ITINs are tax processing numbers that are issued to foreign nationals and others who do not qualify for Social Security numbers but have federal tax filing or reporting requirements. This includes some non-resident aliens, and dependents or spouses of U.S. resident aliens or non-resident alien visa holders.

ITINs that the taxpayer has not used on a federal tax return in the past three years are no longer valid unless the taxpayer takes action to renew the ITIN. In addition, ITINs issued before 2013 must be renewed, even if such numbers have been used in the past three years.

Taxpayers who need to renew their ITIN but fail to do so before filing a tax return may not be eligible for certain tax credits, such as the American Opportunity Tax Credit and the Child Tax Credit, until the taxpayer renews the ITIN. In addition, failure to renew an expired ITIN may cause a refund delay. ITINs only need to be renewed if the taxpayer has to file a federal tax return.

The changes in ITIN requirements were necessitated by the Protecting Americans from Tax Hikes (PATH) Act, which Congress passed in December, 2015.

If you do not take distributions in a timely manner, you may have to pay a 50 percent excise tax on excess IRA additions. You should be aware that defined contribution owners may not have to file a report until retirement.

Those who attain the age of 70 ½ in 2016 are required to report a RMD for the year, but they may wait until April 1, 2017 to do so. Individuals who report RMDs for the first time and are waiting until April to do so, must report twice, because they are required to report a RMD for the current year prior to December 31. This could result in an increase in their tax liability.

Following the first year, IRA owners must report RMDs on an annual basis by the end of the year. The life expectancy of the taxpayer and the taxpayer’s spouse will play a role. The IRS provides resources for making calculations of RMDs. However, the main calculation is to divide the taxpayer’s account balance as of the end of the previous year by an IRS life expectancy factor.

Taxpayers who have neglected to take RMDs are advised to take all of them as quickly as possible so as to avoid the aforementioned excise tax. But taxpayers, such as retirees, who do not need their RMDs, may wish to reinvest those funds into a Roth IRA, which will not require the taxpayer to make withdrawals until after the death of the account holder. Or they may consider reinvesting the funds into a 529 savings plan for their grandchildren.

The elder law attorneys at Hook Law Center assist Virginia families with will preparation, trust & estate administration, guardianships and conservatorships, long-term care planning, special needs planning, veterans benefits, and more. To learn more, visit http://www.hooklawcenter.com/ or call 757-399-7506.

However, as we have discovered, filling the forms out can be more difficult than it seemed at first glance. First, we applied in the last week of September for a FSA ID which linked to our account at the IRS to allow us to link the FAFSA form (but not as we were later to discover the CSS PROFILE) to our 2015 income tax date as filed. Second, there was the frantic gathering of current information: bank statements, mortgage and car loan information, retirement account values, investment account values, including the 529 accounts and UGMA accounts set up for both the child applying for college and his/her siblings. Third, we set up the FAFSA form and imported the information from the IRS – so far so good.

The trouble arose when, after reading the instructions for the forms multiple times, we discovered we had “special” circumstances that we needed to address. When my mother passed away, she created a testamentary trust primarily for the benefit of my father. However, my brother and I were included as permissible principal beneficiaries. Knowing my mother, it was meant to be “just in case” of a catastrophic emergency. Nonetheless, because I am a permissible beneficiary currently, we have to report one-third of the value of the trust on these forms even though I have no ability to compel a distribution from the trust. Thankfully, my children only have interests in the trust contingent on my prior death, so the trust is considered my asset and not the asset of my child for financial aid. Interestingly, we do not need to report the trust created by my grandfather because my interests in that trust are contingent upon my surviving various family members.

Discerning exactly what had to be reported on the various forms in connection with trust funds was not easy. Ultimately, I gave up and called a financial aid officer at the University of Virginia, because I am an alumna and because my child intends to apply there. I did get the answer I needed. Finally. However, here are a few pointers in regards to eligibility for financial aid:

1. Keep in mind that parents’ resources are assessed at a much lower level than assets owned by a student when determining how much the family should contribute towards college. 529 accounts owned by a parent are assessed as an asset of the parent, not as an asset of the student, even if the student is the named beneficiary of the account. Account balances of 529 accounts owned by a grandparent do not get reported on the financial aid form; however, distributions from the account used for the grandchild’s educational expenses are counted as the grandchild’s income for the year of distribution.
2. Eligibility for financial aid is heavily based on your income. Although you do get credit for certain obligations, such as a mortgage or a home equity loan secured by your home and on which you are paying, you do not get credit for consumer loans or unsecured debt (such as credit cards). In addition, the contribution that you make towards your retirement account is added back into your adjusted gross income for these purposes.
3. The balance of your retirement account is not assessed for these purposes.
4. Interests held in trust are assessed as an asset of the beneficiary, even if the restrictions on the trust fund are such that the beneficiary cannot access the funds. However, contingent beneficiaries are ignored.

If you are interested in creating a trust that is meant to be used for your children’s or grandchildren’s college education, the nuances of how the trust is worded may be unimportant. After all, if you are providing a fund from which college expenses are to be paid, then the funds should be so used. On the other hand, if you are creating a trust that is not necessarily meant to fund a college education, as in the case of a trust primarily for the benefit of a surviving spouse, it may be important to assess and think through the ramifications of giving the descendants of your primary beneficiary current access to trust assets. Your decision will be influenced by the specifics of your family situation. Please feel free to make an appointment to discuss these important issues with the attorneys at the Hook Law Center so we can help guide your estate planning decisions.

Ask Kit Kat – Fish Smarts

Hook Law Center:  Kit Kat, what can you tell us about how fish think and feel?

Kit Kat:  Well, there is a lot to tell, actually. Even very tiny fish have some amazing capabilities. Jonathan Balcombe, director of animal sentience with the Humane Society Institute for Science and Policy has written a new book, entitled What a Fish Knows: The Inner Lives of our Underwater Cousins. It turns out that fish have many things in common with other animals, including us humans. That is why they are such a fascinating subject for research. For example, let’s examine the frillfin goby, which is a fish that lives in intertidal areas. They have the capability of jumping from one tidal pool to another when they sense danger. How do they do that so successfully without being stranded on rocks or caught up in vegetation? Scientists tell us that they can memorize the geography of a particular tidal pool and remember it 40 days later. That knowledge serves them well when they sense they can no longer stay in a specific location.

Another example is the case of groupers and moray eels. These two look nothing alike, but they use their differing physical attributes to work together to hunt for food. The grouper elicits the attention of the eel through the use of a head shake or body shimmy. Then they work as a team. The eel chases their prey into a nook or crevice of a rock. Sometimes, the eel gets to the prey first, and has a delicious meal. However, if unsuccessful, the prey swims out, and is captured by the large-bodied grouper. Another capability which grouper have is a pointing ability. They can actually point with their body position to the eel that prey is nearby. Thus the hunt starts, and they begin their cooperative arrangement to capture food.

