the distributions used to pay for qualifying medical expenses are tax-free. Qualified medical expenses include:

  • Medical expenses not reimbursed by health insurance policy
  • COBRA health insurance premiums
  • Long-term care premiums
  • Health insurance premiums if an individual is receiving unemployment compensation

The 2021 individual HSA contribution limit will be $3,600. The limit for family HSA contribution will be $7,200. If you will be 55 before the end of 2021, you can contribute an additional $1,000.

There is no doubt that healthcare related costs are staggering in the US. You will be amazed that even improving your health slightly can potentially lower your healthcare costs tremendously.

Everything You Need to Know About the Coronavirus Stimulus Payments


As part of the economic stimulus package passed by the Congress under CARES (coronavirus aid, relief and economic security) act, individuals and small business owners can obtain crucial benefits to bridge them over until the economy starts recover. In this article, I will address the eligibility, application and other issues related to the one-time stimulus cash payments to Americans.

How much is the payment?

Individuals Each
Child under 17 Married
two kids
17 and over
Amount $1200 $500 $3400 $0

Who qualify for the payments?

According to Wall Street Journal’s report the stimulus payments start “phasing out for those with income above $75,000 in adjusted gross income for individuals, $112,500 for heads of household (often single parents) and $150,000 for married couples. The payments start shrinking above those levels.” The payment will be reduced by $5 for every $100 over the above thresholds until it is completely phased out.

For those with no children, the benefits phase out completely at $99,000 for individuals and $198,000 for married couples.

Are green card holders eligible for the payments?

The answer is “yes” as long as you have a social security number and you meet the income qualifications for the payments.

Which AGI number to use?

The IRS will use 2019 tax returns to set the payment amounts and 2018 tax returns if 2019 tax returns isn’t available.

What about those who do not qualify for the stimulus payments now but lose substantial amount of income in 2020?

The good news is that the final amount of the benefits will be determined based on your 2020 income and settled on your 2020 tax return. So people may ultimately qualify for the stimulus money through a larger tax refund or smaller tax payment in 2021. And for those who eventually qualify for less money than they receive this year, the good news is that they do not need to pay back the extra money they got.

If I typically do not need to file income tax returns do I still get the payment?

Yes. According to IRS it will use the information on the Form SSA-1099 or Form RRB-1099 to generate Economic Impact Payments. Since the IRS would not have information regarding any dependents for these people, each person would receive $1,200 per person, without the additional amount for any dependents at this time. (Sources: Internal Revenue Services)

What about income taxes on these payments?

These payments are not considered taxable income; therefore, individuals do not pay income taxes on these payments.

How do I apply for the payment?

You do not need to apply for the payment. The IRS will send the payments either directly to your bank accounts that are on file with the IRS or by checks via mail based on the qualifications outlined above.

Can my child who was born in 2020 get a payment?

Unfortunately, parents of child who was born in 2020 will not get a payment for that child now. But, if the parents’ income dropped low enough in 2020 to qualify they will either get extra $500 to their tax refund or get the amount subtracted from their income-tax bill when they file their 2020 tax returns in 2021.

Can I receive the payment if I owe money to the IRS for prior years?

IRS will not deduct the money from your qualified payments even if you owe the IRS back taxes or other liabilities.

What about child support?

If you are behind payments for child support the payments may be smaller for you.

How soon will I get the payment?

According to Treasury Secretary Steven Mnuchin’s comments last Thursday the direct deposit stimulus payments would begin in two weeks. For those who will get the payments via checks the paper checks will not be mailed until mid-May.

Coping with Coronavirus Crisis


Since March 24, 2020 Collin County, Texas has officially implemented its seven-day shelter-in-place law. Even before this order, residents in North Texas have been coping with the crisis that has drastically changed their lives.

Historically significant news and data used to come in once in a while now have come in almost daily since the end of last February, causing global financial markets to swing up and down wildly. And the word “unprecedented” has been used many, many times to describe the simultaneous global health crisis and financial crisis.

The speed of interest rates dropping was unprecedented. “Unprecedented” is this time that investors flight to cash abandoning stocks and safe haven assets like US treasuries at the same time. The number of Americans filing for unemployment benefits skyrocketed to a record–breaking 3.283 million for the week ended March 21. Consensus expectations were for 1.64 million claims. The previous record was 695,000 claims filed the week ended October 2, 1982. We are indeed living in an unprecedented time.

