The Internal Revenue Service (IRS) is increasing the amount taxpayers can deduct from their 2018 income as a result of buying long-term care insurance. Premiums for “qualified” long-term care insurance policies (see explanation below) are tax deductible to the extent that they, along with other unreimbursed medical expenses (including Medicare premiums), exceed 10 percent of the insured’s adjusted gross income. These premiums — what the policyholder pays the insurance company to keep the policy in force — are deductible for the taxpayer, his or her spouse and other dependents. (If you are self-employed, the tax-deductibility rules are a little different:…
David Wingate focuses his legal practice on finding asset protection and estate planning solutions to assist with the rising cost of long term care, in a nursing home, assisted living or at home. For more information please contact David at 301 663 9230.
The estate of pop music legend Michael Jackson owes $702 million in federal taxes and penalties, the Internal Revenue Service charged in U.S. Tax Court, accusing the estate of undervaluing some of the star's assets by hundreds of millions of dollars. The dollar amounts in dispute had not been previously disclosed in the court challenge that the Jackson estate filed in July to a bill from the IRS, the U.S. tax-collecting agency. At issue is the wide difference between what the estate said Jackson's legacy was worth versus what the IRS determined was its taxable value. An IRS spokesman and…
Here are some changes that appear relatively certain regardless of the action Congress takes: • The personal exemption will increase, reportedly to $3,900, in 2013 from $3,800 this year. • The maximum earnings subject to the Social Security tax will increase to $113,700 in 2013 from $110,100 in 2012. • Contributions to defined contribution plans will climb to a maximum $23,000 — $17,500 in regular contributions, up from $17,000 in 2012, plus $5,500 in catch-up contributions for those 50-plus, same as in 2012. • There will be a higher threshold on medical deductions, meaning it will be harder to qualify….
If you are caring for your mother or father, you may be able to claim your parent as a dependent on your income taxes. This would allow you to get an exemption ($3700 in 2011) for him or her. There are five tests to determine whether you can claim a parent as a dependent: The person you are claiming as a dependent must be related to you. This shouldn't be a problem if you are claiming a parent (in-laws are also allowed). Keep in mind, however, that foster parents do not count as a relative. To claim a foster parent,…
[Qualified Charitable Deductions] can be used to satisfy the RMD requirement for the IRA owner. This means that the IRA owner who doesn’t need his or her RMD for income can direct the distribution to the charity of his or her choice. If you would rather be a “voluntary philanthropist” versus an “involuntary philanthropist,” then you need to take action regarding the Qualified Charitable Deduction (QCD). In short, it’s a very powerful tool for both charity and reducing the tax liabilities associated with IRAs. However, on December 31, 2011, will we see it disappear? Jim Blankenship at Forbes has recently…
As the end of the year approaches, small business owners need to meet with accountants or tax preparers to review tax-planning strategies. “Every accountant is going to be sitting with their entrepreneur clients in the next few weeks to see what they can do, both on the business- and the personal-tax side, before the end of the calendar year,” says Michael Custer, a CPA and principal at Kaufman Rossin & Co. in Miami. The end of the year is quickly coming upon us and we haven’t even had our Thanksgiving turkey. Regardless, if you’re a small business owner, it means…
We’ve been glued to the news for the past few years trying to figure out what Congress is going to do next with the Estate Tax. More uncertainty has been the answer. Currently, we are living under an estate tax approach that is due to die on December 31, 2012. What follows is anybody’s guess. Now though, all eyes are on the upcoming presidential election. Accordingly, it is the new crop of candidates we’re watching, and there’s quite a fight brewing. Both Herman Cain and Rick Perry have come out with massive tax overhaul plans leaving many to wonder…
Across the board, valuation matters. Contemporaneous appraisals can be worth a lot. Retrospective appraisals — done after the fact and purporting to express value as of a date in the past — are never as persuasive as appraisals done contemporaneously. Oftentimes, proper planning is about the ability to offer proper proof. That’s my primary take-away lesson from the Ninth Circuit Court of Appeals and the case of Estate of Petter v. Commissioner, as assessed in a recent Forbes article. As many of you appreciate, when giving away assets it is important to get the most bang for your buck and…
Simply defined, a charitable remainder trust allows you to transfer cash or assets to the trust — from which you may receive income for life or, if you prefer, a fixed term not to exceed 20 years. The income can be paid over your life, your spouse’s life and even the lives of your children and grandchildren. (The guidelines are outlined in IRS code section 664.) In essence, the trust takes advantage of the tax-exempt status of the nonprofit it benefits. Sometimes, giving an asset to charity doesn’t mean you can no longer enjoy benefits from it. Yes, it’s true….
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