Is there a Federal or MA state gift tax exemption?

Additional Information:

My wife and I are working on our estate planning.  If there is a Federal or MA state gift tax exemption can you please explain it to me?  How do I give gifts to our grandchildren with this tax benefit?

ATTORNEY ANSWER:

There is only a Federal Gift Tax; Massachusetts does not impose a transfer tax on gifts.  Every U.S. Citizen has a cumulative lifetime gifting exemption that was $1,000,000 up until the passage of the recent tax law which increased it to $5,000,000 (but this may only be until the end of 2013).  Additionally, every person has an annual gift tax exclusion of $13,000.  Gifts do, however, have an effect on the Massachusetts Estate Tax.  Furthermore, gifts to grandchildren carry an additional problem at the Federal level due to the Generation-Skipping Transfer Tax.  A comprehensive review of a persons estate plan should be performed you are giving substantial gifts.

[Read more…]

New Statutory Notice Requirements for Trustees in Florida effective June 21, 2011

Effective June 21, 2011, Section 11 of Ch. 2011-183, Laws of Florida, amended s. 736.0813(1)(a) and (b) to require trustees to give notice to the qualified beneficiaries of the trust that “the fiduciary lawyer-client privilege in s. 90.5021 applies with respect to the trustee and any attorney employed by the trustee.

The Beliveau Law Group: Massachusetts | Florida | New Hampshire

The attorneys at The Beliveau Law Group provides legal services for estate planning (wills and trusts), Medicaid (planning and applications), probate (estate and trust administration), business law (formation and operation), real estate (residential and commercial), taxation (federal and state), and civil litigation (in connection with these practice areas). The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

Does MA statutory exemption cover property tax from previous years?

Additional Information:

My mother currently owes back property tax for a few years and just found out that she can apply for a statutory exemption. My question is does the statutory exemption only cover the current year or can it be applied to the past years that she owes taxes for?

ATTORNEY ANSWER:

In some cases a Property Tax exemption that was not taken in a prior year can be obtained in the current year.  Even if the taxes were not paid the exemption may still be available.

[Read more…]

New Statutory Notice Requrements for Personal Representatives (Notice of Administration) in Florida effective June 21, 2011

Section 8 of Ch. 2011-183, Laws of Florida, amended s. 733.212(2)(b), Fla. Stat., effective June 21, 2011, to require that notices of administration contain a statement that “the fiduciary lawyer-client privilege in s. 90.5021 applies with respect to the personal representative and any attorney employed by the personal representative.”  Until such time as the pre-printed forms have been updated, you may include the above statement in your existing notice form.

The Beliveau Law Group: Massachusetts | Florida | New Hampshire

The attorneys at The Beliveau Law Group provides legal services for estate planning (wills and trusts), Medicaid (planning and applications), probate (estate and trust administration), business law (formation and operation), real estate (residential and commercial), taxation (federal and state), and civil litigation (in connection with these practice areas). The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

SJC Decides Early Termination Agreement Disqualifies Employee for Unemployment Benefit Eligibility

In essence, unemployment benefits are available to persons whose jobs are terminated by the employer other than for cause (such as theft, absenteeism, etc.). One might think that an early termination agreement qualifies one for unemployment benefits. As illustrated by Connolly v. Director of Div. of Unemployment Assistance, SJC-10821, decided by the SJC on June 16, 2011, however, this is not necessarily true.

The touchstone of eligibility for unemployment benefits is whether the departure from employment is voluntary or involuntary. If the departure is voluntary, the employee is not entitled to unemployment benefits.

Depending upon the particular circumstances, an early retirement agreement may be voluntary or involuntary. For example, where the employee is going to lose his job anyway if he doesn’t sign the agreement, the termination is involuntary. In that case, it makes sense for the employee to sign the agreement. In addition, it makes sense to state in writing that the termination is involuntary and that the employer will not challenge the employee in seeking unemployment benefits.

When the employee is not in jeopardy of losing his job, as was the case in Connolly, the early termination agreement is voluntary. Consequently, Ms. Connolly was not eligible for benefits. If you ever find yourself in a similar situation, you probably want to sign the agreement only if you are prepared to go without unemployment benefits until you locate your next position.

Daniel Keleher, Esq.