For more examples, you might want to read the book. It really is fascinating. As more and more people become aware that fish can think and feel, they will treat them with more respect. That is not to say we shouldn’t continue to enjoy them as a source of our own nourishment, but perhaps we can become a little more careful about how they are harvested. Commercial fishing tends to use large nets over many miles which scoop up whatever is in a particular area, including dolphins, when what they are really after that day might be tuna. Hopefully, we can develop more strategic ways to fish without the collateral damage to others, which are not the intended objects of the fishing operation. The author says another thing anyone can do is, if you see a stranded fish washed up on a beach, pick it up and get it back into the water. We all need a little help once in a while. (“Kinder School of Thought,” All Animals, September/October 2016, p.34-35)

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Hook Law Center encourages you to share this newsletter with anyone who is interested in issues pertaining to the elderly, the disabled and their advocates. The information in this newsletter may be copied and distributed, without charge and without permission, but with appropriate citation to Hook Law Center, P.C. If you are interested in a free subscription to the Hook Law Center News, then please telephone us at 757-399-7506, e-mail us at mail@hooklawcenter.com or fax us at 757-397-1267.The post Musings on Financial Aid first appeared on SEONewsWire.net.]]> http://www.seonewswire.net/2016/08/mail-fraud-and-tax-evasion-charges-filed-against-former-new-york-attorney/ Mon, 01 Aug 2016 13:07:42 +0000 http://www.seonewswire.net/2016/08/mail-fraud-and-tax-evasion-charges-filed-against-former-new-york-attorney/ A six-count indictment was unsealed on July 8 against a former New York attorney in federal court in New York. Joseph Scali was charged with structuring cash transactions, mail fraud, tax evasion, obstructing the IRS, perjury and obstruction of justice.…

Many seniors are at risk of falling victim to con artists who prey on them in an effort to gain access to their savings and any assets they have accumulated over the years. An example of such a scam occurs when a fraudulent individual pretending to be an IRS agent telephones the potential victim, stating that the individual owes unpaid back taxes, and makes threats to sue or arrest the senior, or suspend their driver’s license.

Seniors are also susceptible to health care scams in which people call posing as health care or Medicare representatives in an attempt to obtain the senior’s personal and contact information. They will then call the senior back at some future date, stating that they communicated with their son or daughter, who said it was fine to give them their Social Security number. In addition, scammers may offer to help seniors obtain health insurance. The National Council on Aging said that in several cases, they use the personal information to bill Medicare, and keep the funds.

Seniors must also exercise caution when dealing with professionals in whom they have placed their trust, such as financial advisers. It is not unheard of for such advisers to commit fraud and embezzle funds from seniors’ investment accounts. For this reason, it is important to use only established firms as advisers.

Some con artists will even go so far as to pose as a grandchild or great-grandchild in an attempt to secure funds from the senior. In addition, due to the increasing cost of prescription drugs, some seniors search for drugs online. But many of these drugs are counterfeit. Or, upon receipt of funds, the scammers just accept the money without delivering the medications.

Another scam is the obituary scam in which the con artist reads the obituaries, and contacts the family members to inform them that the deceased left an outstanding debt, and is calling to collect on the debt.

Fraudulent behavior has also been committed by people who work at funeral homes. They will advise the senior to purchase the priciest casket, even when a cremation will be performed. They may also add extra charges to the bill for cemetery plots.

Furthermore, tech support scams occur in which a person calls the senior pretending to be a technician from Microsoft or another well-known brand. The person then uses scare tactics to say that there is a virus on the computer and the technician must remotely access the computer in order to install software. Then the scammer requests payment in the form of hundreds of dollars via online or with the use of a credit card, and if the senior resists, the scammer threatens to destroy the computer.

Consumers can report scams to the Federal Trade Commission by calling 1-877-FTC-HELP or visiting ftc.org/complaint.

If you decide to sell the house, view listings of comparable homes that have sold in the neighborhood and adjacent towns, and decide upon a minimum price. Make certain that the homeowner’s insurance is paid and current, and that the estate or trust is designated as the insured in the event anything happens to the house after your parents’ death and prior to the sale. The same applies to mortgage payments, property taxes and utility bills. Upon the sale of the property, you will be required to pay the balance of the mortgage, real estate commissions, transfer taxes and other closing costs. If you move into the house, there may be a rise in property taxes for you, as the house may be worth more than before. However, any special property tax break for seniors may not apply to you.

Nevertheless, if you subsequently decide to sell the house, and the house has increased in value, you may be eligible for the capital gains exclusion. Thus, if you are single, you will not have to pay capital gains taxes on a maximum of $250,000 profit, and if you are married, you will not have to pay capital gains taxes on a maximum of $500,000 profit. In order to qualify for this exclusion, you must reside in the house for a minimum of two of the last five years prior to the sale.
You may, instead, wish to rent out the house to generate income while still using the property during certain times of the year. For instance, the house could be a vacation rental, and at other times, you and your family could use it for family get-togethers. If you live relatively close by, you could serve as property manager rather than hiring one, thereby realizing savings of 10 to 30 percent of the rent.

In addition, you will have to switch the insurance coverage to a landlord policy that covers the structure and personal property along with medical and legal liability in the event a tenant is injured and files a lawsuit against you. This type of insurance also covers loss of rent in case the property can no longer be inhabited because of a covered loss.

You will also realize a tax benefit by modifying the house into a rental. The depreciation expense will help to lower your taxable rental income. Regarding tax savings, the house is a depreciable asset, and a certain portion of its value can be subtracted each year. Furthermore, you can depreciate improvements, such as a new roof, if they add value and lengthen the life of the property. However, in the event you sell, you will have to repay the depreciation to the IRS, and you will not be eligible for the capital gains exclusion because the house is not your main residence.

If you decide to sell the house, view listings of comparable homes that have sold in the neighborhood and adjacent towns, and decide upon a minimum price. Make certain that the homeowner’s insurance is paid and current, and that the estate or trust is designated as the insured in the event anything happens to the house after your parents’ death and prior to the sale. The same applies to mortgage payments, property taxes and utility bills. Upon the sale of the property, you will be required to pay the balance of the mortgage, real estate commissions, transfer taxes and other closing costs. If you move into the house, there may be a rise in property taxes for you, as the house may be worth more than before. However, any special property tax break for seniors may not apply to you.

Nevertheless, if you subsequently decide to sell the house, and the house has increased in value, you may be eligible for the capital gains exclusion. Thus, if you are single, you will not have to pay capital gains taxes on a maximum of $250,000 profit, and if you are married, you will not have to pay capital gains taxes on a maximum of $500,000 profit. In order to qualify for this exclusion, you must reside in the house for a minimum of two of the last five years prior to the sale.
You may, instead, wish to rent out the house to generate income while still using the property during certain times of the year. For instance, the house could be a vacation rental, and at other times, you and your family could use it for family get-togethers. If you live relatively close by, you could serve as property manager rather than hiring one, thereby realizing savings of 10 to 30 percent of the rent.

In addition, you will have to switch the insurance coverage to a landlord policy that covers the structure and personal property along with medical and legal liability in the event a tenant is injured and files a lawsuit against you. This type of insurance also covers loss of rent in case the property can no longer be inhabited because of a covered loss.

You will also realize a tax benefit by modifying the house into a rental. The depreciation expense will help to lower your taxable rental income. Regarding tax savings, the house is a depreciable asset, and a certain portion of its value can be subtracted each year. Furthermore, you can depreciate improvements, such as a new roof, if they add value and lengthen the life of the property. However, in the event you sell, you will have to repay the depreciation to the IRS, and you will not be eligible for the capital gains exclusion because the house is not your main residence.

If you die without a Will or some other form of estate planning, the state in which you reside and the IRS will simply make one for you. Of course, they have no interest in avoiding or reducing estate taxes, minimizing estate administration costs or protecting your family and legacy. The distribution of your assets will just be turned over to the Probate Court to be distributed in accordance to the government’s rule book.

There are Four Ways to Pass Property at Your Death

1. Joint Property: is a type of ownership of property or asset in which you and another co-owner have a right of survivorship, meaning that when you die, your interest in the property will pass to the surviving owner or owners by operation of law, avoiding probate. Examples of joint property ownership are joint bank accounts and jointly owned real estate.

2. Beneficiary Designation: you name a person designated as the recipient of funds or other property under the terms of a contract. For example, you have an IRA, 401k, or a Life Insurance Policy. By contract, the beneficiary you designate will receive your funds at your death, thereby avoiding probate.

