Taxes and retirement accounts

Retirement accounts grow tax-deferred until you need the funds. However, in most cases your money cannot remain in these accounts forever. The IRS has rules that dictate when and how much you must withdraw from your retirement accounts.

  • Required withdrawals. The amount you must withdraw each year is called your required minimum distribution (RMD). You can withdraw more than the required minimum distribution from your retirement accounts, but if you fail to take at least the required minimum on time, you face a severe 50% penalty. These rules apply to traditional IRAs and qualified retirement plans, but they do not apply to Roth IRAs during the owner’s lifetime.

In most cases, you must begin withdrawing money from your retirement accounts as follows:

  • Your first withdrawal can either be taken in the year you turn age 70½, or it can be postponed until April 1 of the following year. [Read more…]

Health care reform deadline extended again

On February 10, 2014, the Treasury Department issued rules that will allow certain businesses to delay for one more year the requirement to provide minimum, affordable health insurance to their workers. Businesses with 50 to 99 employees now have until January 1, 2016, to provide health insurance for employees or face penalties. In order to qualify for this extension, employers must certify that they have not laid off employees in order to come under the 100 employee threshold. Large employers – those with 100 or more employees – must still comply with the health insurance mandate by January 1, 2015.

When are you required to file a gift tax return?

Are you planning to give sizeable gifts to family members? Due to generous provisions in the tax code, you may not owe any federal gift tax, but you still might be required to a file a gift tax return.

Here’s a quick review of the basic rules. Despite a common misconception, gift tax is paid by the gift giver, or “donor,” not the recipient, or “donee.” This applies to gifts of cash, property, and other interests. For 2013 and thereafter, the top gift tax rate is permanently set at 40%, a slight increase from 35% in 2012. However, you may be able to avoid gift tax liability due to two key tax breaks.

  • Annual gift tax exclusion. Under the exclusion, annual gifts to a donee valued up to $14,000 in 2014 (the same as in 2013) are completely exempt from gift tax. Note that the exclusion is available for gifts to as many recipients as you choose.
  • Lifetime gift tax exclusion. In addition to any amount covered by the annual gift tax exclusion, you can benefit from a lifetime gift tax exemption of $5 million, inflation-indexed to $5.34 million in 2014. However, this exemption is unified with the federal estate tax exemption, so amounts used for gifts will erode the tax shelter available for bequests from your estate. [Read more…]

Major tax deadlines for March

  • March 3 – Farmers and fishermen who did not make 2013 estimated tax payments are required to file 2013 tax returns and pay taxes in full.
  • March 17 – 2013 calendar-year corporation income tax returns are due.
  • March 17 – Deadline for calendar-year corporations to elect S corporation status for 2014.
  • March 31 – Deadline for payors who file electronically to file 2013 information returns (such as 1099s) with the IRS.
  • March 31 – Deadline for employers who file electronically to send copies of 2013 W-2s to the Social Security Administration.

Don’t forget Form 8938 if you have foreign investments

If you own foreign investments, you may have an additional federal tax form to file this year.

Form 8938, “Statement of Specified Foreign Financial Assets,” is due April 15, 2014, and is filed as part of your individual tax return. You’ll use Form 8938 to disclose interests in certain foreign financial accounts when your ownership exceeds the reporting requirements.

What are the reporting requirements? They vary depending on where you live and your filing status. For example, say you’re married and live in the United States, and you’ll file a joint tax return for 2013. You’ll include Form 8938 with your tax return when the total value of your reportable assets on the last day of 2013 was more than $100,000, or if the value exceeded $150,000 at any time during the year. [Read more…]

Check your eligibility for this business credit

The health insurance premium credit for small businesses has been available since 2010. According to a recent report, many businesses that qualify for this credit have failed to take it.

Even if your business hasn’t taken this credit in the past, you may want to look into it this year. For 2014, the credit increases from 35% to 50%. When you qualify, you can use the credit to offset your federal income tax liability by up to 50% of the cost of health insurance premiums you pay for employees.

Three general tests for eligibility are:

  • Employing fewer than 25 “full-time equivalent” employees.
  • Paying average annual wages of less than $50,000.
  • Paying at least 50% of health insurance premiums for those employees. [Read more…]

IRS adjusts tax numbers for 2014

Each year the IRS adjusts certain tax numbers for inflation and tax law changes. Here are some of the adjusted numbers you’ll need for your 2014 tax planning.

  • Standard mileage rate for business driving decreases to 56¢ a mile. Rate for medical and moving mileage decreases to 23.5¢ a mile. Rate for charitable driving remains at 14¢ a mile.
  • Section 179 maximum first-year expensing deduction decreases to $25,000, with a phase-out threshold of $200,000.
  • Social security taxable wage limit increases to $117,000. Retirees under full retirement age can earn up to $15,480 without losing benefits.
  • Kiddie tax threshold remains at $2,000 and applies up to age 19 (up to age 24 for full-time students). [Read more…]

Note these upcoming tax deadlines

  • February 18 – Deadline for providing 2013 Forms 1099-B and 1099-S to recipients.
  • February 28 – Payers must file 2013 information returns (such as 1099s) with the IRS. (Electronic filers have until March 31 to file.)
  • February 28 – Employers must send 2013 W-2 copies to the Social Security Administration. (Electronic filers have until March 31 to file.)
  • March 3 – Farmers and fishermen who did not make 2013 estimated tax payments must file 2013 tax returns and pay taxes in full.
  • March 17 – 2013 calendar-year corporation income tax returns are due.