The Beliveau Law Group: Massachusetts | Florida | New Hampshire

The attorneys at The Beliveau Law Group provides legal services for estate planning (wills and trusts), Medicaid (planning and applications), probate (estate and trust administration), business law (formation and operation), real estate (residential and commercial), taxation (federal and state), and civil litigation (in connection with these practice areas). The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

New report issued stating that Social Security Income (SSI) doesn’t even cover the cost of adequate shelter

A report entitled Priced Out: The Housing Crisis for People with Disabilities, just released by Technical Assistance Collaboration, Inc., shows that in 2010, the basic cost of shelter, represented by the average rent for a modest one bedroom apartment, was more than the entire income of an individual receiving Supplemental Security Income (SSI).

To read the entire report click Priced Out 2010 Report

The Beliveau Law Group: Massachusetts | Florida | New Hampshire

The attorneys at The Beliveau Law Group provides legal services for estate planning (wills and trusts), Medicaid (planning and applications), probate (estate and trust administration), business law (formation and operation), real estate (residential and commercial), taxation (federal and state), and civil litigation (in connection with these practice areas). The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

Court of Appeals for the District of Columbia issues ruling in Intermountain Insurance Service of Vail, LLC, Thomas A. Davies, TMP, (CA DC 6/21/2011) 107 AFTR 2d 2011-964

In Intermountain, the Court of Appeals for the District of Columbia has reversed the Tax Court and upheld the regulations for Code section 6501(d)(1)(A) that treat a basis overstatement as triggering the 6 year limitations period for when a taxpayer omits from gross income an amount that is greater than 25% of the amount of gross income stated in the return.

In upholding the regulations, the DC Court of Appeals joins the Court of Appeals for the Federal Circuit and the Courts of Appeals for the Seventh and Tenth Circuits.  The Fourth and Fifth Courts of Appeals have struck down the regulations.

Margaret L. Cross-Beliveau, Esq., LL.M.

The Beliveau Law Group: Massachusetts | Florida | New Hampshire

The attorneys at The Beliveau Law Group provides legal services for estate planning (wills and trusts), Medicaid (planning and applications), probate (estate and trust administration), business law (formation and operation), real estate (residential and commercial), taxation (federal and state), and civil litigation (in connection with these practice areas). The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

What should I be cautious about when designating a trust as my beneficiary?

Additional Information:

I have a traditional 401(k), ROTH 401(k), ROTH IRA, a checking account, a savings account, a health savings account, and a taxable brokerage account.  I’m in my early 30s and my total of all these accounts is less than $1 million.  I believe I can designate a beneficiary for all of these accounts to avoid probate. But I don’t want to grant these accounts to beneficiaries outright.  For one, most of the beneficiaries (my nieces and nephew) are minors.   If I grant the funds to their parents (my sisters) I’m concerned that I cannot prevent them from squandering it.  Plus I have other ideas for the funds too (making loans or investments in businesses started by the kids, etc.).  A trust makes sense.  What should I be wary of when naming a trust as a beneficiary as these types of accounts?

ATTORNEY ANSWER:

A trust is a wonderful vehicle to avoid probate and make sure that your beneficiaries will receive their inheritance in the time frame which you envision. Also, it preserves your privacy and the privacy of your beneficiaries because a trust that is created and funded during your lifetime will not have to be filed at the probate court which is open to public scrutiny. [Read more…]

CMS issues letter to states regarding same sax partners and Medicaid Liens, Transfers of Assets, and EState Recovery

The Centers for Medicare and Medicaid Services (CMS) issued a letter on June 10, 2011 to advise States on options regarding spousal and domestic partner protections related to liens, transfer of assets, and estate recovery.  According to the letter, States have the flexibility to permit same sex couples the same protections of assets and finances for which heterosexual couples qualify when one partner receives Medicaid for long-term services and supports.

Read letter here.

Margaret L. Cross-Beliveau, Esq., LL.M.

The Beliveau Law Group: Massachusetts | Florida | New Hampshire

The attorneys at The Beliveau Law Group provides legal services for estate planning (wills and trusts), Medicaid (planning and applications), probate (estate and trust administration), business law (formation and operation), real estate (residential and commercial), taxation (federal and state), and civil litigation (in connection with these practice areas). The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

Fourth Circuit upholds IRS regulation on time limit for equitable spousal relief requests

The Fourth Circuit reversed the Tax Court and joins with the Third and Seventh Circuits upholding Reg. 1.6015-5(b)(1), which proves that a spouse must request equitable relief under Code Sec. 6015(f) no later than two years from the first collection activity against the spouse in Jones v. Comm., (CA 4 6/13/2001) 107 AFTR 2d 2011-930

IRS Commissioner Doug Shulman has directed the IRS to review the two-year period regulation noting that the courts are at odds over the two-year rule.