3. Trust: if you put your property into a trust, and the trust is drafted and funded properly (funded means that all of your assets that you want to pass are titled in the trust), your property will pass to your beneficiaries at your death according to the terms of the trust, avoiding probate.

4. Probate Court: if you have assets titled in your name at your death and you have not provided a mechanism to pass the assets to your beneficiaries (i.e. the above three ways to pass property at your death), the only mechanism left to pass your assets is the Probate Court.

What is Probate?

Probate refers to the method by which your estate is administered and processed through the legal system after you die. The probate process essentially transfers your estate in a certain manner (for example, your debts and taxes paid before your beneficiaries receive their inheritance). Think of the probate process as the “script” that guides the transfer of your estate according to the rulebook of the state you live in.

The probate process is needlessly time consuming, frustrating and expensive. It is also open to the public, meaning creditors, predators or anyone else will have complete access to all information about your estate. For the vast majority of people, the benefits of a Will or other estate planning tools far outweigh any initial costs.

Get Educated

To learn more, join us for one of our FREE LifeCare Planning Workshops. Our estate planning experts will have upcoming workshops in Ann Arbor, Bloomfield Hills, Brighton, Dearborn, Lansing, Livonia, Novi, and Trenton. We promise that time will fly, you’ll learn a lot, and have a little bit of fun. To sign up for a LifeCare Planning Workshop click here.

The post The “10 Most Gruesome Estate Planning Mistakes” series. Mistake #1: Dying Intestate appeared first on Michigan Estate Planning.

It is an investment in your future and a labor of love. You would not be selling insurance if you did not see it as being a calling you could dedicate yourself to wholeheartedly by helping people get the right kind of insurance coverage.

It makes sense to sit down before you get started and figure out how much money you want to earn. It’s part of your roadmap to success. As part of that calculation, work with figures that cover how much you intend to spend for each application you write. Do you have limits? Do you have preferences for the kinds of applications you write? Do you want to work in a particular niche? These questions form the backbone of your strategy for success in building your insurance business.

Make sure to separate your personal expenses out from your business expenses. Getting those two things intermingled is a recipe for disaster and the IRS frowns upon it. How do you keep your expenses separate? Easy. Have a dedicated credit card for the business and any business expense goes on it, not your personal credit card. It’s not that difficult to get used to distinguishing what is and what is not a legitimate business expense. When in doubt, ask colleagues what they consider to be business expenses. You learn as you grow.

Along with a business only credit card, make sure to also have a business only bank account. That is even more important when it comes to keeping track of your sales and expenses. It’s your monthly snapshot of the health of your insurance agency and its growth and shows if you are on track.

The third element you need is either an online bookkeeping program, like Inuit or Quick Books or do it the old fashion way. Whatever works. You just need a way to keep track of your income and expenses. If you don’t like the idea of doing your books online, talk to a brick and mortar accountant or bookkeeper. Just be sure to cross your T’s and dot your I’s when it comes to tracking your success.

One popular racket among scammers involves calling people on the phone, pretending to be from the Internal Revenue Service, and demanding immediate payment of taxes owed. They threaten jail time and often demand payment by a specific method. According to the IRS, at least 5,000 victims were cheated out of some $26 million since 2013 — an average of over $5,000 each.

You should know that the IRS virtually never calls taxpayers, and absolutely never demands immediate payment over the phone. They never demand a specific form of payment. And jail time for unpaid taxes is not common; it is a punishment usually reserved for people willfully avoiding large tax liabilities.

Criminals running more general scams often fraudulently obtain people’s credit reports. That way they can call about a debt you actually owe. Like those posing as IRS agents, these scammers will demand immediate payment via a specific method and threaten jail time or law enforcement involvement. They may be unusually harassing and rude.

Again, no legitimate debt collection agency is going to demand payment “today,” refuse to accept various forms of payment or threaten jail time. Another tell-tale sign is if the caller refuses to give a physical mailing address. If you call back and a live person immediately answers, or if you speak with the same individual each time you call, these are red flags. Real debt collection agencies have phone menus or receptionists and multiple agents, any of whom might work on your case.

Ignoring scare tactics and knowing how scams work can help protect you against scammers. For real problems with real debt, contact Osenton Law Office.

O. Reginald (“Reggie”) Osenton is the Owner and President of Osenton Law Office If you need a Brandon bankruptcy lawyer, attorney, call 813.654.5777 or visit http://www.brandonlawoffice.com.

Your business entity may be any one of the following: corporation, sole proprietorship, LLC or partnership. Take the time to get an Employer Identification Number from the IRS and make sure to set up a separate bank account.

Anything financial relating to your company must be run through your business bank account. Having the trappings of what you need to run a business in place helps you think like you are running a business and not just doing something you like as a hobby. Formalizing it with the paperwork makes you a real entity and you’re ready to get out there and sell insurance.

Lay the groundwork for success before you leap off a tall building and dive right in. If you have the foundation in place, success follows.

Benepath is the leading provider of exclusive group health insurance leads. To learn more, visit http://www.benepath.net or call 1-866-368-0377

The old idea of retirement planning being a “three-legged stool” still holds basically true, but it’s also a little more complicated than it used to be.

Individual retirement accounts, or IRAs, have been a valuable tool for retirement and estate planning for several decades. It has been a great way for people to save money for retirement with little or no taxes paid and grow with interest to provide a nice nest egg to live on later in life or to pass on to beneficiaries.
This comes about following a landmark Supreme Court case that did not get many headlines nationally but has wide ramifications.

No Asset Protection for Inherited IRAs

The Supremes ruled in the 2014 case, Clark v. Rameker, that an inherited IRA is not a “protected account” under federal bankruptcy laws. What this means is if you have an IRA that you inherited from a loved one who passed away and you file for bankruptcy protection, that account is not shielded, which means the account can be used to pay creditors and can be subject to liquidation by a bankruptcy court.
Think about that for a second, and take it to a different angle. Let’s say you leave an IRA to your child who is a bit of a spender. He or she is the type who would ask for money out of the IRA ad use it to buy a car, lots and lots of shoes (there was a big sale!) and to pay back taxes or cover a gambling debt. Was that how you expected the money to be used? Surely the plan was to give the IRA to be used for retirement income and not for paying back creditors or for frivolous spending.

Stand Alone Retirement Plan Trust

But if an inherited IRA is now not protected, what can you do? There are ways to protect that IRA, and they include creating a “see through” trust account that meets certain IRS criteria. In a trust, the inherited IRA not only can be protected from bankruptcy or other creditors, but it also can be protected from those spenders you have as children.
If you have an IRA account that you intend to pass down to the next generation, it is a good idea to visit with an estate-planning attorney who knows the ramifications of the Clark case and how it applies to federal regulations as well as Michigan state law regarding such accounts.  One of the best ways to pass IRA’s down to the next generation are with Stand Alone Retirement Plane Trusts.

This is your hard-earned money, and you have a right, a duty, and a responsibility to protect it from various threats so it can be used to its maximum potential. Your retirement account is a part of your legacy, and your legacy should be maintained by the next generation, or you should take control of it in your own way. Either way, proper estate planning now will keep your legacy intact for years to come, regardless of your children, grandchildren or their creditors.

The post A Threat to Your IRA Thanks to the Supreme Court appeared first on Estate Planning Lawyers | Elder Law Attorneys | Brighton | Novi | Livonia Elder Law Attorneys.

Having said that though, are most parents aware of this? The answer is quite simply a No. Do they have issues dealing with such a form? The answer once again is No. It is important to understand what this is about.

What does it do?

