Will you get credit in property division for footing household bills during divorce?

An issue that frequently arises when a marriage breaks up is who pays the household bills while the divorce is pending. A lot of times the spouse who paid the bills during the marriage will continue to pay utility bills and homeowner’s association or condo fees while making mortgage payments on the marital home. If you’re the one making those payments, you’re probably wondering whether a divorce judge will give you some sort of credit for it when dividing up the marital property. In other words, will you get a bigger share of the remaining property in consideration for the bills you’ve paid or be saddled with a smaller share of marital debt?

The answer is that it depends on the situation and the laws where you live.

Take, for example, a recent case from North Carolina, where it all came down to the concept of “active” versus “passive” decreases to marital debt. [Read more…]

Taxes and virtual currencies: What you need to know

Virtual currencies are all the rage lately. Here are some tax consequences you must know if you decide to dip your toe into that world.

The IRS is paying close attention
The first thing to know is that the IRS is scrutinizing virtual currency transactions, so if you live in the U.S. you’ll have to report your transactions in Bitcoins and the like to the IRS. Despite some early misconceptions, virtual currency transactions can be traced back to their owners by governments and other cyber sleuths.

If you decide to use or hold virtual currencies, carefully report and pay tax on your transactions. Act as if you are going to be audited, because if you don’t, you just might be! [Read more…]

Tips for when your employees are family members

Working with family can be a pleasure. It can also be a pain, especially if you have to terminate a family member’s employment. Here are tips to help you ease the strain of mixing your family and employee relationships.

Hire for the right reasons. Make your hiring and firing decisions based on the skill sets needed to keep your business operating effectively. Hiring your son because he’s struggling to find a job is not a good business reason for bringing staff on board.

Set clear expectations. Communicate the job’s performance requirements to your family member right from the start. Clearly define company policies for promotion, compensation and termination. Make it plain that unethical conduct will not be tolerated. [Read more…]

New 2018 capital expense rules

There are many provisions in the tax reform bill passed in late 2017 designed to benefit small business owners. There are also a variety of new tax tools affecting how small businesses account for deducting the cost of capital purchases under the new tax law. Here’s what you need to know:

Tool #1: Section 179 deduction
The new law increases the amount of business property purchases that you can expense each year under Section 179 to $1 million (from $500,000 previously). Normally, spending on business property (machines, computers, vehicles, software, office equipment, etc.) is capitalized and depreciated so that the tax benefit is spread out slowly over several years. Section 179 allows you to get the tax break immediately in the year the property is placed into service.

Tips:

  • There is an eligibility phaseout for Section 179 that ensures it’s only used by small businesses, but that was also raised to $2.5 million (from $2 million) by the new law. If you spend more than $2.5 million on business property in total during the year, your ability to use the $1 million Section 179 deduction is reduced dollar-for-dollar above that amount. [Read more…]

Tax filing reminders

February 28 – Payers must file most other Forms 1099 (except certain Forms 1099-MISC due Jan. 31) with the IRS. (April 2 if filing electronically.)

March 1 – Farmers and fishermen who did not make 2017 estimated tax payments must file 2017 tax returns and pay taxes in full.

March 2 – Automatic extension deadline for employers and health care providers to provide Forms 1095-B and 1095-C to individuals. [Read more…]

New Pass-Through Entity Rules

One of the most important – and complicated – changes in the new tax reform act is to tax rules affecting small businesses that are treated as “pass-through entities.”

The good news is that if you own one of these businesses you may get as much as a 20 percent reduction to the taxation of business net income under the new rules. However, calculating the actual deduction can become very complex. It depends upon several factors, including your level of income, your profession, the amount your business spends on wages and property acquired during the year.

Tax reform background

Most small businesses in the U.S. use pass-through business structures, which pass their profits on to their individual owners. Owners pay tax on those profits at their individual tax rates, in conjunction with other income. The new tax rates range from 10 percent to 37 percent in the 2018 tax year. Pass-through business structures include S corporations, partnerships and LLCs. Sole proprietorships handle business income in a similar way using Form 1040 Schedule C and are also covered by the new rules. [Read more…]

How to sell your rented investment property

Are you ready to sell that investment property, but unsure what to do because it’s currently being rented? You have options, but first you need to understand the legal restrictions on selling a property while a tenant is renting it.

Most states do not see selling the property as a valid enough reason to terminate a lease agreement early. So if there is still a set term on the lease, you may need to wait the tenant out before selling. Otherwise you can offer to pay him or her to vacate early.