Margaret L. Cross-Beliveau, Esq., LL.M.

The Beliveau Law Group: Massachusetts | Florida | New Hampshire

The attorneys at The Beliveau Law Group provides legal services for estate planning (wills and trusts), Medicaid (planning and applications), probate (estate and trust administration), business law (formation and operation), real estate (residential and commercial), taxation (federal and state), and civil litigation (in connection with these practice areas). The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

Wells Fargo stops making reverse mortgages

Wells Fargo has announced that it will no longer issue new reverse mortgages but will continue to service its current mortgages citing that home prices are too unpredictable.

Reuters article

Margaret L. Cross-Beliveau, Esq., LL.M.

The Beliveau Law Group: Massachusetts | Florida | New Hampshire

The attorneys at The Beliveau Law Group provides legal services for estate planning (wills and trusts), Medicaid (planning and applications), probate (estate and trust administration), business law (formation and operation), real estate (residential and commercial), taxation (federal and state), and civil litigation (in connection with these practice areas). The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

Amendment to conform cafeteria plans deadline is June 30, 2011

The Patient Protection and Affordable Care Act (PPACA) redefined “medical expenses” for cafeteria plans so that an expense incurred for an over the counter medicine or drug is a reimbursable medical expense only if the medicine or drug is a prescribed drug or insulin.  The PPACA became effective after December 31, 2010.  Any amendment to conform a cafeteria plan to the PPACA requirements that are adopted no later than June 30, 2011 may be made retroactive for expenses incurred after December 31, 2010, or after January 15, 2011 for health FSA and HRA debit card purchases.

Margaret L. Cross-Beliveau, Esq., LL.M.

The Beliveau Law Group: Massachusetts | Florida | New Hampshire

The attorneys at The Beliveau Law Group provides legal services for estate planning (wills and trusts), Medicaid (planning and applications), probate (estate and trust administration), business law (formation and operation), real estate (residential and commercial), taxation (federal and state), and civil litigation (in connection with these practice areas). The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

Can an agent with POA remove funds in an IRA account willed to a relative?

Additional Information:

My great grandmother had Alzheimer’s for several years, but was of sound mind when she made her will. She gave POA to a family member.

Her physical health began failing two months ago and she passed away last month.

Today I received a letter informing me that, in her will, she had left me a considerable sum in an IRA account. It also informed me that the relative with the POA had cleaned out the account just weeks before my great grandmother’s death.

Can he legally do this?

ATTORNEY ANSWER:

The short answer is yes, a power of attorney would have the power to access financial accounts for your great grandmother.  The important question is why the power of attorney tapped the IRA account. [Read more…]

What happens to the estate when there was no will (it was torn up per the widow)? Is there a way to find out what can be done?

Additional Information:

According to the widow a will did exist but was torn up & a new will was never done prior to the husbands death.  Isn’t is a law that you have to record or register a will in your county seat?   I have been told that before.  The widow is withholding information from the children he had from a prior marriage. She claims everything is hers ..is that true?

ATTORNEY ANSWER:

There is no law that a Will must be recorded before death.  A will may be revoked or amended at any time. A valid way to revoke a will is to destroy the original.  [Read more…]

Can someone who has left the company deplete all his pension funds from that company before he dies?

Additional Information:

My ex is an alcoholic and died one. I believed he knows he does not have long to live, when he was given the package to leave the company, was he allowed to take all his 401K and Pension Fund out before retiring age? He was 47 when he died and it was 2 years after he left the company. Is he entitled to take all the funds and spend since he knows he has not much time to live? He has a son who was a minor when he passed. We just realized that his Trustee had not informed his company about his death so I believed there might be some money left for his son now since he had not received any?

ATTORNEY ANSWER:

Once a person retires, the retiree can either roll the money out of the pension plan into an individual retirement account (IRA) or leave the money in the company’s plan, provided the company’s pension plan allows for that option. Your ex could have very easily spent all of the money from the pension plan. There is no prohibition from withdrawing the money early. He would have had to pay an early withdrawal penalty and taxes.

He also may have left the money in the pension plan.  The executor should contact the plan administrator.

Margaret L. Cross-Beliveau, Esq., LL.M.

Legal Disclaimer: Please note that this answer does not constitute legal advice, and should not be relied on since each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue. This answer does not create an attorney-client relationship. A lawyer experienced in the subject area and licensed to practice in the jurisdiction should be consulted for legal advice.

