Put midyear tax planning on your summer schedule

Don’t forget to put a little tax planning on your busy summer agenda. A midyear tax review is essential this year if you want to save tax dollars and time. To get together for a check of your 2012 tax situation, give us a call.

This newsletter provides business, financial, and tax information to clients and friends of our firm. This general information should not be acted upon without first determining its application to your specific situation. For further details on any article, please contact us.

Capital gains and losses: New twists for 2012

The end of the year is the traditional time for securities investors to “harvest” capital losses for federal income tax purposes. But there’s an added wrinkle in 2012: Due to pending tax law changes, you might try to reap more capital gains than losses. Thus, the usual strategy of harvesting losses could be turned upside down.

Here’s a recap of the basic rules. The capital gains and capital losses you realize during the year are “netted” under complex rules when you file your tax return. A gain or loss is treated as being long-term if you’ve held the securities for more than one year. For 2012, net long-term capital gain is taxed at a maximum tax rate of 15% (0% for investors in the regular 10% and 15% tax brackets). [Read more…]

Supreme Court upholds 2010 health care law

In a 5 to 4 decision, the Supreme Court ruled on June 28 that most of the Patient Protection and Affordable Care Act of 2010 was constitutional. Chief Justice John Roberts wrote the majority opinion that rejected the individual insurance mandate under the commerce clause of the Constitution, but upheld it as part of Congress’s power to tax.

In addition to upholding the individual insurance mandate, the ruling means that the tax changes included in the law were also upheld as constitutional. [Read more…]

Man could bring paternity claim against married woman

A man can sue to establish that he’s the father of a child born to a married woman with whom he had an affair, the Kentucky Supreme Court recently ruled.

The mother had stopped the affair when she learned that she was pregnant. Shortly after the child’s birth, genetic testing revealed that the man was actually the father.

When the man sued to establish his paternity, the mother argued that under state law, such a suit could be brought only if a child was born out of wedlock. [Read more…]

Mother couldn’t be forced to move to accommodate visitation

A mother who moved from Missouri to Ohio can’t be legally required to move back to Missouri in order to accommodate the father’s visitation rights, the Missouri Supreme Court recently decided.

The mother had given birth to a child out of wedlock. After the father’s paternity was established through biological testing, he filed a lawsuit seeking custody or visitation.

The mother had moved to Ohio while the case was pending. A judge awarded her custody, but ordered her to return to Missouri so it would be easier for the father to visit the child. [Read more…]

Custody order couldn’t favor one parent’s religion

There’s no question that a child custody order can take the parents’ religion – and the children’s religious education and observance – into account. But a recent case shows that a custody order that goes too far in favor of one parent’s religion might not be okay.

In this case, Howard Rosenstein wanted to raise his two children as Jews. A custody order allowed him to have the children on all Wednesday evenings and Sunday mornings so they could attend Jewish religious training, and also said that he could have custody on major Jewish holidays, including Passover and all eight days of Hanukkah. The father’s right to the children on these occasions would take precedence over all other custody arrangements. [Read more…]

Federal government benefits can be divided at divorce

Federal government benefits – such as from Social Security or the military – have their own rules, and those rules usually trump state law. So sometimes it’s unclear whether a state divorce court can divide up a federal payment.

However, in several recent cases, it was determined that federal payments could be split at divorce.

  • A military retiree’s health insurance benefits can be split at divorce, the Alaska Supreme Court decided.

That’s because of a federal law called the Uniformed Services Former Spouse Protection Act. [Read more…]

Couple ordered to reveal passwords for dating sites, Facebook

A judge in Connecticut ordered a divorcing couple to give each other their passwords to Facebook, eHarmony, and Match.com, and not to delete any information from the sites.

While this is a highly unusual step, it shows how increasingly relevant social media and dating websites are to divorce cases…and it’s yet another reminder that people who are contemplating divorce shouldn’t post anything online that they wouldn’t want to be revealed during the divorce proceedings, because they might well be. [Read more…]

Must couples share property they acquire after they split up?