For tenants on a month-to-month lease, be sure not to violate local landlord-tenant statutes that set forth the proper notice requirements for the tenant to vacate the property. These normally range from 30 to 60 days. [Read more…]

Why more millennials are opting for adjustable-rate mortgages

Cash-strapped millennials looking to keep interest-rate costs down are opting for adjustable-rate mortgages (ARMs) instead of the more traditionally popular fixed-rate mortgages.

ARMs are particularly attractive for young homeowners who do not plan to retain property long term. Experts say the best way to select an ARM is to match the fixed period to the time the buyer plans to be in the home. For example, millennials planning to move where their jobs take them within a few years might find a 3/1 ARM provides a rate advantage in the short term.

Know a millennial thinking of trying an ARM? Here’s what they should consider: [Read more…]

When can a tenant legally withhold rent?

Although it’s never ideal, sometimes it may become necessary to withhold rent until problems with a rental unit are corrected.

Tenants need to be very careful when doing so. A tenant must provide notice and be sure to follow state or local laws. Not following the rules can lead to an eviction for failing to pay rent.

First, always give the landlord a reasonable opportunity to fix any problems. But if you have repairs that need to be made and your landlord refuses to make them, or won’t even return your call, eventually withholding rent may be an option. Unless your lease specifically allows you to deduct or withhold rent for particular repairs, maintenance or other issues, you need to clear it with your landlord, in writing, to make sure you are protected from a breach of contract claim. If your landlord refuses to cooperate, an experienced landlord-tenant attorney can help you avoid having to pay even more for an eviction defense attorney down the road. [Read more…]

Precautions to take before starting a home-improvement project

You’ve selected the right contractor, picked out the materials and set aside the necessary budget. It might seem like you’re ready to embark on that home-improvement project. But have you contacted your insurance agent?

Experts recommend that homeowners get in touch with their insurance agent before a home-improvement project to make sure they have sufficient coverage, and after the project is done to see if policy limits need to be increased to provide for enough insurance to rebuild the home. Some projects, such as replacing a roof or installing impact-resistant windows, may even qualify you for an insurance discount.

If anything goes wrong during the project that results in the need to file a claim, you’ll be glad you handled the following in advance, as well: [Read more…]

Weigh the risks in contractor disputes

Construction projects can get tense, and when a dispute arises mid-project it takes some finesse to maintain working relationships or at least get the project done.

It’s always best to bring up any concerns right away and see if by talking it out you and the contractor can find resolution. Often contractors will be willing to redo work, or make changes to completed work, for a discounted price.

That can be the most cost effective way to resolve an issue, and can also help keep your project close to the original timeline, as the contractor will want to maintain the working relationship. [Read more…]

U.S. Supreme Court rules on regulatory takings

Property owners forced to hash out regulatory takings in court may lose out more often thanks to a new test used to determine whether two adjacent properties with a single owner could be considered a larger parcel.

The U.S. Supreme Court’s decision in Murr v. Wisconsin found that the properties in question were a single parcel, and because the owners were not deprived of all economically viable uses of their property they could not establish a compensable regulatory taking.

The case addressed land use regulations that merged adjacent parcels (one developed, one undeveloped) into one for environmental reasons, despite the fact they were separately acquired, owned and taxed. The regulations prevented the development or sale of the second, undeveloped parcel. [Read more…]

IRS now allows private debt collectors to dun taxpayers

In a move that could be confusing to seniors who are vulnerable to scams, the IRS is using private debt collection agencies to collect past-due taxes. The new program began in April 2017.

Pursuant to a law Congress passed in December 2015, the IRS may now contract with private debt collectors to collect certain debts. The private collection agencies can work on accounts where the taxpayer owes money but the IRS is no longer actively working on the account, perhaps because it is older or because the IRS does not have the resources to continue pursuing it.

Historically, scammers have posed as the IRS to target seniors and other vulnerable adults to retrieve identifying information or payment. Up until now, tax professionals have been able to reassure clients that the IRS would never harass consumers over the phone. However, under this new rule private debt collectors may contact taxpayers by phone, which may make it more difficult to determine whether a scammer is targeting the taxpayer.  [Read more…]

Five things to know to reduce your tax on capital gains

Although it is often said that nothing is certain except death and taxes, the one tax you may be able to avoid or minimize the most through planning is the tax on capital gains. Here’s what you need to know to do such planning:

What is capital gain? Capital gain is the difference between the “basis” in property (usually real estate or stocks, but also including artwork and collectibles) and its selling price. The basis is usually the purchase price of the property. So, if you purchased a house for $250,000 and sold it for $450,000 you would have $200,000 of gain ($450,000 – $250,000 = $200,000). [Read more…]

Using a prepaid funeral contract to spend down assets for Medicaid

No one wants to think about his or her death, but a little preparation in the form of a prepaid funeral contract can be useful. In addition to helping your family after your passing, a prepaid funeral contract can be a good way to spend down assets in order to qualify for Medicaid.