The IRS form 8332 is a form that is filled by the custodial parent of the child. The custodial parent can use this form to do the following things:

• Make sure to release the claim to exemption form of child/children to enable the non-custodial parent to claim a tax exemption of credit for the child.
• Revoke a previous release form that was filed for the claim to exemption of the child.

Does the Orange County marital settlement agreement/Judgment need to state that the custodial parent should release the child dependency and tax credit exemption?

Yes, your divorce agreement should have this agreed upon and stated specifically. This is important because:

• When the spouse or parent signs such an agreement that states the child tax dependency and exemption have been transferred over to you, it becomes legally binding.
• The order clearly specifies that the spouse/parent needs to execute the IRRS 8332 form.
• Inability to do so will mean you are able to claim exemption as well as reimbursement for further damages of the money that you lost as result of this disregard of the Orange County divorce agreement.

Why would a custodial parent agree on signing and filing out the IRS release of claims and exemption from?

While it is true that divorce tends to be an emotionally charged affair with each of the spouse holding some kind of bitterness about the other spouse, filing out such a form is not that hard to agree upon between the spouses. This is because the exemptions in this form are likely to have no real value to the parent who has the child’s custody. This is especially true in cases where the custodial spouse is dependent on the other spouse for spousal and child support.

Gerald A. Maggio is an experienced Orange County divorce and family law lawyer and family law attorney located in Irvine, California, serving the Orange County and Riverside areas. Mr. Maggio assists clients with legal issues including divorce, legal separation, divorce mediation, child custody, prenuptial agreements, stepparent adoptions, and other family law issues. Mr. Maggio has practiced law in California since 1999, and founded The Maggio Law Firm in 2005, focusing exclusively on divorce and family law matters.

If an employer does not offer a 401(k), there are other investment options, including the traditional IRA and the Roth IRA

Today, when it comes to providing a retirement plan for their employees, businesses large and small, have opted for a defined-contribution plan with choices that include a 401(k), IRAs and Roth IRAs; this, versus a ‘defined benefit,’ program, or more commonly referred to as a pension plan.

According to an interview on CNBC with the CEO of a major investment firm, the era of pension plans represented an almost “paternalistic” approach of making sure their workers would have a financially secure retirement.

But with the introduction of the 401(k) retirement plans back in 1980, employees have been able to squirrel away pre-tax dollars, as well as any employer contributions, in a number of funds through the sponsoring investment firm of the employer’s choosing.

Consequently, this retirement alternative has allowed employers to avoid the risks long associated with years of funding the traditional pension plan, a risk derived from the fact that Americans are simply living longer.

As investors scramble to improve their portfolios since the 2008 economic debacle, their investment decisions are impacted by their increased longevity. Not only are 6,000 of us turning 65 every day, but 13 percent are over the age of 65. What’s more, the average life expectancy for men is 78, and 80 for women.

Does the ‘law’ require employers to provide workers with a 401(k) ?

Employers are not legally bound to provide a sponsored 401(k). For workers fortunate enough to have this choice, they’ve come to realize that their plan was never meant to be the single source of income in their retirement years. Indeed, this self-funded retirement program is meant to complement the retiree’s Social Security and personal savings.

Just how much can they put into their plan? For 2015 an investor’s contribution limit is $18,000; that’s up from $17,500 in 2013 and 2014.

What are the ‘risks’ for employees?

Because the 401(k) is a voluntary program offered by employers, business owners have also managed to detach themselves from being accountable when it comes to fund management, or even educating employees about the basics of investing.

Alternatives to the 401(k).

If an employer does not offer this tax-deferred retirement option, the IRS says it’s okay to put money aside in other investment vehicles, including the traditional IRA and the Roth IRA.

IRA:  Workers can turn to the individual retirement account (IRA) for tax-deferred investing; again, like the 401(k), the investments are not taxed until they are withdrawn, but contribution limits are more restrictive than with the 401(k): $5,500 with a $1000 ‘catch up’ if you’re over 50.

Like the 401(k), investors are allowed to take an upfront deduction, thereby reducing the amount of their wages that are subject to taxation.

Roth IRA:  No upfront-deductions are allowed like they are with the 401(k) and IRA, but the distributions are tax-free. Also, although there are certain income restrictions before the plan can be allowed by the IRS, the contribution amounts are the same as the IRA.

Both the IRA and Roth IRA require investors to establish their plans through an investment firm, like a Vanguard or Fidelity, for example, who act as the legal custodian of the funds.

American Society of Pension Professionals and Actuaries: “The system is not perfect.”

“Nothing in the history of this country has promoted more savings by average Americans than the 401(k) plan, with total assets in excess of $4 trillion (plus over $5 trillion in IRAs, much of which is from 401(k) rollovers). Three-quarters of American families became investors first through their workplace retirement plan. It is hard to imagine where we would be without our nation’s private retirement system. The system is not perfect…” Forbes 4/24/2013

Contact us to discuss your estate planning needs, including your options for long-term care, power-of-attorney as well as guidance with veteran’s benefits.

The post The law does not require employers to provide workers with a 401(k), a defined-contribution retirement plan. appeared first on Estate Planning Lawyers | Elder Law Attorneys | Brighton | Novi | Livonia Elder Law Attorneys.

A continuing care retirement community is able to offer progressive levels of care as they become necessary.

In today’s uncertain economic times marked by roller-coaster markets and flat-line wages, leave it to a certain segment of Michigan seniors and retirees who are choosing to live in bigger homes instead of taking a more common route of downsizing during their retirement years.

In fact, according to a recent report by Merrill Lynch and Age Wave, 49% of retirees in their survey chose not to downsize in “their last move.” Moreover, 30% were electing to move into a much larger home. Such choices obviously belong to a retirement sector quite “confident with their investments.”

More importantly, the survey revealed that about 20% selected a larger home not only to accommodate family visits, but also to provide the space for families to live with them in the future—the survey indicates that 16% of the retirees responding actually had a boomerang child living with them.

Accompanying this ongoing trend is the notion that a larger home may actually provide better in-home care options; this, even though larger homes bring higher taxes, maintenance and even association fees.

Still, and while larger homes can make in-home care a more viable option, the increase interest in other choices, such as assisted living and even nursing home options continues unabated.

Staying in the home.

It may not be surprising that around 90% of seniors polled by AARP showed a preference for ‘aging in place, or staying in their home after the age of 65. Often, that might mean customizing rooms by adding ramps, or installing stairlifts, or even moving an upper bedroom to the first floor.

But when health conditions deteriorate for those ‘aging in place,’ seniors can still receive hospice care in their homes during those end-of-life stages—funded by Medicare and Medicaid services.

Is ‘assisted living’ covered by Medicare/Medicaid?

Of course, the home may not be a viable option, because of expense and minor health issues. As such seniors may favor an assisted living facility. Unfortunately, neither Medicare and Medicaid will pick up room-or-board costs.

However, these facilities accept seniors who may be at different ‘tiers’ of medical need, thereby affecting the resident’s monthly charges. Generally, the more ambulatory you are, the cheaper the overall costs.

By law, these facilities can only offer extra care up to a certain level; then, other options may have to be considered. But if you are fortunate to have long-term care insurance, the policy may provide some “in-home” help while you are in an assisted-living setting.

Continuing Care Retirement Facilities (CCRCs)

Generally, these facilities require a one-time ‘entry fee’, and then monthly payments that reflect the range of services and amenities offered. Ideally, as their ability to live independently decreases, seniors are able to receive progressive care at the CCRC—a viable solution to the universal question of how to avoid nursing home costs.

CCRCs are normally set up to  provide  around-the-clock care when needed. Of course, with this level of assistance comes higher monthly costs.

‘Assistance’ from your 401(k).