Susan Flanagan

Susan Flanagan, from Beliveau Law Group, helped me with the Medicaid Application for my mother who is in a Nursing Home. She was very knowledgeable and helped me through the long process. Because my mother had an Irrevocable Trust, it was much to difficult for me to tackle the Medicaid Application on my own. Susan helped me every step of the way. She would always return my calls and emails within the hour. She has incredible patience, vast knowledge on the subject…and kept me going when I felt overwhelmed. She went to the Department of Health and Human Services in my place and handled every detail until my mother finally qualified for Medicaid. I can’t say enough about Susan Flanagan. She surely is an asset to Beliveau Law Group and it was my pleasure to work with her. Thank you for everything you did for me, Susan.

~Maureen, a Medicaid Application client

Mary Hart

She is a professional working hard on your side taking care of all legal matters for you! Worry free if you work with her! I am glad I have Mary as my attorney and Matt as my agent!! Silver bullet combination!

~Anonymous, a Real Estate client

Employee could sue over broken promise of new job

Salesman Michael Cocchiara had worked for eight years at a Dodge dealership in Oregon when he suffered a heart attack, and his doctors told him he needed to get a less stressful job. He lined up a new job at a newspaper company, but the dealership asked him not to quit, and said that it would give him a new “corporate” job instead that would meet his health needs. Relying on this promise, Cocchiara turned down the newspaper job.

But the dealership then reneged, and didn’t give him the corporate job. He eventually found yet another job, but at much lower pay.

Cocchiara sued the dealership, claiming it committed fraud, and demanding lost wages. [Read more…]

Breast-feeding mother can sue employer

New mothers needing a private space to pump breast milk for their newborns is a reality of an increasingly modern workplace. Some employers or co-workers might be uncomfortable with this, but the law is likely to come down on the mothers’ side.

Take the case of a mother in Texas who wanted to go back to work as an account rep at a debt collection agency after staying home with her new baby for several months. During conversations prior to her return, she told her bosses that she would like permission to use a back room to express breast milk after she came back. The bosses apparently hemmed and hawed about her request, and once she received medical clearance to return, they told her someone else had filled her position. [Read more…]

Federal agents step up ‘surprise’ FMLA investigations

Under the federal Family and Medical Leave Act, employers with more than 50 workers must allow qualified employees to take up to three months of unpaid leave for personal medical reasons or to care for a sick family member.

At a recent conference, a senior Department of Labor official stated that compliance with the law has been a problem, and that the Department’s enforcement division planned to step up its on-site investigations into whether employers are following the law.

Investigators won’t necessarily show up unannounced, but they may arrive with only one or two days’ notice. The Department is looking particularly closely at what it considers violation-prone industries, including those with a lot of low-wage workers, physical laborers and non-union employees. [Read more…]

Criminal background checks may be ‘discrimination,’ U.S. says

The federal Equal Employment Opportunity Commission has sued two companies claiming that their use of criminal background checks was illegal because it amounted to discrimination against black employees and job applicants.

In one case, automaker BMW adopted a policy of blocking any employee or contractor with certain criminal convictions from access to its South Carolina facility – regardless of the person’s age at the time of the conviction or the nature of the worker’s duties.

The EEOC claimed that this policy had the effect of screening out black workers – many of whom had previously worked at the facility without a problem, but were denied access after the new background checks uncovered a prior criminal conviction. [Read more…]

Same-sex marriage ruling affects employee benefit plans

The U.S. Supreme Court’s decision striking down the federal Defense of Marriage Act will have a significant effect on employee benefit plans.

The federal law had refused to recognize same-sex marriages for purposes of federal taxes and other requirements. The Supreme Court said this law was unconstitutional, which means that same-sex couples who are married under state law now have to be treated as married under federal law.

Among other things, it now appears that:

  • Employees with a 401(k) or similar retirement plan will have to name a same-sex spouse as the primary beneficiary, unless the spouse waives this right.
  • Pension plans that offer “surviving spouse” annuities or “joint and survivor” annuities will have to include same-sex spouses. [Read more…]

‘Wellness’ programs: a shot in the arm, or a legal headache?

More and more companies are adopting “wellness” programs that reward employees for healthy behavior. This would seem to be a “win-win” for companies and their workers, because workers are rewarded for getting in shape, and companies can reduce health insurance costs and absenteeism while boosting morale.

But there are a number of legal issues raised by these plans. Companies should know that the legal boundaries of these programs are sometimes unclear. And workers should know that there are limits on how far an employer can go in delving into their private medical information.

Wellness programs can reward employees for a wide range of health-related behaviors, such as filling out a health questionnaire, attending a wellness fair, joining a gym, reducing cholesterol levels or quitting smoking.

Rewards typically include defraying the cost of a gym membership or contributing to the employee’s individual health insurance premium. [Read more…]

Review Noah Rabin

Noah guided me through the process of my mother’s Medicaid Trust. There were so many times when I needed help and Noah was right there to offer his help. I would email him, and within 30 minutes he would respond. I just can’t say enough about this lawyer…he is intelligent, patient, kind, and always willing to respond and lend a hand to get the job done. He was absolutely wonderful…and he is an asset to Beliveau Law Group. Thank you for everything, Noah!

~Maureen, a Trusts client