Amid this historical backdrop the central banks, especially the Fed, had adopted extraordinary measures to fight the financial fallout caused by this health crisis. And the Congress had just passed an unprecedented 2.2 trillion rescue/stimulus bill to relive financial burdens off Americans’ shoulders.

Based on a report by the Wall Street Journal, the bill will provide one-time checks of $1,200 to Americans with adjusted gross income up to $75,000 for individuals and $150,000 for married couples. Individuals and couples are eligible for an additional $500 per child. The one-time payment will be reduced by $5 for each $100 of income over those thresholds, completely phasing out for individuals whose incomes exceed $99,000, $146,500 for head of households with one child, and $198,000 for joint filers who don’t have children.

If you have recently filed tax return and the IRS has your refund account information on file, you can expect the direct payment into your refund account as early as in three weeks. It will take much longer to receive the payments by checks. The income figures above are based on the adjusted gross income from the 2019 return, or if that return hasn’t been filed, the 2018 return, said Jeff Levine of and Buckingham Wealth.

According to the bill it expands unemployment insurance to cover freelance and gig workers. The current unemployment assistance will be increased by $600 a week for four months.

The bill also includes $350 billion in loans to small businesses that can be used to cover payroll expenses, rent, and interest on mortgage obligations.

The IRS has also taken some steps to relieve Americans’ tax burden. It has officially postponed the deadline for filing income tax returns of year 2019 by 90 days. The new deadline will be July 15, 2020. “All taxpayers and businesses will have this additional time to file and make payments without interest or penalties,” said Treasury Secretary Steven Mnuchin in a recent tweet.

In an article written by Ben Werschkul for Yahoo! Finance, the IRS announced that it “will generally not start new field, office and correspondence examinations” during this period (April 1-July 15). The agency also announced that field collection activities will be suspended from April 1 to July 15. Liens and levies will be suspended during this period, too. However, the IRS underlined “field revenue officers will continue to pursue high-income non-filers”.

As this crisis rages on, there has already been some debate of whether the eventual recovery will be V shaped or U shaped. Given the unique nature of this economic crisis, whether the recovery will be V shaped or U shaped will largely depend on the progress of the medical research on effective treatment/vaccine against coronavirus. If the medical breakthrough comes earlier we may see a V shaped recovery. If not, we may see a U shaped recovery. Another interesting point made by Robert Rodriguez, former CEO of First Pacific Advisors in a latest interview by ThinkAdvisor pointing to a stock market rebound in the shape of a “lower-case “v”, not a rocket ship capital “V” — because of factors such as stock buybacks by companies benefiting from the fiscal stimulus will be banned.

Others like Jeremy Siegel, professor of finance at Wharton School of Business echoed a call by some financial professionals of rethinking the traditional “gold stand” of “60/40” portfolio strategy. Last Wednesday during a market update webcast sponsored by WisdomTree Asset Management he argued for the “need to pivot to a 75/25” portfolio strategy from the traditional 60/40 strategy “because interest rates are going to stay lower.” His point is based on historical real return index data from January 1802 through December 2019 showing that the real return from stocks was 6.8%, 3.5% for bonds, 2.6% for bills, 0.6% for gold and -1.4% for the dollar.

As with crisis in the past, there are opportunities for investors amid the market rout. For one, with the recent market sell-off, you may have a smaller tax bill if you convert your traditional IRA assets into Roth IRA. However, you need to consult your financial advisor before the conversion as the move is non-reversible and potentially complicated. For another, there are some solid companies priced attractively after the recent broad-market sell-off. But, I agree with what Peter Mallouk, president and CEO of Creative Planning said in another ThinkAdvisor interview that some of the worst things investors could do include getting into an industry that doesn’t recover, like energy, or betting on a company that can’t recover.

In the meantime, how do we as individuals go about our daily lives? I would like to share my personal experience of living through the coronavirus crisis.

I try as much as I can to keep my family’s pre-crisis routine . While staying at home, resist making too many trips to the pantry, though it is easier said than done. I make sure everybody in the family stay healthy by taking multivitamin supplements besides eating healthy meals, exercising at least 30 minutes daily and sunbathing for 15 minutes whenever the sun comes out. I sip water throughout my waking time almost daily. Since we do not need to commute to school or work, it is easier for us to get plenty of sleep everyday, another boost for our immune systems. To beat the feeling of isolation we get in touch with our friends as much as possible. We also spray letters and packages with disinfecting spray and wash our hands thoroughly after handling.