Congress tried to include long-term care (LTC) for all U.S. citizens in the Affordable Care Act (ACA), but it was axed. Instead, the hope is that the IRS will eventually allow us to use our 401(k) to at least pay for LTC premiums, thereby lessening the agency’s current definition of “hardship” cases.

IRS’s existing hardship withdrawal rules do provide for tax-free withdrawals to cover what is considered to be “significant medical expenses.” But it remains questionable that the hardship rules will change; this, owing to the potential decrease in tax revenues that could result.

To start the conversation about the importance of an overall estate plan, including the need for long-term health coverage, contact us today.

The post How to avoid nursing home costs: CCRCs may provide the progressive care needed. appeared first on Estate Planning Lawyers | Elder Law Attorneys | Brighton | Novi | Livonia Elder Law Attorneys.

by Thomas D. Begley, Jr., Esquire, CELA

Generally, “all income from whatever source derived” is considered gross income by the Internal Revenue Service (“IRS”).[1] However, income received as a result of a personal physical injury or a physical sickness is not considered income by the IRS.[2] However, punitive damages are considered taxable income.[3] The determining factor with respect to the treatment of litigation recoveries is the “origin of the claim” test. “The origin and character of the claim upon which an expense was incurred rather than the potential consequence upon the fortunes of the taxpayer” is the controlling test.[4]

The physical injury generally involves a touching that produces physical harm. The physical harm must be observable bodily harm.[5] Therefore, it would appear that most settlements involving sexual abuse victims are subject to taxation, because there is seldom observable bodily harm. Emotional distress is not treated as a physical injury or physical sickness.[6] However, damages for emotional distress would be excludable from income, if they flowed from a related physical injury. However, in a Worker’s Comp claim, personal injuries are sufficient. Physical injuries are not required,[7] because they are not tort-based claims.

In certain cases, such as wrongful death cases, the proceeds paid in connection with the wrongful death claim are excluded from income, even for parties who suffer a non-physical injury because the wrongful death victim did suffer a physical injury. The derivative claims are entitled to the same income tax exclusion. The survival claim is excluded from income, because of the physical injury to the decedent; however, the survival claim is included in federal and New Jersey estate tax and New Jersey inheritance tax. Disability insurance payments are taxable if the premiums for the disability insurance were paid by the employer, but are excluded from tax if the premiums were paid by the employee. Generally, payments for defamation are taxable income, unless there is a physical injury or physical sickness from which the defamation flowed.[8]

[1] I.R.C. §61.

[2] I.R.C. §104.

[3] I.R.C. §104, O’Gilvie v. United States, 519 U.S.C. 79 (1996).

[4] The United States v. Gilmore, 83 S. Ct. 623 (1963).

[5] P.L.R. 20041022.

[6] I.R.C. §104(a)(5).

[7] I.R.C. §104(a)(1).

[8] Anderson v. Commission, T.C. Memo 2003-168 aff’d 194 Fed. App.’s 47 (9^th Cir. 2004).

By Tom Breedlove, Director, Care.com HomePay

As the April 15^th tax filing deadline gets closer, those who have put off their taxes until the last minute – and there are a lot of us – are apt to forgetting minor details that can impact our returns. In the household employment world, two commonly overlooked tax-time items for New York families are the federal and state dependent care tax breaks.

To qualify for these, both spouses must either be working or a full-time student and have expenses related to the care of someone they can claim as a dependent. For the federal tax break, families should use IRS Form 2441. They may itemize up to $3,000 for 1 dependent and $6,000 for 2 or more dependents. Most families will receive a 20% tax credit on these expenses, saving up to $600 if they have 1 dependent and up to $1,200 if they have 2 or more dependents. According to 2012 data from the IRS, approximately 420,000 New York families took advantage of this credit and saved an average of just under $600.

The New York state tax credit for dependent care is very similar to federal tax credit. Families can use Form IT-216 and claim the same expenses they reported on IRS Form 2441. The state tax credit for most families will be 20% of the credit they receive from the IRS – meaning they can save up to $120 if they have 1 dependent and $240 if they have 2 or more dependents. It seems like a small amount, but every little bit helps.

Please keep in mind that these tax breaks assume the family is paying their caregiver legally. The IRS and the state of New York only reward those who put forth the effort to do things the right way. The tax breaks exist to help offset the cost of paying employment taxes, which means paying the caregiver “on the books” isn’t really as costly as many people think.

Learn more about our services by visiting www.littmankrooks.com.

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The IRS made its timely announcement on October 30, just prior to the heavy shopping season of Thanksgiving and Christmas. The estate tax exemption — the amount a person can leave to heirs without being assessed a federal estate tax — will rise to $5.43 million per person in 2015, which is up from $5.34 million for this year. (1)

The IRS announced no change to the gift tax exclusion amount, which will remain at $14,000 for 2015. Cumulatively, all gift tax exclusions count against the lifetime estate tax exemption amount. However, it is important to remember that spouses wishing to leave as much in tax-free assets to their heirs as possible are each entitled to their own exemption. Thus, a couple will be able to bequeath $10.86 million tax-free in 2015, less the amount of any prior lifetime gifts. (2)

It is also important to remember that a person can give away gifts valued at $14,000 to more than one individual, and spouses can each give up to $14,000 to the same individual in the same year. And should a person wish to avoid the gift tax limit altogether, he or she can make a payment directly to a provider. This tactic is especially useful if, for example, a parent wishes to help an adult child with medical or housing expenses or with the purchase of a new automobile. (3)

Another rule that has not changed with respect to the estate and gift tax exclusions is that any gifts or assets bequeathed from a so-called family limited partnership are discounted in valuation for lack of marketability, and thus the gift tax and estate tax exclusions are maximized for those assets that are transferred through an FLP.

An experienced estate-planning attorney can discuss the advantages of an FLP with a person and establish such an asset-protection vehicle for them, as well as review and assist in the creation of other estate-planning options.

Contact an estate planning lawyer with the McDevitt Law Office of call 1-571-223-7642.

Social Security and the Internal Revenue Service (IRS) have released cost-of-living numbers for 2015. They are as follows:

Social Security

• For 2015 there is a 1.7% COLA increase for Social Security benefits.[1]
• The Maximum Social Security benefit for a single individual retiring at full retirement age[2]   $2,663

• Supplemental Security Income (SSI) – Single[3] $733
• Supplemental Security Income (SSI) – Couple[4]$ 1,100
• Supplemental Security Income (SSI) – Essential Person[5] $367
• Maximum Annual SSI benefit – Single[6] $8,796
• Maximum Annual SSI benefit – Couple[7] $13,200
• Substantial Gainful Activity (SGA) – Disabled[8] $1,090
• SGA – Blind[9] $1,820
• Tax Rate Employer and Employee calculated separately[10] 65%

(includes OASDI and Medicare)

Add an additional .09% for individuals earning more than $200,000 or married couples earning more than $250,000

• Tax Rate Self Employed[11] 30%
• Trial Work Period[12] $780
• Maximum Social Security Wage Base[13] $118,500
• Quarter of Coverage[14] $1,220

IRS

• Annual Gift Tax Exclusion^[15] $14,000
• Gifts to Non-Citizen Spouse^[16] $147,000
• Income Level/Maximum Tax Estates and Trust^[17] $12,300
• Income Level/Maximum Single Individual Income Tax^[18] $413,200
• Federal Estate Tax Exemption^[19] $5,430,000
• Personal Exemption^[20] $4,000
• FICA Wage Threshold^[21] Domestic Workers $1,900
• FUTA Wage Base^[22] $7,000
• Maximum IRA Contribution^[23] $5,500
• “Catchup” IRA Contribution^[24] $1,000
• Applicable Allowable AGI Limit Roth IRA Single Taxpayer^[25] $116,000 – $131,000

• Applicable Allowable AGI Limit Roth IRA Married Taxpayer Filing Jointly^[26]   $183,000 – $193,000

• Medicare Tax on Earned Incomes over $200,000 – Single; over $250,000 – Married^[27]                                                                                          0.9%

• Medicare Tax on Unearned Incomes over $200,000 – Single; over $250,000 – Married^[28]   3.8%

[1] 79 Fed. Reg. 64455 (Oct. 29, 2014).