Most people assume that a divorcing couple’s assets will be divided according to what they own at the time they separate. But in some cases, things that happen after a couple split up can affect what they’re entitled to in a divorce.

Only an attorney with expertise in divorce law can determine exactly what you might be entitled to…so it’s important to tell your attorney about anything that could affect the prospects of both you and your spouse down the road.

Take the case of a man in South Carolina who was a 25% partner in a real estate development project at the time he and his wife filed for divorce. While the divorce was pending, the value of his share increased…and his partner then bought out his interest in the project for $1.6 million. [Read more…]

‘Whistleblowers’ have more rights than you might think

When an employee comes forward with evidence of wrongdoing in a company, it’s important for the employer to take the allegations seriously.

That’s because many state and federal laws have “whistleblower” provisions that prohibit employers from firing, demoting or otherwise punishing workers who report legal or ethical violations.

These laws are complex, in part because there’s no “one size fits all” standard. They vary among industries, among types of companies, and between states. So if you’re a whistleblower or you have an employee who’s a whistleblower, it’s wise to consult an attorney who can give you the lay of the land. [Read more…]

Another state limits credit checks on job applicants

California has become the latest state to limit employers’ ability to run credit checks on job applicants.

Under a new law, employers are prohibited from conducting these checks except for managerial and law-enforcement positions, jobs requiring regular access to confidential information or more than $10,000 in cash, and jobs requiring the employee to make financial transactions on the employer’s behalf.

Similar laws have now been enacted in Connecticut, Hawaii, Illinois, Maryland, Oregon, and Washington, and have been proposed in about 10 other states. [Read more…]

Job-bias rules might not apply to religious organizations

The usual rules and laws that prohibit employers from discriminating against employees might not apply in certain cases involving religious organizations, according to a new decision from the U.S. Supreme Court.

The case involved a teacher at a school that was run by a Lutheran church in Michigan. The teacher asked for time off so she could be treated for narcolepsy. While she was on leave, the school hired a replacement, and when the teacher tried to return to work, she was fired. She sued for disability discrimination.

But the school argued that the lawsuit should be thrown out because, if the government could pass a discrimination law that forced the church to accept an employee it didn’t want, this would violate the First Amendment, which guarantees freedom of religion. [Read more…]

Companies can’t discriminate when ordering medical exams

Companies can require their employees to undergo medical examinations in certain situations as a condition of employment. But as a recent case from Maryland’s highest court shows, they can’t do so in a discriminatory manner.

In that case, an employer had required a female truck driver to have a medical exam for a condition involving heavy menstrual bleeding. She filed a complaint with a local civil rights commission. When the employer learned about the complaint, it fired her. She sued for sex discrimination and retaliation.

According to the employee, the exam requirement amounted to sex discrimination because several male employees with serious health problems, including diabetes, Parkinson’s Disease and severe dizziness, were not required to undergo medical tests.

The court agreed, upholding a substantial jury verdict for the employee.

Businesses might have to help disabled workers commute

The Americans with Disabilities Act requires employers to reasonably accommodate disabled employees at work…but a new court decision says that they might also have to help disabled employees with their commute.

Barbara Nixon-Tinkelman, who worked for a city agency in New York, was hearing-impaired and suffered from cancer, heart problems and asthma. When her employer reassigned her to spend nine months working in Manhattan rather than a more convenient location in Queens, she asked for help.

A federal judge sided with the agency, saying it didn’t have to accommodate the woman because commuting was “outside the scope of her job.”

But on appeal, a higher court sided with Nixon-Tinkelman. It said the agency had a legal obligation to consider a number of possible accommodations, including transferring her back to a more convenient location, letting her work from home, or providing her with a car or a parking permit so she didn’t have to use public transportation.

Can workers be punished for griping about their jobs on Facebook?

A lot of companies assume it’s okay to fire or discipline employees who complain about their jobs on Facebook or other social media sites – especially if they start calling supervisors names, or bad-mouthing the company in a public way.

But in some cases, disciplining an employee for a Facebook rant could violate federal labor law. These employees could file a complaint with the National Labor Relations Board…even if they don’t belong to a union.