As a parent I would like to point out that now is an opportunity to teach our kids life lessons and build characters such as resilience and patience. It is also an opportunity to show solidarity among our neighbors and communities. If we are unable to volunteer, we can donate to local charities such as North Texas Food Banks. For those of us who have pets, we will have more time spent with them. Maybe, half an hour of dedicated play with our pets will strengthen our bonds. If your dog likes being touched, a little massage would be nice, too.   

Last, I want to say that generations of human beings have gone through and prevailed over wars, pandemics and financial crisis. Scientists worldwide are racing towards creating vaccines against coronavirus. If history can be of any indication I am confident that we will pull out of this twin crisis, too. Most importantly, we will have gained invaluable lessons and be better prepared for the future.

2019 End of Year Tax Moves


The end of year 2019 is rapidly approaching. For financial advisors and their clients this means it’s time for clients’ income tax planning. The 2018 Form 1040s are a natural starting point for advisors to identify tax planning strategies for 2020. For DIY readers who haven’t made any tax saving moves yet, however, there are still some time to do so by the end of 2019. Of course, everyone’s tax situation is different. In this article, I will just list some of the strategies.

2019 is the second year when Tax Cuts and Jobs Act has gone into effect. Because standard deduction is much higher under the new tax law, this eliminates the need for itemized deductions for many families. According to Tax Foundation, 10% of the population itemized deductions in tax year 2018 vs. 30% itemized deductions in tax year 2017. But, if you can still itemize your deductions, and you own a home and have paid your property tax at the beginning of 2019, you may want to pay off your 2020 property tax by the end of this year. That way you will have bigger amount of property tax deduction on your 2019 tax year return when you itemize.

Another area to look for saving taxes is your tax-deferred retirement contributions. Some readers may have forgotten to adjust their contributions at the beginning of each year after IRS raised qualified retirement contribution limits for that year. Even if you cannot or do not want to contribute to the maximum limit, bumping up your contributions a bit more still helps. Now is the time to play catch up.

Americans are generous, especially during holiday season. Many made charitable givings every year. If you are considering making some charitable gifts to your favorite cause(s) again this year, and if you didn’t itemize on 2018 tax year return, consider bunching strategy of combining multi-year charitable givings into one tax year. Bunching may make the amount of charitable giving large enough for you to exceed the standard deduction during the year you use this strategy.

Tax Deduction/Credit Texas Taxpayers May Have Overlooked


The tax season has set upon (most of) us. Don’t forget the deadline for filing your 2018 individual tax return is April 15, 2019. Some of you may have already filed your returns. Cheers!
For those of you that haven’t started yet, here are some places that you might want to look for tax deduction/credit.

1. Texas taxpayers can deduct state and local general sales taxes they paid during 2018
Since Texas residents don’t pay state income taxes, this allows them to deduct general state and local sales tax on their federal tax returns. Texas taxpayers can deduct either actual sales tax paid during 2018 or use a default amount determined by the IRS. But, the taxpayer has to itemize in order to take advantage of this sales tax deduction.

2. Mortgage Credit Certificate (MCC)
Good news for some Texas first-time home buyers who bought their homes in 2018. A Mortgage Credit Certificate, or MCC, provides first-time buyers with a dollar for dollar tax credit of up to $2,000 on the interest they pay on their mortgage every year. This certificate must be issued by a state or local governmental units or agencies. Usually, only the taxpayers who itemize can deduct their mortgage interests paid on their tax returns. With a MCC, however, homeowners can take the standard deduction while apply their MCC tax credit to their remaining tax liability. However, this credit is not available for everyone. According to Texas Department of Housing and Community Affairs the program is open to those individuals and families who:
• meet income and home purchase requirements;
• have not owned a home as primary residence in the past three (3) years;
• meet the qualifying requirements of the mortgage loan;
• will use the home as their principal/primary residence.

For further information on MCC, qualified Texas taxpayers may go to for the latest information.

3. Museum Membership Fee
Some of you may pay membership fees or dues to become members of local museums and/or organizations. My family, for example, pays membership fees to Perot Museum every two years. You may not realize that you can deduct this kind of fees or dues on your tax return. However, there is a caveat. Of course, another caveat. Don’t you love them! you can deduct only the amount that is more than the value of the benefits you receive from the museum or qualified organization.