[2] 2015 Social Security Changes, www.socialsecurity.gov.

[3] 79 Fed. Reg. 64456 (Oct. 29, 2014).

[4] 79 Fed. Reg. 64456 (Oct. 29, 2014).

[5] 79 Fed. Reg. 64456 (Oct. 29, 2014).

[6] 79 Fed. Reg. 64457 (Oct. 29, 2014).

[7] 79 Fed. Reg. 64457 (Oct. 29, 2014).

[8] 79 Fed. Reg. 64456 (Oct. 29, 2014).

[9] 79 Fed. Reg. 64456 (Oct. 29, 2014).

[10] 2015 Social Security Changes, www.socialsecurity.gov.

[11] 2015 Social Security Changes, www.socialsecurity.gov.

[12] 79 Fed. Reg. 64460 (Oct. 29, 2014).

[13] 79 Fed. Reg. 64456 (Oct. 29, 2014).

[14] 79 Fed. Reg. 64456 (Oct. 29, 2014).

[15] I.R.C. §2503; Rev. Proc. 2014-61(3)(.35)(1).

[16] I.R.C. §2523; Rev. Proc. 2014-61(3)(.35)(2).

[17] I.R.C. §1(e); Rev. Proc. 2014-61(3)(.01) Table 5 Section 1(e).

[18] I.R.C. §1(c); Rev. Proc. 2014-61(3)(.01) Table 3 Section 1(c).

[19] I.R.C. §2010; Rev. Proc. 2014-61(3)(.33).

[20] I.R.C. §151; Rev. Proc. 2014-61(3)(.24).

[21] 78 Fed. Reg. 66413 (Nov. 5, 2013).

[22] IRC § 3306(b)(1).

[23] IRC § 219(b)(5)(A);IR-2013-86 (Oct. 31, 2013).

[24] IRC § 219(b)(5)(B); IR-2013-86 (Oct. 31, 2013).

[25] IR-2014-99 (Oct. 23, 2014).

[26] IR-2014-99 (Oct. 23, 2014).

[27] IRC § 3101(b).

[28] IRC § 1411.

Many people assume that if an organization has been granted 501(c)(3) status by the IRS, it went through a stringent application and review process and must therefore be legitimate.  However, the truth is that there is minimal oversight of the process of creating a non-profit organization.  In fact, the IRS recently simplified the application for 501(c)(3) tax exemption from 12 pages (plus schedules) down to only 3 pages.

 With almost no ongoing oversight, many of these groups use only a very small portion of donation money to fund products and services for veterans.  Worse still, there are fraudulent organizations that are used only to line the pockets of their creators.

 For example, the United States Navy Veterans Association (USNVA) was a registered 501(c)(3) charity.  It had many markings of a legitimate non-profit – a quality website, supposedly in operation since 1927 and dozens of purported chapters across the country with thousands of members nationwide.  In reality, USNVA was run by one man out of his duplex in Florida.  This sham charity bilked donors out of nearly $100 million over a seven-year period.  The ringleader was arrested in 2012 and sentenced to 28 years in prison and $6 million in fines, but sadly most of these donations will never be recovered.

 Fortunately, there are resources available to assist potential donors in verifying the legitimacy of a charity before donating.  First off, the charity’s website can provide a first step – most legitimate charities post their financial statements and annual reports on their website so that the public may view them.  Additionally, www.guidestar.org is a non-profit that provides detailed information about 501(c)(3) registered charities.  Further, legitimate charities should be completely transparent.  If an organization is not forthcoming about providing financial/audit statements, copies of their conflict of interest policy, or information about the board of directors and employees, there is cause for concern.

If you have questions about the authenticity of a veteran charity, or believe that you have been taken advantage of by a fraudulent charity, contact the experienced attorneys at Fausone Bohn, LLP.  We can provide you the sound legal advice that you need.  You can reach us at (248) 380-0000 or online at www.fb-firm.com.

The post Veteran Charities – Not All Exist to Benefit Veterans first appeared on SEONewsWire.net.]]> http://www.seonewswire.net/2014/11/michigan-retirement-plan-trust-explained/ Mon, 10 Nov 2014 03:01:31 +0000 http://www.seonewswire.net/2014/11/michigan-retirement-plan-trust-explained/ A Michigan Retirement Plan Trust is a specially designed, cutting edge estate planning tool, that may be used as the beneficiary of an IRA or other type of qualified account.  It’s a form of stand-alone trust, separate from a revocable living…

A Michigan Retirement Plan Trust is a specially designed, cutting edge estate planning tool, that may be used as the beneficiary of an IRA or other type of qualified account.  It’s a form of stand-alone trust, separate from a revocable living trust.  The Retirement Plan Trust (RPT) allows you to maximize income tax deferral and wealth accumulation while also building in an unprecedented level of asset protection.

For Michigan clients who have retirement accounts greater than $150,000, a Retirement Plan Trust makes a lot of sense for a variety of reasons.

Forced Stretch Out of Required Minimum Distributions (RMDs)

Thanks to the 2004, Private Letter Ruling, through a Retirement Plan Trust, your loved ones can now “stretch out” their taxable required minimum distributions (RMDs) over their lifetime, while maintaining all the benefits of a trust if a Retirement Plan Trust is named as a beneficiary.  Too often in the past, beneficiaries were named outright to receive the IRAs or 401(k)s and they ended up blowing the stretch out, by taking a lump sum distribution.

Not anymore.  The Retirement Plan Trust provides protection and can force the stretch out.

What is a Retirement Plan Trust?

A Retirement Plan Trust is a stand-alone trust created solely to hold retirement accounts.  It is a form of revocable trust, but separate from your typical revocable living trust.  It is established during the lifetime of the IRA holder and is named as a beneficiary of the IRA (typically after a spouse).

The Retirement Plan Trust is relatively new, so don’t be upset if your financial planner, CPA, or even your estate planning attorney is unfamiliar with it.  It is new as of 2004, when there was a private letter ruling from the IRS that allowed it.

How Does the Retirement Plan Trust Work?

First, the IRA owner must set up the Retirement Plan Trust during their lifetime and it must meet the strict IRS requirements.  Typically, it is set up as revocable trust, meaning it can be changed at any time.  The trust will name beneficiaries, the younger the more powerful the stretch out provisions become.

From there, new beneficiary designations must be completed, naming the Retirement Plan Trust as beneficiary.

Then at the owner’s death, the IRA account is retitled and the RMDs pour into the Retirement Plan Trust and are either paid out or held per it’s terms.  The beneficiaries of the account then receive the benefit of both the stretch out as well as the asset protection.

Want to Learn More about the Retirement Plan Trust?

Then request our free Retirement Plan Trust Guide.

 

The post Michigan Retirement Plan Trust Explained appeared first on Estate Planning Lawyers | Elder Law Attorneys | Brighton | Novi | Livonia Elder Law Attorneys.