A prepaid or pre-need contract allows you to purchase funeral goods and services before you die. The contract can be entered into with a funeral home or cemetery. Prepaid funeral contracts can include payments for embalming and restoration; a room for the funeral service; a casket, vault or grave liner; cremation; transportation; permits; a headstone; a death certificate; and an obituary, among other things.

One benefit of a prepaid funeral contract is that you are paying now for a service that may increase in price — possibly saving your family money. You are also saving your family from having to make arrangements after you die, which can be difficult and time-consuming. [Read more…]

Estate planning for a single person

If you are single, you may not think you need to plan your estate.  But single people have as much reason to plan as anyone else. Estate planning not only involves determining where your assets will go when you die, it also helps you plan for what will happen should you become incapacitated, perhaps as the result of a stroke, dementia, or injury. If you don’t make a plan, you will have no say in what happens to you or your assets.

Without a properly executed will in place when you die, your estate will be distributed according to state law. If you are single, most states provide that your estate will go to your children, parents, or other living relatives. If you have absolutely no living relatives, then your estate will go to the state. This may not be what you want to have happen to your assets. You may have charities, close friends, or particular relatives that you want to provide for after your death.

If you become incapacitated without any planning, a court will have to determine who will have the authority to handle your finances and make health care decisions for you. The court may not choose the person you would have chosen. In addition, going to court to set up a guardianship is time-consuming and expensive. [Read more…]

The best way to avoid an audit: Preparation

Getting audited by the IRS is no fun. Some taxpayers are selected for random audits every year, but the chances of that happening to you are very small. You are much more likely to fall under the IRS’s gaze if you make one of several common mistakes.

That means your best chance of avoiding an audit is by doing things right before you file your return this year. Here are some suggestions:

Don’t leave anything out. Missing or incomplete information on your return will trigger an audit letter automatically, since the IRS gets copies of the same tax forms (such as W-2s and 1099s) that you do. [Read more…]

Mileage rates for 2018

The IRS recently announced mileage rates to be used for travel in 2018. The standard business mileage rate increased by 1 cent to 54.5 cents per mile. The medical and moving mileage rates also increased by 1 cent, to 18 cents per mile. Charitable mileage rates remained unchanged at 14 cents per mile.

Remember to properly document your mileage to receive full credit for your miles driven.

Looking ahead: Tax reform in 2018

Congress has passed tax reform that will take effect in 2018, ushering in some of the most significant tax changes in three decades. Here are some major items in the new bill that impact individual taxpayers.

Reduces income tax brackets. The bill retains seven brackets, but at reduced rates, with the highest tax bracket dropping to 37 percent from 39.6 percent.

Double standard deductions. The standard deduction nearly doubles to $12,000 for single filers and $24,000 for married filing jointly. To help cover the cost, personal exemptions and most additional standard deductions are suspended.

[Read more…]

Tax filing reminders

January 16 – Due date for the fourth installment of 2017 individual estimated tax.

January 31 –

  • Due date for employers to furnish W-2 statements to employees, and to file Forms W-2 with the Social Security Administration (both paper and electronic forms).
  • Due date for payers to provide most Forms 1099-MISC with non-employee compensation in box 7 to recipients and to the IRS.
  • Employers must file 2017 federal unemployment tax returns and pay any tax due.
  • Due date for providers to send Forms 1095 to recipients and the IRS.

Revised: Tax Cuts and Jobs Act: What the Tax Reform Bill Means for You

Revised: 12/28/2017

Congress has passed a tax reform act that will take effect in 2018, ushering in some of the most significant tax changes in three decades. There are a lot of changes in the new act, which was signed into law on Dec. 22, 2017.

You can use this memo as a high-level overview of some of the most significant items in the new act. Because major tax reform like this happens so seldom, it may be worthwhile for you to schedule a tax-planning consultation early in the year to ensure you reap the most tax savings possible during 2018. [Read more…]

Tips for choosing your executor

Choosing your executor, who will administer your estate and carry out your final wishes, may be one of the most important decisions you make when preparing your will.