In the past year, more than 100 complaints have been brought before the NLRB over “Facebook firings,” involving companies ranging from giants such as Wal-Mart to local bars and car dealerships. In about half the cases it reviewed, the NLRB issued a civil complaint. [Read more…]

Tenants could be kicked out for smoking

A cooperative’s board of trustees could refuse to approve a lease renewal because the tenants smoked a lot, a New York judge has ruled.

The co-op board had the right to approve or disapprove leases in the building, although it couldn’t do so “unreasonably.”

In this case, the tenants lived in the building for a year and wanted to renew. During the year, the board sent two letters to the tenants complaining about the “tremendous amount of smoke emanating from your apartment,” which it described as a “fire hazard.”

When the board refused to renew the lease, the tenants sued, claiming the board had acted unreasonably.

But a judge found that the board “acted for the legitimate welfare of the cooperative and thus its actions were reasonable.”

Who’s responsible for damage from a fallen tree?

A big storm comes up and knocks down a tree in Bob’s yard. It falls over the property line and damages his neighbor Janet’s car. Is he legally liable for the damage?

As with much in the law, it depends. Generally, though, Bob would be responsible if he knew the tree was in danger of causing damage to Janet’s property, or if a reasonable person in his position would have noticed the danger. For instance, Bob might be responsible if the tree was dead or dying and was leaning precariously over Janet’s driveway, or if Janet had complained to him previously that tree limbs were falling onto her parking space. [Read more…]

What you need to know if you’re hiring an architect

Hiring an architect to design a home, a commercial building, or a new addition can be very exciting. But there can be some traps for the unwary in the fine print of the contract, and you’ll want to have an attorney look it over in order to protect your rights.

Here’s just one example: Who owns the architect’s drawings and plans? You might assume that you do, since you’re paying for them. But one of the most commonly used standard contracts says that the architect, not you, has all ownership rights (including copyrights) in any drawings, plans, or specifications that the architect creates.

What does that mean? It means that if the contract with the architect is terminated for any reason, you have to return all the documents to the architect, and you no longer have a right to use the plans for your building! [Read more…]

More apartment and office buildings are allowing pets

Many landlords – both residential and commercial – have been trying to set themselves apart and attract more tenants by allowing pets.

It’s true that pets can cause damage to a building, but it’s also true that there’s a growing demand for pet-friendly environments, and allowing pets can make a rental property much more attractive.

Some 17 percent of businesses across the U.S. now allow pets at work, according to one recent survey. Most of these are small businesses and traditional stores – such as a bookstore with a cat – but many large companies such as Google and Apple now allow pets in offices, and other businesses are following suit. [Read more…]

Be careful if you’re buying a condo that’s new construction

With the real estate market still in the doldrums, a lot of people are thinking that this is a good opportunity to buy a brand new condominium, rather than one in an older community.

New construction has a lot of advantages – but it can also be more complicated, and there are some potential trouble spots as well. You should definitely speak with your real estate attorney before you sign anything in order to make sure you’re protected.

There are three big advantages to new construction:

  • One, everything’s new! You get to enjoy a brand-new kitchen, brand-new bathrooms, brand-new appliances, etc. Plus, you can avoid paying for major common-area maintenance items that an older building might need, such as repainting or roof repairs. [Read more…]

How Social Security provides benefits for spouses

Social Security doesn’t just pay retirement benefits to retired workers. In some circumstances, it also provides benefits to a worker’s spouse, former spouse, or surviving spouse.

Here’s a look at the ins and outs of spousal benefits. (But keep in mind that these are general rules, and how they apply to you could vary based on your specific circumstances.)

Once you reach age 62, assuming you’ve been married for at least 10 years, you can qualify for either (1) your own Social Security payments based on your earnings record, or (2) a “spousal benefit,” which is a portion of what your spouse would be entitled to at full retirement age based on his or her earnings record. [Read more…]

Senior cohousing: A new retirement alternative

Most seniors want to remain at home as long as possible, but with family often spread out all over the country, it isn’t always easy to do so. “Senior cohousing,” a new concept, allows older Americans to age at home in a supportive community.