The post Michigan Retirement Plan Trust Explained first appeared on SEONewsWire.net.]]>

This is the first of a two-part article on tax and public benefits planning for same-sex couples.  In the 2013 case of United States v. Windsor,[1] the Supreme Court of the United States declared §3 of the Defense of Marriage Act (DOMA) unconstitutional.  Section 3 was drafted to prohibit the payment of federal benefits to same-sex married couples.  It should be noted, however, that Windsor did not apply to §2 of DOMA, which prohibits any state from being forced to recognize the actions of another state on the issue of same-sex marriage.  As a result, there is importance attached to the state in which the marriage was celebrated and also to the state in which the couple is domiciled.  As of the writing of this article, the following states recognize same-sex marriages:  California, Connecticut, Delaware, District of Columbia, Hawaii, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New Jersey, New York, Rhode Island, Vermont, and Washington.  For purposes of federal taxation, federal law applies and the IRS has not taken a state-by-state approach to the issue of validity of the marriage.[2]  For IRS purposes, if the marriage was celebrated in a state recognizing same-sex marriage, the IRS will deem the marriage to be valid regardless of the state in which the couple resides.  If a couple marries in New Jersey and remains domiciled in New Jersey, New Jersey would be the state of celebration and also the state of domicile, and the IRS would recognize the marriage for federal income, estate, and gift tax purposes.  If the couple married in New Jersey but moved to Pennsylvania, a state that does not recognize same-sex marriages, the IRS takes the position that federal law trumps state law and the same-sex couple would be subject to the benefits and burdens of any married couple with respect to federal income, estate, and gift tax purposes.

For income tax purposes, some of the issues involved are:

• Joint Returns.  Same-sex couples, regardless of their domicile, will be permitted to file income tax returns jointly so long as the marriage was celebrated in a state that recognizes same-sex marriages.  If the same-sex couple moves from New Jersey to Pennsylvania, Pennsylvania would not be required to recognize the marriage and would require that each member of the couple file separate state income tax returns.[3]  For federal income tax purposes, the married couple will be subject to the “marriage penalty” (i.e., the increased taxation to which the married couple may be subject by virtue of their combined incomes on their Federal 1040).  The same-sex couple will also be able to enjoy the many benefits of married filing jointly such as the higher likelihood of increased itemized deductions if the couple incurs significant medical expenses.

• Sale of a Principal Residence.  Capital gains of up to $250,000 per person or $500,000 for a married couple are excluded from the calculation of gain on the sale of a primary residence so long as the taxpayer used the home as his or her primary residence for two out of the five years preceding the date of the sale.[4]  However, the creditor protection associated with tenancy by the entirety planning should be available for same-sex couples domiciled in New Jersey, but would not be available for same-sex couples domiciled in states that do not recognize same-sex marriages.  Real estate law is a state law function.

• Alimony and Child Support.  Alimony and child support will become an issue with respect to same-sex couples.  In the heterosexual community, 50% of all marriages end in divorce.  There is no reason to believe that the same ratio would not apply in the same-sex community.  If a same-sex couple becomes divorced, there may be an obligation for spousal support through alimony or for child support.  In the event that alimony and child support are subject to federal income tax laws, they will be treated the same as any other married couple no matter where the couple is domiciled for federal income tax purposes.

• Amend Prior Returns. It may be possible for same-sex couples to amend prior returns.  If a couple celebrated a marriage in a state recognizing same-sex marriage they may be entitled to a refund had they filed as married filing jointly.  It is suggested that same-sex married couples consult with their tax preparers.

• Federal Estate Tax.  Windsor was a federal estate tax case.  Under both Windsor and the IRS Notice, for federal estate tax purposes the marriage will be recognized regardless of the state of domicile.  The portability of the unused exemption for the first-to-die spouse will be available.  Planning to achieve a basis adjustment on death will be possible.

• Federal Gift Tax.  For gift tax purposes, joint gifting will now permit same-sex couples to use the annual exclusion more aggressively.  For 2014, the annual exclusion is $14,000.  If the other spouse joins in the gift, this can be increased to $28,000 per person per year.

In conclusion, Windsor will have a positive effect on federal income, estate, and gift tax planning for same-sex married couples.

The government permits an annual exclusion amount, currently set at $14,000 per year. That sum is not subject to either reporting or taxation. And that figure can effectively be doubled through the procedure known as gift-splitting, whereby each spouse exercises the annual exclusion and sends a combined $28,000 tax-free gift to a child.

The gift-splitting provision can be especially useful when a couple wants to help their married child with a big-ticket item (such as the down payment for a house). If the gifts are properly timed, a respectable sum can be transferred tax-free in short order.

For example, a couple using the gift-splitting provision could give $28,000 to a married child and another $28,0000 to that child’s spouse during Christmas week. Then, they would repeat the process during the following New Year’s week. Within the two holiday weeks, the younger couple would have amassed $112,000 tax free. If parents take this route, they better be sure they like their son-in-law!

The annual exclusion gift is not limited to use for parent-to-child transfers. Indeed, anyone is entitled to give anyone else — relatives, friends or even total strangers — the annual exclusion gift. In addition, the annual exclusion gift is not considered part of a person’s $5.3 million exemption from the estate tax.

Yearly gifts larger than $14,000 are not likely to result in gift tax exposure, but they must be reported to the IRS.

While most gifts take the form of cash, neither the gift nor the annual exclusion must be in that form. Gift-givers can transfer a massive variety of assets, including artwork, boats, businesses, family heirlooms, homes, stocks and bonds. When a gift is anything other than cash, the government requires appraisal. The assets are best held in a revocable trust in which ownership stakes are recorded and maintained.

Whenever asset transfers are contemplated, the advice of an experienced estate-planning attorney is simply essential. There are smart, protective ways to give gifts. Too often, mistakes and unpleasant surprises result from more casual approaches.

Pioneers of Elder Law – For over 30 years, Gilfix & La Poll Associates LLP has innovated creative legal solutions to help you manage and plan the future of your estate.
To contact an estate planning lawyer visit http://www.gilfix.com/ or call 800.244.9424.

There are two different IRS limits that affect how much an individual can give to another without the imposition of a gift tax: an annual exclusion and a lifetime exclusion. In 2014, the annual limit is not changing, but the lifetime limit is increasing.

During 2014, one may give up to $14,000 to each recipient before having to file a gift tax return, the same limit as in 2013. Spouses can double the size of a gift by combining their exclusions. This is a per-person exclusion, so a married couple could give $28,000 to an adult child, another $28,000 to the adult child’s spouse and another $28,000 to each of their grandchildren.

One may still make a payment for someone, including for tuition or medical expenses, without the amount counting as a gift.

Giving more than the annual limit to an individual does not necessarily mean that one will owe a gift tax. Any amount above the annual exclusion counts toward the lifetime exclusion, which has increased to $5.34 million as of 2014 (from $5.25 million in 2013). Any gifts above that amount during one’s lifetime may be subject to a gift tax of up to 40 percent.

Learn more from an estate planning attorney at Littman Krooks by visiting http://www.elderlawnewyork.com/.

There are two different IRS limits that affect how much an individual can give to another without a gift tax being imposed: an annual exclusion and a lifetime exclusion. In 2014, the annual limit is not changing, while the lifetime limit is increasing.

During 2014, one may give up to $14,000 to each recipient before having to file a gift tax return, the same limit as in 2013. Spouses can double the size of a gift by combining their exclusions. This is a per-person exclusion, so a married couple could give $28,000 to an adult child, another $28,000 to the adult child’s spouse, and another $28,000 to each of their grandchildren.

One may still make a payment for someone, for instance tuition or medical expenses, without the amount counting as a gift.

Giving more than the annual limit to an individual does not necessarily mean that one will owe a gift tax. Any amount above the annual exclusion counts toward the lifetime exclusion, which has increased to $5.34 million as of 2014, from $5.25 million in 2013. Any gifts above that amount during one’s lifetime may be subject to a gift tax of up to 40 percent.