Before you name someone, get his approval and make sure he feels up to the task. An executor’s responsibilities including filing court papers to start probate and validate the will, inventorying the estate, notifying banks and government agencies, sorting out finances, maintaining all property until it’s distributed or sold, filing a final tax return, and distributing assets.

Depending on the size and nature of your estate, this work can seem like a complicated, daunting task. Recognize that serving as executor can be particularly complicated for someone who lives out of state. He or she will likely have to travel for probate appearances, and some states require a state resident to co-serve as executor or agent. [Read more…]

Pre-litigation claims can be effective in estate tax disputes

Pre-litigation is activity that occurs before a legal suit is filed. If you are involved in an estate transfer and your rights are unclear, pre-litigation may be an effective way to establish your position and head off a more costly legal conflict.

Pre-litigation claims are typically made in an effort to get the other party to back down or engage in negotiations. This process may be the first step in claiming a will or trust is invalid, challenging a premarital agreement, or charging that an executor is engaged in misconduct.

In a much-publicized conflict over the estate of former “Growing Pains” star Alan Thicke, for example, his sons filed a pre-litigation complaint to enforce their father’s trust, claiming that Thicke’s widow intended to challenge her prenuptial agreement. (Thicke’s widow denied such intent and a judge subsequently dismissed the sons’ claim.) [Read more…]

Documenting your rationale

In addition to telling your children why you plan to leave an unequal gift, consider providing a written explanation of your decision that can be attached to your trust or will. Such a letter communicates facts and feelings that are not otherwise included in estate planning documents and may deter an unhappy heir from contesting your will. Consult your attorney about any estate planning letters you intend to leave to ensure you don’t create any confusion in your plans.

Beneficiary designations
Talk to your estate planner and be sure you understand the implications of naming certain children as a beneficiary on a retirement account or life insurance policy. In such cases, those assets would pass to the named child directly and would be excluded from your estate, meaning those assets won’t get divvied up among your heirs.

Even if your child recognizes this was a mistake and wants to redistribute the funds, it can be a costly and difficult issue to fix. Regifting assets to their siblings could trigger gift taxes. Alternately, the child could disclaim part of the inheritance, but that is best done with legal counsel and a full understanding of potential implications. [Read more…]

Communicate with your kids before leaving unequal assets

When it comes to leaving money to the kids, some parents struggle to reconcile “equal” with “fair.” An equal inheritance treats each child the same, regardless of life situation or special circumstances. On the other hand, sometimes an unequal distribution can seem like the fairest thing to do, given a child’s age, financial wherewithal, or previous track record.

To avoid unpleasant surprises and contentious family squabbles, be transparent about your plans and talk with your children ahead of time. That helps children understand your point of view and gives them an opportunity to share concerns or life issues you may not be aware of.

Imagine, for example, that you intend to leave more to your daughter, the social worker, and less to your son, the small business owner.  Disclosing this plan could encourage your proud son to reveal that business is declining and the operation has far less value than you thought. [Read more…]

How to leave your home to the kids

Deciding when and how to relinquish the family home can be one of the most challenging issues seniors face. For many, a home is their most valuable asset and a cornerstone of the wealth they’d like to transfer to their family.

If you’re one of AARP’s estimated 87 percentage of older adults who wants to stay at home and “age in place,” you may be planning to stay put as long as possible with the goal of transferring your house to your heirs after you die.

Here is a review of the ways you can go about leaving your home to your children: [Read more…]

Proposed regulations curtailing valuation discounts withdrawn

The Treasury Department and the IRS have announced that proposed regulations that would have drastically limited valuation discounts for transfers of family businesses are being withdrawn.

The regulations would have curbed valuation discounts commonly used when family business owners transfer minority shares to other family members.

The withdrawal means that family business owners will still be able to transfer a portion of their business to their children while applying valuation discounts. Primarily, those discounts include adjustments for lack of control and lack of marketability. [Read more…]

Tax Cuts and Jobs Act: What the Tax Reform Bill Means for You

Congress has passed tax reform that will take effect in 2018, ushering in some of the most significant tax changes in three decades. There are a lot of changes in the new bill, which is expected to be signed into law soon.

You can use this memo as a high-level overview of some of the most significant items in the new bill. Because major tax reform like this happens so seldom, it may be worthwhile for you to schedule a tax-planning consultation early in the year to ensure you reap the most tax savings possible during 2018. [Read more…]

Court decision muddies the waters for ‘safe harbor’ for user-generated online posts

A recent decision from a federal appeals court in California will likely have broad implications on what screening procedures, if any, a service provider adopts for user-generated posts and material.

