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The I.R.S. and Tax Settlement Firms

An excellent article came across my computer from our friends at Investopedia.

I have written about the topic of debt in previous articles – ways to budget and how to stay out of debt (under Archives topic Debt on my website http://www.attorneybarbaradalvano.weebly.com).

Debt Collection

If you are struggling with the decision of what to do about debt collection notices from the IRS, the Investopedia article may be a useful starting point.

Read the article before you begin any discussions with a tax settlement firm that promises to resolve your debt for ‘pennies on the dollar’.

The truth about IRS tax settlement firms” by Mark P. Cussen, CFP®, CMFC, AFC (June 26, 2018) introduces topics such as: the IRS collection process; asset seizures; Offer in Compromise; and success rates for tax settlement firms.

One piece of advice is do not ignore I.R.S. collection notices – they will not go away!

Working To Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

Please read my full Disclaimer and How I Can Help You

Visit my website:  www.attorneybarbaradalvano.weebly.com for over 275 articles and printable infographics

 

 

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Tax Season Anxiety

“Tis the season to be anxious…”

Tax season is upon us.  Maybe you are one of the lucky few who filed early and already received their refund.  For the rest of Americans, tax time can be stressful and produce anxiety.  And scammers prey upon our anxieties.

An excellent article came across my desk from Fidelity Viewpoints about protecting personal identity and specific frauds surrounding tax filing.  The link is below:

https://www.fidelity.com/viewpoints/personal-finance/preventing-identity-theft?ccsource=email_weekly

The Fidelity Viewpoints article gives a synopsis of some of the frauds and tricks used by scammers during tax season.  The elderly are particularly vulnerable.

If you believe that you or a loved one has been a victim of theft of identity, file a Form 14019 Identity Theft Affidavit with the IRS.  The form is available on the IRS website.

Working To Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

 Please read my full Disclaimer and How I Can Help You

Visit my website:  www.attorneybarbaradalvano.weebly.com for over 250 articles and printable infographics

2018 Tax Legislation

Our friends at Investopedia have managed to put the more than 500 pages of the recent tax legislation into a compact and easier to digest form as to the impact on many individual taxpayers.

The Investopedia article: How the GOP Tax Bill Affects You by Amy Fontinelle (Updated January 3, 2018) outlines some of the major effects of the legislation.

The official title of the bill is:  “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018,” —thus possibly making it a tax legislation bill with the longest title in history.

Many will be reading numerous articles about the new tax bill and attempting to figure out the financial long and short- term effects.

As always, I caution not to rely on any one article or website for information.

Consult a professional about your individual tax situation.

I have learned from one contact that the (hard copy) IRS forms remain on ‘backorder’.

According to an IRS mailing:  “The Federal Tax Products you ordered …are not available at this time. We are holding your order pending availability.  There is no need to reorder. We apologize for the delay.”

(As of this writing, the hard copy of the requested IRS forms had not yet arrived.)

So if you require\order hard copies of tax filing forms, such as Form 1040, Instructions, Schedules, etc. you may be able to access them sooner via the IRS website.

As the IRS notice stated:  “Electronic versions of new tax products are often available several weeks before they are available in print.”  (www.irs.gov)

Working To Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

Please read my full Disclaimer and How I Can Help You

Visit my website:  www.attorneybarbaradalvano.weebly.com for over 250 articles and printable infographics

 

A Day That Went Virtually Unnoticed..

Most Americans had a lot more to think about in April (for instance filing taxes by the April 15th deadline!) than Tax Freedom Day ®.  Nevertheless Tax Freedom Day ® was a truly significant date.

“ Tax Freedom Day® is the day when the nation as a whole has earned enough money to pay off its total tax bill for the year.”

According to the venerable Tax Foundation, this year, “Tax Freedom Day ® falls on April 24, or 114 days into the year”. Yes, on April 24, 2015 Americans worked enough to pay their tax bill!  “Americans will pay $3.3 trillion in federal taxes and $1.5 trillion in state and local taxes, for a total bill of more than $4.8 trillion, or 31 percent of the nation’s income.”