The Beliveau Law Group: Massachusetts | Florida | New Hampshire

The attorneys at The Beliveau Law Group provides legal services for estate planning (wills and trusts), Medicaid (planning and applications), probate (estate and trust administration), business law (formation and operation), real estate (residential and commercial), taxation (federal and state), and civil litigation (in connection with these practice areas). The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

How can you get a letter of testamentary or similar document when there is no probate?

Additional Information:

My mom and sister died within two days of each other. I am my mom’s representative and her will states that my sister or her estate was to receive a portion of her assets. My sister’s husband (the trustee) is willing to disclaim any proceeds but the insurance company wants a letter of testamentary to validate his right to do so. Since my sister’s estate was not probated what do I do now. My mom was in Colorado and my sister from California.

ATTORNEY ANSWER:

You cannot obtain what you are looking to do without opening a probate for your sister’s estate. Only the fiduciary of your sister’s estate can disclaim or accept the assets. A probate for you sister will have to be opened in either case.

Margaret L. Cross-Beliveau, Esq., LL.M.

Legal Disclaimer: Please note that this answer does not constitute legal advice, and should not be relied on since each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue. This answer does not create an attorney-client relationship. A lawyer experienced in the subject area and licensed to practice in the jurisdiction should be consulted for legal advice.

The Beliveau Law Group: Massachusetts | Florida | New Hampshire

The attorneys at The Beliveau Law Group provides legal services for estate planning (wills and trusts), Medicaid (planning and applications), probate (estate and trust administration), business law (formation and operation), real estate (residential and commercial), taxation (federal and state), and civil litigation (in connection with these practice areas). The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

How long can a bank hold assets after a person dies?

Additional Information:

Father died 1 year ago, will and small estate affidavit filed at that time.  Bank holds an equity line of credit on home,$70,000.  Estate worth less than $100,000.  Bank demands letter of office, obtained from probate.  Funds to pay for filing of probate by lawyer are in the bank ,we can not access the funds.  We can’t pay until we have access, we can’t access until we probate.  Catch 22, [Read more…]

Property received as inheritance to be used as a single family home rental and consequences on work disability income claim?

Additional Information:

I am receiving approximately $200,000 in inheritance with approx $100,000 in a personal residence. I would like to keep property as a rental income to help with my living expenses. Due to multiple sclerosis I have been on work disability for 15 years and need the disability income to live. How do I position my inheritance so that I do not put my disability income at risk? Is there some sort of trust that I can set up so I personally do not get income from the inheritance property?

ATTORNEY ANSWER:

There is only one type of trust available for a person receiving an inheritance who is currently also receiving SSI (social security income). It is a special needs trust with a payback provision to reimburse the state for money it paid for your care. Special needs trusts can also be called supplemental needs trusts. As this is a specialized trust under federal laws, it may also be referred to as a (d)(4)(A) trust. [Read more…]

Trustee issues

Additional Information:

We have my mother’s trust accounting & in the accounting there is major amount of money that can not be accounted for & he can not provide the proof of were the money went & for what it went for. Also 2 of her life insurance policies can not be accounted for either. We know they were pd to the trust because the insurance companies told us. But just like the money it just isn’t there we looked all threw the accounting and it is no where. So at this point we are questioning everything he has done. She lived in a Senior living home in her own apartment & when we started looking at her tax returns from before she passed we noticed his address on the returns for the 3 yrs she lived there Not the Senior living home. Can he do this or does it have to be the place where she actually lived ?

ATTORNEY ANSWER:

It appears that the Trustee of your mother’s trust has committed a breach of his fiduciary duty. You should contact an attorney immediately. The longer you wait, the bigger the change the lost money may stay lost. [Read more…]

June 10, 2011 MassHealth Medicaid Bed Hold Hearing & June 15, 2011 Written Testimony Deadline

MassHealth (Medicaid) is holding a public hearing on Friday, June 10, 2011 at 10:00AM to discuss the  termination of the 10-Day Bed Hold which will become effective July 8, 2011.
For further details: click here

Hearing Location:

China Trade Building; Daly Conference Room, 5th Floor; Two Boylston Street; Boston, MA

1) Get signatures in support of reinstating the Bed Hold (for signature form click 2011 Bed Hold Signature Sheet). Ask residents, friends, family, colleagues – anyone you know! Mail forms to MANHR by June 14th: MANHR, POB 560224, Medford, MA 02156.