The case, which is called Mavrix Photographs LLC v. LiveJournal Inc., limits the availability of safe harbor protection for social media platforms and other sites that use moderators to review user-submitted posts, even when the website has processes in place for expeditiously removing materials identified in takedown notices under the federal Digital Millennium Copyright Act.

Safe harbor protection can shield you from liability for the copyright infringements of your site’s users if you establish effective notice-and-takedown procedures and promptly remove content when you’ve been notified it is infringing. [Read more…]

Is a patent enough? How to protect your intellectual property

You had a great idea and you started a business around it. Now, you need to protect that intellectual property.

First, check to be sure that your idea is original. Conduct patent and trademark searches early in the development of new products and processes to make sure there isn’t anyone else already protecting the same ideas or concepts.

If you do have an original, patentable idea, go ahead and file a patent application. Filing an initial patent application gives you time to develop or sell your idea, complete market research and/or raise money. [Read more…]

Traditional office vs. co-working space: Which is right for your business?

Collaborative work environments with shared spaces are an increasingly popular take on traditional office space, but can come with less than ideal leasing terms.

Most co-working spaces operate using an occupation license agreement that allows members to use the space for a particular purpose or set of purposes. But it is much easier for a landlord to revoke a licensee’s right of access to than it is to evict a tenant.

A commercial leasing agreement for traditional office space provides tenants more rights and a greater level of security. Such leases can be overly restrictive for startup operations planning to grow quickly, however. Those with smaller teams and budgetary constraints may benefit from the collaborative environment and reduced costs a shared space can provide. [Read more…]

Cybersecurity essentials for small to mid-size businesses

A strong cybersecurity program is designed to protect the confidentiality, integrity and availability of a business’s information systems. These systems can include any computer or networked electronic system used by a business, and certain sensitive business and consumer information.

Programs should be designed to perform three primary functions:

  • Identify and assess threats and risks;
  • Protect information systems and sensitive information from malicious use and unauthorized access; and
  • Detect, respond to and recover from cybersecurity “events” such as breaches.

[Read more…]

Know the risks associated with using targeted advertising for your business

Many companies employ third-party advertising services that use online consumer data and automated software to place advertisements on websites, in apps and within user-generated video services.

But this wide-reaching marketing tool comes with the risk that your advertisement and brand could be displayed alongside offensive content. Third-party targeted advertising services, such as AdSense from Google and Bing Advertising from Microsoft, offer the ability to exclude targeted ads from pornographic or gambling sites. But beyond that it is difficult to prevent your ad from appearing on a website that you would prefer not be associated with your business. Many times, when an advertising service identifies a user that matches the intended audience of the advertisement, the user will see the advertisement even on offensive sites.

The rise of fake news sites further complicates matters, as new sites are created every day in an effort to reap advertising revenue. In one recent example of the challenges this presents, Allstate saw one of its ads appear next to an article denying the occurrence of the Sandy Hook school shooting on a fake news site. [Read more…]

Tips are considered wages, court decides

Employers in the service industry should consult with an employment lawyer before requiring workers to pool their tips. That’s because the laws regarding tip pooling can be complex and employers who engage in certain tip-pooling practices run the risk of violating the federal Fair Labor Standards Act and state wage laws.

This happened recently in South Carolina. Zen 333, a restaurant in Charleston, didn’t allow bartenders or wait staff to take tips directly from customers. Instead they had to put them into a tip pool that was divided among the staff. Servers also had to contribute 4.5 percent of their gross food and alcohol sales directly to “the house” and 3.5 percent of their alcohol sales to the bartenders, who in turn had to contribute a percentage of their alcohol sales to “the house.” According to bartenders and waiters, the restaurant’s owners would withdraw these mandatory contributions from the tip pool and if the cash tips didn’t cover those contributions they’d take the difference from credit-card tips.

The bartenders, who were paid $40 plus tips for all shifts worked, and the servers, who were paid $2.25 an hour plus tips, took the restaurant to court, claiming that this practice violated FLSA and the state wage law because it resulted in them not being paid the wages they earned. [Read more…]

Employers take note: ‘Hostile environment’ claims can be costly

A “hostile” work environment is one where an employee is constantly confronted with offensive behavior by co-workers or supervisors. This can include sexually charged or bigoted comments and jokes, repeated requests to engage in sexual activity, taunting, or insulting personal comments. An employer that doesn’t properly investigate workers’ complaints of a hostile environment , or that investigates but fails to take proper action in response, can face discrimination and sexual harassment claims, as Kansas City, Missouri recently found out.