Senior cohousing consists of a group of houses or condos that are individually owned by seniors and are clustered around a common area. The design usually includes a common house with guest rooms, a kitchen for group meals, and other common areas the residents agree on (such as a gym, media room, or art room). The residents pay a monthly maintenance fee, and meet regularly to make decisions as a group. [Read more…]

Be careful if you name more than one ‘agent’

A power of attorney and a health care proxy are essential parts of a good estate plan. A power of attorney document appoints an agent to make business and financial decisions for you if you become incapacitated. A health care proxy appoints an agent to make medical decisions for you if you can’t make them yourself.

The easiest – and in some ways, best – idea is to name one person as your agent for all purposes.

Sometimes, though, people want to name more than one agent. For instance, a person might not want to choose one child over another, or might want to name multiple agents in order to spread the burden or allow one agent to act quickly if another is unavailable. [Read more…]

A ‘letter of instruction’ can spare your heirs a lot of stress

Although it’s important to have an updated estate plan, there’s a lot of information your heirs need to know that doesn’t necessarily fit into a will, trust, or other document. For instance: Where can your heirs find your insurance policies? How can they locate your bank accounts, and access your safe deposit box? How can they be sure they’ve accounted for all your assets?

The solution is a “letter of instruction,” which can provide your heirs with guidance if you die or become incapacitated.

A letter of instruction isn’t legally binding, but it can give your heirs crucial information to help them tie up your affairs. Without such a letter, it can be easy to miss important items, or become overwhelmed trying to sort through all the documents you’ve left behind. [Read more…]

Medicare is changing how it pays for medical equipment

Medicare is changing how it pays for certain types of medical equipment…and it’s good to be aware of the changes, so you can make sure that what you buy will be covered by insurance.

The changes affect “durable” medical equipment, which means items you can use repeatedly as opposed to items meant for one-time use. Examples include wheelchairs, walkers, scooters, oxygen equipment, hospital beds, support mattresses, prostheses, orthotics, enteral nutrition devices, etc.

In the past, Medicare simply came up with a fixed amount that it would pay for each piece of equipment of this type. If a supplier accepted Medicare, it would have to charge no more than that amount, and typically Medicare would cover 80% of the cost. [Read more…]

Tax Filing Reminder

July 31 is the deadline for filing 2011 retirement or employee benefit returns (5500 series) for plans on a calendar year.

Quick Quiz: Taxable income or nontaxable?

You only have to examine your paycheck to realize certain income is tax-free. For example, health insurance premiums paid by your employer are generally not includible in your income.

Do you know the tax status of other types of income? Here’s a short quiz to test your knowledge.

1. You tell your son he’ll be the sole beneficiary of your estate, and that you’ve decided to give him an advance on his inheritance. You hand him a check for $10,000. He wants to know how much he’ll have to pay in taxes. What do you tell him? [Read more…]

What to consider in making the social security decision

If you’re approaching retirement and are eligible for social security, you have three broad options for drawing your benefits: start early, wait until your “full” retirement age, or hold out a few years longer to qualify for the monthly maximum.

*Early withdrawals. Starting your withdrawals at the earliest allowable date (age 62) may be a good idea if you (a) plan to stop working or cut back to part-time status, and (b) really need the income. Your health is also a consideration, since an early start will maximize your lifetime benefits if your life expectancy is much below eighty. [Read more…]

Cancelled debt can result in taxable income

With the recent economic downturn experienced by many taxpayers, there is a tax concept that is very important: cancellation of debt. You would think that the cancellation of debt by a credit card company or mortgage company would be a good thing for the taxpayer. And it can be, but it can also be considered taxable income by the IRS. Here is a quick review of various debt cancellation situations.

* Consumer debt. If you have gone through some type of credit “workout” program on consumer debt, it’s likely that some of your debt has been cancelled. If that is the case, be prepared to receive IRS Form 1099-C representing the amount of debt cancelled. The IRS considers that amount taxable income to you, and they expect to see it reported on your tax return. [Read more…]