2) Provide written or oral testimony. This is easier than it sounds — a short one or two paragraph response is fine, and please limit to one page.

a) Tell your story to put a face on Medicaid nursing home residents who will be hurt by not having the Bed Hold provision. With these stories, advocates can better demonstrate what Medicaid Bed Holds really mean to the well-being of nursing home residents.

b) Or simply voice your concerns/recommendations!

c) If you are giving oral testimony at the June 10th hearing, call 617-573-1770 by 5:00PM on Thursday, June 9th to notify Medicaid and get an early speaker’s slot at the hearing.

d) Letter or email comments will be accepted up until 5:00PM on June 15, 2011.

Mail To:

Executive Office of Health and Human Services

Office of Medicaid; One Ashburton Place, Room 1109; Boston, MA 02108

Email To:

masshealthpublicnotice@state.ma.us

Include sender’s name, mailing address, and organization or affiliation, if any.

HOW DO I FIND OUT IF SOMEONE HAD TWO WILLS BUT ONLY HAD ONE GIVEN TO THE COURT?

Additional Information:

I BELIEVE A FAMILY MEMBER HAD TWO WILLS AND I WAS IN ONE OF THEM, BUT THE ONE I WAS IN WAS NOT GIVEN TO THE COURTS AND EVERYTHING WAS LEFT TO THE OTHER PERSON.

ATTORNEY ANSWER:

The Last Will and Testament which was submitted to the Probate Court must be the last Will which was executed by the Testator. All prior Wills are revoked upon the signing of a new Will.  If you are the beneficiary of the last Will executed you must bring it to the attention of the Probate Court. [Read more…]

What are my rights for my mom estate? She passed away and there are 10 other slibing beside myself.

Additional Information:

What are my right since my mother pass away and there are 10 other siblings involved concerning our mother house and any money that she may have left behind after her final expense has been taking care of?

ATTORNEY ANSWER:

First, you need to determine which assets will need to be probated.  Any assets which were owned by your mother jointly with another person or had a beneficiary designation on them will pass directly to the joint owner or beneficiary. [Read more…]

Board of Assessors of Bridgewater vs. Bridgewater State University Foundation judgment rendered

Board of Assessor of Bridgewater vs. Bridgewater State University Foundation, No. 10-P-593, June 7, 2011, Ruling issued by Margaret L. Cross-Beliveau, Esq., LL.M.

The Massachusetts Supreme Court slip opinion was issued today in the Board of Assessor of Bridgewater vs. Bridgewater State University Foundation overturning the Appellate Tax Board’s decision to grant a tax exemption.  The Appellate Tax Board concluded that the Bridgewater State University Foundation (foundation) was entitled to the exemption because the foundation allowed the Bridgewater State University (university) to use and occupy the property in accordance with the foundation’s charitable purposes which constituted occupancy of the property by the foundation within the meaning of the statute. [Read more…]

If a living person has a life estate for a house can they sell the house?

Additional Information:

A man now only holds a life estate for the house he lives in and signed the deed over to his 2 daughters. Can he sell the house and avoid the capital gain fees because he has lived there for 2+ years out of the past 5 years. Or do his daughters have to sell the house and property and pay the capital gain?

ATTORNEY ANSWER:

Currently the father owns a life estate and the daughters own the remainder interest.  The family can sell the home together but no owner in this situation can force the sell of the entire property without a court order.

Once the family members determine they wish to sell the property, each member will be compensated based on the ownership interests.  The father’s interest is based on his life expectancy.  [Read more…]

Ascertainable Standard Explained

Additional Information:

According to an irrevocable trust, as a income beneficiary, I am allowed access to the principal of my trust share trust only under certain ascertainable standards–h/e/m/s. Also, the “trustee’s determination shall be conclusive.  The trustee “shall” take into consideration my “income or capital resources from any source.”  Does this mean that if I have a large amount of resources outside the trust that it will be hard for me to access the principal, if at all? And if I do get access, will there be taxes I have to pay?

ATTORNEY ANSWER:

Under the terms of the trust, the Trustee may only distribute principal to you for your health, education, maintenance and support. As the trust instruments uses the verb “shall”, you will need to prove that your income and capital resources are not meeting your needs.

[Read more…]

Center on Budget and Policy Priorities issues a Report entitled New Estate Tax Rules Should Expire After 2012

The Center on Budget and Policy Priorities’ report espouses the position that the estate tax rules should be let to expire after 2012.

Among the reasons list are that (1) the 2009 rules were more than generous since less that one quarter of one percent of the estates incurred and an estate tax and (2) with the step-up in basis a substantial amount of income would go untaxed as there would no longer be a capital gain.  For the full report, click here.