In that case, LaDonna Nunley, an African-American woman who had worked as a chemist for Kansas City’s water department for 24 years, claimed that a co-worker had engaged in a pervasive pattern of offensive speech directed toward her, including comments referencing genitalia and comments comparing President Barack Obama to a bowel movement. She said she reported the comments to supervisors but they failed to discipline the co-worker.

Ultimately Nunley, who also claimed that she was passed over for promotions in favor of less qualified, younger white workers, brought age, sex and race discrimination claims against the city along with a claim of hostile work environment. [Read more…]

Signature not enough to bind worker to arbitration clause

Mandatory arbitration agreements, which require employers and employees to forego court if they get into a legal dispute with one another and take the case to a private third-party arbitrator to resolve, are a popular way for employers to avoid the unpredictability and expense of the court system.

But if you plan on subjecting workers to such agreements, it’s critical to give actual notice of the terms, as a restaurant in North Carolina recently learned.

In that case, two white employees who worked under a Latino supervisor alleged that he often made racist remarks to them, saying among other things that because they weren’t Hispanic, they couldn’t relate to customers or co-workers or handle day-to-day situations. [Read more…]

Disabled workers may need accommodations beyond FMLA leave

Under the federal Family and Medical Leave Act (FMLA), companies with more than 50 employees must allow workers to take up to 12 weeks of unpaid leave to deal with medical issues. But if a worker isn’t ready to return after 12 weeks, employers should talk to an employment attorney before taking any disciplinary action. That’s because an employee who’s used all of his or her FMLA leave may still be entitled to more leave time as an accommodation under the Americans with Disabilities Act (ADA).

In a recent Massachusetts case, bank employee Amanda LePete took 12 weeks of FMLA leave when she had a baby. While she was out she developed post-partum depression. As her return date approached she was still suffering symptoms so she sought medical help and tried to extend her leave. When her counselor couldn’t pin down a specific date when she might be able to return the bank sent her a letter setting a hard deadline, telling her she’d be fired if she didn’t return on that date. Panicked, she and her attorney appealed to human resources to extend her leave but the request was denied. She subsequently got a letter telling her she was fired.

LaPete filed a disability discrimination claim against the bank under the ADA and state anti-discrimination law. [Read more…]

When is employee travel time compensable?

If you’re a “non-exempt” employee — typically someone who doesn’t work in a professional, executive or managerial capacity and who earns an hourly wage — your compensation structure is pretty simple. Under the federal Fair Labor Standards Act (FLSA) you get paid for the hours you work and if you put in more than 40 hours in a week, you get overtime.

But what about time you spend traveling for work? That seems simple too. You don’t get paid for commuting time to and from work. But you do get paid for time you spend traveling around during the workday.

This seems straightforward on the surface. But there are little wrinkles and nuances that workers and employers need to understand. [Read more…]

New year, new job

5 tax tips for job changers

There are a lot of new things to get used to when you change jobs, from new responsibilities to adjusting to a new company culture. You may not have considered the tax issues created when you change jobs. Here are tips to reduce any potential tax problems related to making a job change this coming year.

  • Don’t forget about in-between pay. It is easy to forget to account for pay received while you’re between jobs. This includes severance and accrued vacation or sick pay from your former employer. It also includes unemployment benefits. All are taxable but may not have had taxes withheld, causing a surprise at tax time.
  • Adjust your withholdings. A new job requires you to fill out a new Form W-4, which directs your employer how much to withhold from each paycheck. It may not be best to go with the default withholding schedule, which assumes you have been making the salary of your new job all year. You may need to make special adjustments to avoid having too much or too little taken from your paycheck. This is especially true if there is a significant salary change or you have a period of low-or-no income. Keep in mind you’ll have to fill out a new W-4 in the next year to rebalance your withholding for a full year of your new salary. [Read more…]

4 business year-end tax moves

Even though the end of 2017 is near, it is not too late to get your business into the best possible tax position for the new year.

Here are some year-end tax moves to consider:

  • Update the office. A fresh coat of paint and new office furnishings not only make your place of business more comfortable, they also provide another tax deduction. How you handle deducting these expenses will vary depending upon whether you own or lease your office space, so reach out for assistance if you have questions. [Read more…]

Get ready to save more in 2018

You can save more for retirement next year using tax-advantaged accounts, thanks to a boost in the maximum 401(k) contribution rate by the IRS. The maximum rate increases by $500 to $18,500, which is the first increase in three years. Those aged 50 or older can still contribute an additional $6,000 on top of that amount.