The post IRS Raises Lifetime Limit For Tax-Free Gifts first appeared on SEONewsWire.net.]]> http://www.seonewswire.net/2013/10/same-sex-spousal-benefits/ Thu, 17 Oct 2013 09:00:20 +0000 http://www.seonewswire.net/2013/10/same-sex-spousal-benefits/   The White House has announced that the same-sex spouses of military vets are now granted spousal benefits. The Supreme Court’s rejection of the Defense of Marriage Act (DOMA) means that the spouses of vets can collect federal benefits, regardless…

One type of scam takes advantage of the public’s confusion over changes in health insurance. Someone perpetrating this type of fraud may call a senior and say that new Medicare cards are being issued and they just need to verify some personal information. A similar trick is for callers to say they are IRS agents. The goal is to obtain personal details such as Social Security numbers, which can be used to set up credit cards or loans in victims’ names, or claim their income tax refunds.

Seniors may be targeted in part because they are more likely to answer the phone, because they may have retirement savings or because they are perceived as more trusting. However, scammers will defraud anyone they can. The federal government reported that almost 83,000 complaints of this type of imposter scam were received in 2012, an increase of 12 percent from 2011.

Other criminals target electronic Social Security benefits payments. More than $28 million in benefits was stolen from October 2011 to June 2013. The thieves begin by obtaining a victim’s personal information, such as Social Security number and bank account information, which is often done through the same type of fraudulent telephone call, with the scammers posing as government officials. The fraudsters then contact the Social Security Administration or the victim’s bank pretending to be the victim and have the electronic benefits payments transferred to an account that they control.

The U.S. Senate Special Committee on Aging recently convened a panel of advocates and victims to learn what action can be taken to prevent this type of crime. Once the benefits have been stolen, getting them repaid can be difficult if not impossible.

On an individual level, seniors and others should take care to avoid being taken advantage of. First of all, never give out personal information such as a Social Security number to an unsolicited caller over the phone. Official communication from government agencies is by letter delivered by the U.S. Postal Service. Never wire money to an unknown person or agree to accept debit or credit cards in another person’s name. If you receive a call from a person pretending to be a Social Security official, call the Social Security Fraud Hotline at 1-800-269-0271.

The Hale Law Firm believe the right solution to your estate planning, elder law, or probate needs can be identified in a free initial consultation with one of our attorneys and counselors at law. To learn more or to contact a Dallas estate planning attorney, visit http://www.thehalelawfirm.com/ or call 972.351.0000

There are two sections of a law that lays out benefits for U.S. veterans that the Obama administration will no longer enforce. In a rare decisions to stop enforcing enforcing federal laws, the President has directed the Executive Branch to cease enforcement of sections 101(3) and 1010(31) Title 38.

(Related: Advance Care Planning Lessons for Oakland County Residents)

The sections define marriage as between a man and woman and deny legally married same-sex couple Veterans Affairs benefits like health care and disability payments. House Speaker John Boehner, a Republican from Ohio, said the decision to allow same-sex couples to apply for benefits was based on a June Supreme Court decision that shot down the Defense of Marriage Act.

“Although the Supreme Court did not directly address the constitutionality of the Title 38 provisions in Windsor, the reasoning of the opinion strongly supports the conclusion that those provisions are unconstitutional under the Fifth Amendment,” Holder wrote.

(Related: Majority of Hospitals Fail a Medicare Test)

The Obama administration continues to execute moves in compliance with the United States v. Windsor ruling. Earlier this year, the IRS made it known that it would treat all married couples, both same-sex and straight, the same. Prior to that, the Pentagon extended full benefits to same-sex spouses of service members and civilian employees. A federal judge ruled that to denying them those benefits, is unconstitutional.

Christopher J. Berry is an elder law attorney Dedicated to helping seniors, veterans and their families navigate the long-term care maze. To learn more visit http://www.theeldercarefirm.com/ or call 248.481.4000

Click here for the brochure, and remember, if you are making your reservations, be sure to block out the 2 days before the convention (October 20 and 21) for the NBAA Tax Conference.

I look forward to seeing you there.

Regards. SHL.

Filing bankruptcy does not stop the IRS from collecting tax refunds before the process is started. What many people do not realize is that if the bankruptcy trustee is the one behind the seizure of a tax refund, the refund will not be forthcoming. It will be used to pay creditors. On the other hand, if the bankruptcy trustee did not seize the tax refund, the seizure can be corrected.

When it comes to bankruptcy, the courts view the IRS as a creditor, just like any other bank, credit institution, or company that is owed money. If the IRS moves to seize someone’s tax refund, they must advise the individual of their actions, and include the reason for doing so. For example, if the reason is to pay back taxes written off in bankruptcy, contact your lawyer, the bankruptcy trustee and the IRS promptly. You will need to provide proof your bankruptcy has been discharged to correct this error and get your tax refund back.

Why call the trustee? They have a great deal of latitude to file motions to seize funds and redirect the money to pay creditors. Letting the trustee know the IRS seized a tax refund may trigger the legal process to have that money returned. Provided the trustee is able to demonstrate the IRS acted illegally to seize the refund in the first place, the motion should result in the money being returned.

There are instances in which you may owe more in taxes than you expected. If you file bankruptcy, the IRS might audit your previous tax returns, to see if you made any extra cash. They could then seize the refund to pay for the extra owing they found in your records. This extra money is usually not written off in bankruptcy, as you did not know the debt existed. Despite the fact this kind of gold mining in a debtor’s past tax records is unsettling and seems underhanded, it is legal.

In both Chapter 7 and Chapter 13 bankruptcy proceedings, bankruptcy trustees may file motions to seize tax refunds to pay creditors and back taxes owed the IRS. In a Chapter 7 filing, the liquidation of assets takes the tax refund and uses it to pay off the maximum amount of the debt. The rest is written off. In a Chapter 13 filing, the taxes are seized to roll them into an individual’s court-approved payment plan.
Kevin Ahrenholz is an Iowa bankruptcy lawyer and Iowa bankruptcy attorney. To contact him, visit http://www.iowachapter7.com or call 1.877.888.1766.

If you are filing a Chapter 7 bankruptcy, which is by far the most common bankruptcy declared in the U.S., federal income taxes may be discharged only if the taxes in question were due to be filed more than three (3) years ago, and were actually filed more than two (2) years ago, and were assessed on previous returns at least 240 days prior to seeking bankruptcy protection, and you did not file a fraudulent tax return or try to avoid paying taxes. The issue is that if you are seen to have made an effort to pay the taxes, but just did not have enough funds at your disposal, you may be able to discharge your federal taxes.

The courts may consider discharging a tax debt if the IRS has not already filed a tax lien on your assets. If they have, the lien will then carry over through the bankruptcy, meaning the IRS may still seize your property to collect on your debt. By and large, debtors may find this process more beneficial for them, instead of agreeing to what the IRS refers to as an “offer in compromise.” That would, if the debtor accepts it, mean they must make payments for a long time to come.

Federal tax liens are a tricky area, and you really need to understand how this process may work, by consulting with an Iowa bankruptcy lawyer. For instance, any federal lien filed against property prior to a bankruptcy, should only attach to the equity you have at the time the bankruptcy petition is filed.

Make certain before you file for bankruptcy protection that you are up-to-date on all of your tax returns and amendments before going to the 341 meeting. The fact is there are a large number of bankruptcy trustees who refuse to have a 341 hearing if you are missing tax returns for the last four years. If information is missing, the trustee will not know if you have non-dischargeable tax liability, which makes a difference in how your case is handled. In other words, be prepared before filing Chapter 7, and do it in partnership with an experienced Iowa bankruptcy lawyer.

Kevin Ahrenholz is an Iowa bankruptcy lawyer and Iowa bankruptcy attorney. To contact him, visit http://www.iowachapter7.com or call 1.877.888.1766.