Margaret L. Cross-Beliveau, Esq., LL.M.

The Beliveau Law Group: Massachusetts | Florida | New Hampshire

The attorneys at The Beliveau Law Group provides legal services for estate planning (wills and trusts), Medicaid (planning and applications), probate (estate and trust administration), business law (formation and operation), real estate (residential and commercial), taxation (federal and state), and civil litigation (in connection with these practice areas). The law firm has offices and attorneys in Naples, Florida; Boca Raton, Florida; Danvers, Massachusetts; Waltham, Massachusetts; Quincy, Massachusetts; Manchester, New Hampshire and Salem, New Hampshire.

Penalties imposed for misclassifying employees as independent contractors

As reported in RIA Tax Newsstand:  Employers that misclassify employees as nonemployees or independent contractors will face substantial financial penalties as the result of not withholding income tax, failing to withhold and pay employment taxes, and failing to file the correct reports and returns with the IRS, Social Security Administration (SSA), and state government agencies.   The IRS penalty for unintentionally failing to withhold federal income tax is 1.5% of the wages paid.  This assessment is doubled to 3% if the employer failed to file an information return (Form 1099-MISC) for the worker with the IRS.  [Read more…]

IRS raises threshold for imposing tax liens

The IRS recently announced that it will adjust its use of tax liens to collect back taxes. A federal tax lien gives the IRS a claim on a delinquent taxpayer’s property for unpaid taxes.

This change means the IRS won’t use a tax lien unless at least $10,000 in back taxes is owed; the previous threshold had been $5,000.

In addition, the IRS says it will “withdraw” more tax liens once the back taxes have been paid. A withdrawal removes the lien from the taxpayer’s credit record, whereas a lien “release” as previously used left the lien on the credit record for at least seven years. Having a tax lien on a taxpayer’s credit record can knock 100 points off the individual’s credit score. The IRS estimates that the new rules mean that “tens of thousands of people won’t be burdened by liens.”

“Tax Freedom Day” came later in 2011

“Tax Freedom Day” fell on April 12 in 2011, three days later than in 2010. According to the Tax Foundation, all the money earned by taxpayers in the first 102 days of 2011 will go to pay their federal, state, and local taxes.

Another statistic from the Tax Foundation: If the government were to collect enough taxes to fund all spending for 2011 (with no deficit), Tax Freedom Day would be May 23, 2011. That’s 41 more days of work to provide the additional $1.48 trillion of revenue needed.

Tax tips for your vacation home

Planning to rent out your vacation getaway? When it comes to taking advantage of the tax benefits, timing is an important factor. Here are two points to remember.

  • The fourteen-day-or-ten-percent test. The IRS applies this test to determine if you use your vacation home as a personal residence. If you stay in the home more than 14 days or 10% of the total days it’s rented in a calendar year (whichever is greater), the general rule is you’re using it as your home.

Why does it matter? Because treating a vacation home as your personal residence affects your rental deductions. You’d include all the rent you receive as income on your tax return. But related expenses are generally limited to the amount of that income, meaning you can’t offset other income with a loss. Note that time spent in your vacation home by family members and certain others can count as personal use. [Read more…]

Tax breaks can help when disaster strikes

Recent events here and abroad are reminders that disasters can occur at any time – often with staggering human and financial costs. If you’re an unlucky victim of a disaster, you may receive help from insurance and federal disaster aid. But the tax code also offers some relief. You may be able to take an itemized deduction for part of your loss. In tax terms, it’s a “casualty loss,” and it can also apply to events such as a car crash, a house fire, or theft. Here are the basics.

  • The loss or damage must be due to an unexpected and sudden event. Losses due to slow deterioration over the years, such as rot, rust, or insect damage, don’t qualify.
  • Your tax deduction won’t equal your total loss. You must subtract any insurance or other reimbursement. Then you must also deduct $100 for each loss and 10% of your adjusted gross income. [Read more…]

Pour Over Will and Trust

Additional Information:

If the deceased had a pour over will filed in probate and any of this assets that wasn’t put into the trust, would pour over from his estate into the trust? If the estate has a independent representative administering the estate, if the administer doesn’t follow the pour over will and by pass the trust without pour over the estate to the trust. Is that illegal? A trust is business; would it have a EIN number?

ATTORNEY ANSWER:

A decedent’s will only governs those assets which pass through the probate estate. Certain assets such as IRAs and life insurance have listed beneficiaries who would inherit the property directly upon the decedent’s death and not be placed into the trust unless the beneficiary is the estate.

[Read more…]