This is good news, because a 401(k) is one of most potent tools in your retirement arsenal. It offers many benefits over other forms of saving, including: [Read more…]

Tax filing reminders

  • December 15 Due date for calendar-year corporations to pay the fourth installment of 2017 estimated income tax.
  • December 31 –
    • Deadline to complete 2017 tax-free gifts of up to $14,000 per recipient.
    • Deadline for paying expenses you want to be able to deduct on your 2017 income tax return.

New Hampshire Real Estate Transfer Tax

Attorney David M. Beliveau submitted an article to the New Hampshire Bar discussing the real estate transfer tax and the change in the law as it pertains to real estate transfers to revocable trusts and LLCs. Read the entire article below.

Tax Law: Amended Last Year: A NH Real Estate Transfer Tax Primer

By: David Beliveau | New Hampshire Bar

The New Hampshire real estate transfer tax (NH RSA 78-B) – a tax on the transfer of New Hampshire real estate – is $0.75 per $100 of the full price of or consideration for the real estate for the purchaser and the seller (meaning half of the total tax is paid by the purchaser and half by the seller).

The tax, collected by the NH Department of Revenue Administration (DRA), requires filing DRA forms PA-34, Inventory of Property Transfer; CD-57-P, Declaration of Consideration Real Estate Purchaser (Grantee); and CD-57-S, Declaration of Consideration Real Estate Seller (Grantor). The law changed last year in the case of real estate transfers to revocable trusts and LLCs.

During a person’s life, he or she may establish a trust and transfer assets to it. As a result, such assets will avoid probate when the person dies. Real estate may be transferred to the trust.

Prior to last year, a transfer of New Hampshire real estate to a revocable trust was subject to a minimum $40 real estate transfer tax. In such case, the applicable deed language was something like: “This is a non-contractual conveyance for which no consideration is paid. Therefore, the minimum $40 State of New Hampshire real estate transfer tax liability is payable.” All three of the above-referenced DRA forms were required to be prepared and filed. [Read more…]

Medicaid Irrevocable Trusts – Do They Protect Assets?

The New Hampshire Bar Association recently published an article written by Attorney David M. Beliveau discussing the use of Medicaid irrevocable trusts as a legal tool to protect assets (typically, a residence) in the case one has to be admitted to a nursing home and apply to receive Medicaid to cover the respective cost. The question is, do such trusts work? Read the entire article below.

Elder, Estate Planning & Probate Law: Medicaid Irrevocable Trusts: A Tale of Two Cities?

By: David M. Beliveau | New Hampshire Bar Article

With the increasing cost of nursing home care, some elders are using Medicaid irrevocable trusts to try to protect their assets (typically, their residences) in case they have to be admitted to a nursing home and apply to receive Medicaid to cover the respective cost. The question is, do such trusts work? Last year, both the New Hampshire Supreme Court in In re Petition of Braiterman and a Massachusetts appellate court in Heyn vs. Director of the Office of Medicaid answered the question.

Both Braiterman and Heyn turned on each court’s interpretation of the “any circumstance” test. Under 42 USC Section 1396p(d)(3)(B), if there are any circumstances under which payment from the trust could be made to or for the benefit of the Medicaid applicant, then the Medicaid irrevocable trust is deemed countable for the purpose of determining the Medicaid applicant’s eligibility for Medicaid. In Braiterman, the New Hampshire court appears to have interpreted the “any circumstance” test broadly and, consequently, found the Medicaid irrevocable trust at issue problematic. In contrast, in Heyn, the Massachusetts court appears to have interpreted the “any circumstance” test narrowly and, consequently, found the Medicaid irrevocable trust at issue not problematic. [Read more…]

Planning to move out of state? Your current custody situation matters

According to a recent ruling from a New Jersey family court, your current custody arrangement can make a big difference if you’re thinking of relocating to another state with your child.

The mother in that case had emigrated from Cuba in 1999 and lived in Florida until 2004, when she moved to New Jersey to work in pharmaceuticals. That’s apparently where she met her husband, who she married in 2009 and with whom she had a daughter.

The couple divorced in 2015. The divorce agreement said they’d share joint legal custody and the mother would be considered the “parent of primary residence.” Once the mother vacated the marital home, the father would be the “parent of alternate residence.” The father was to have the daughter on Mondays, Wednesdays and alternate weekends. The agreement didn’t discuss the issue of out-of-state relocation. [Read more…]

Things to think about when your intended has bad credit

Love can blind a person to many things, and bad credit is one of them. But that’s an issue that can come back to bite you later. If your spouse-to-be has bad credit, it can cause huge problems, keeping you from having the kind of married life you’d planned on. It will rear its ugly head when you’re thinking about buying a house, when you’re trying to give your kids the best possible educational, athletic and enrichment opportunities and even when you’re trying to plan the wedding of your dreams. That’s why it’s important to sit down with your intended before getting married and having an honest financial conversation.

One thing you need to talk about is what kind of debt you’re both bringing into the marriage.  For example, do you or your significant other have “good” debt? In other words, long-term debt at a reasonable interest rate, like a student loan, a mortgage or perhaps a business loan? If your fiancé has this kind of debt and a solid job with a promising career trajectory and a good track record of making payments on time, chances are you’re OK.

But what if your intended has a lot of “bad” debt: short-term high-interest debt, like credit cards and car loans that show he’s living beyond his means and which he can’t realistically pay back? This is the kind of situation that could ultimately put a huge crimp in your lifestyle, serve as a source of tension and perhaps imperil your marriage. [Read more…]

Wedding cancelled; Jilted fiancé can get engagement ring back

There was a time when many states allowed a person to sue another person for breach of a promise to marry. This resulted in a lot of colorful lawsuits that provided for sensational trials and plenty of entertaining gossip in otherwise dull towns. The ability to bring such suits resulted in runaway verdicts and abuse, which is why so many states have adopted “heart balm” laws that forbid jilted suitors from bringing such cases.

But that doesn’t mean a heartbroken suitor has no recourse at all. If a recent Virginia case is any indication, a man who’s left at the altar can still sue to recover the engagement ring.

The case involved Ethan, an accountant who proposed to Julia in 2012. But the relationship went bad over the course of the next year and the engagement was called off. [Read more…]

Wife can share in ex-husband’s ‘post-employment compensation’

A divorced man could be ordered to share with his ex-wife a sum of money that he received from his employer after he stopped working, the Rhode Island Supreme Court has decided.

The husband, Richard Beverley “Bev” Corbin III, had started working with a division of megabank Wells Fargo in July 2006. He signed an agreement to work as an at-will employee for two years.  By June 2008, things started to go sour. By September 2008 he and the employer couldn’t come to an agreement about his continued employment, so he took part in Wells Fargo’s dispute resolution process, signed a departure agreement and release of any claims he might have against the company and was given a $175,000 lump sum payment.

Corbin and his wife Anne subsequently decided to divorce. During the divorce proceeding, a family court judge ruled that the $175,000 lump sum payment represented “back wages” that should be considered part of the marital estate and awarded 50 percent of it to Anne. [Read more…]

Prenups can be challenged if terms aren’t fair

Most people who are getting divorced assume that if they agreed to a prenuptial agreement before they got married they’re going to be stuck with its terms.

That’s generally the case, which is why if you’re being asked by your betrothed to sign a prenup, it’s a good idea to consult with a lawyer of your own beforehand and to make sure you speak to a family law attorney instead of a generalist who’s dabbling in divorce law.

Still, contrary to general belief prenups are not necessarily bulletproof. In fact, depending on the circumstances and where you live, a divorce court judge may be willing to toss a prenup aside if the terms are legitimately unfair. [Read more…]

Long-term care benefits for veterans and surviving spouses

Long-term care costs can add up quickly. But for veterans and the surviving spouses of veterans who need in-home care or are in a nursing home, help may be available. The Veterans Administration (VA) has an underused pension benefit called Aid and Attendance that provides money to those who need assistance performing everyday tasks. Even veterans whose income is above the legal limit for a VA pension may qualify for the Aid and Attendance benefit if they have large medical expenses for which they do not receive reimbursement.

Aid and Attendance is a pension benefit, which means it is available to veterans who served at least 90 days, with at least one day during wartime. The veteran does not have to have service-related disabilities to qualify. Veterans or surviving spouses are eligible if they require the aid of another person to perform an everyday activity, such as bathing, feeding, dressing or going to the bathroom. This includes individuals who are bedridden, blind or residing in a nursing home.

To qualify the veteran or spouse must have less than $80,000 in assets, excluding a home and vehicle. In addition, the veteran’s income must be less than the Maximum Annual Pension Rate (MAPR). Following are the MAPRs for 2017: [Read more…]