According to the Kyle Pomerlau article: “Tax Freedom Day ® is one day later than last year due mainly to the country’s continued steady economic growth, which is expected to boost tax revenue especially from the corporate, payroll, and individual income tax.”

On the website you will see that Tax Freedom Day ® 2013 was 5 days later than it was the prior year, and in 2014 it was 3 days later than the prior year.  You might call that “tax creep”.

Kyle Pomerlau writes: “Americans will collectively spend more on taxes in 2015 than they will on food, clothing, and housing combined.”  An astounding statistic.

Read more interesting articles on the website:  http://www.taxfoundation.org

From the website: “The Tax Foundation is the nation’s leading independent tax policy research organization. Since 1937, our principled research, insightful analysis, and engaged experts have informed smarter tax policy at the federal, state, and local levels. It is described as” a non-partisan research think tank, based in Washington, DC.”  (and came of age during the Great Depression 1937)

Another recent article from the website is “Understanding the Marriage Penalty and Marriage Bonus” by Kyle Pomerlau.  If you are married or intending to get married, it makes for very interesting reading.

Working to Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

Please read my full disclaimer and “How I Can Help You”

Tax Time, Oh My!

Yes, that pesky time of the year has rolled around.  You will probably be reading numerous blogs/articles about tax help and planning.  As an estate planning attorney it is also a busy time of the year for me.  My clients want to make certain their Estate Plans are well positioned for the current and future financial years.

For clients with small businesses and those who are just starting a small business there is a free e-book being offered by our friends at NFIB.  www.nfib.org  (And as I always say…Free is good!)

I have written in previous blogs about the work of the NFIB and you can learn more from their website.

The NFIB current nine page e-book document offers a quick look at tax issues for small businesses, including “What’s New In 2015” and “How To Choose the Right Tax Professional”.  The e-book is titled– “Small Business Tax Guide”- and offers a brief synopsis of the difference between CPA, enrolled agent and tax preparer, plus questions to consider before hiring someone to do your tax filings.

Do not rely solely  on the free e-book, it is written as a brief synopsis, but it does offer a brief look at some tax issues for the small business owner.

Please read my full disclaimer and also the section – “How I Can Help You”.

Working to Preserve Your Wealth and Protect Your Future…in a Constantly Changing World

Being Wealthy in America

I have inserted in this article a number of “Legal Flags” in bold type to highlight certain considerations.

 UBS, a global financial services company, released the results of a 2013 survey they conducted on the question of wealth. UBS received 4,450 responses on a variety of survey questions related to the topic of determining wealth. Their survey respondents were age 25 and older and had at least $250,000 of investable assets.  Some of their thoughts may surprise you.

  A majority of those surveyed defined wealth as “having no financial constraints on what they do.”  However, when asked to quantify a dollar amount as “being wealthy,” those respondents used the dollar amount of $5 million.  Only 31% of millionaires (those having investable assets of at least $1 million) considered themselves wealthy. (Legal flag: Having a Will or a Trust is not “just for wealthy” individuals.  Moreover, whether you consider yourself wealthy or not, the titling of your assets needs to be properly coordinated with your Will or Trust.)  On the other hand, a significant percentage (62%) of respondents with investable assets between $1 million and $5 million were confident that they would be able to achieve their financial objectives for the future-this represents good, optimistic attitudes.

  An astonishing 4 out of 5 survey participants provide financial support for adult children or parents and one in five respondents share a home with a family member.  According to the survey, this financial support is being provided to family members for a variety of situations, including:  (1) paying for daily living expenses (Legal Flag: Are these payments intended as gifts or as loans?  Would a Trust be an appropriate method to continue this support into the future upon your death or disability?); (2) funding educational costs (Legal Flag: Unlimited gifts to fund education expenses can be made for federal gift tax purposes if education costs are paid directly to the institution rather than directly to the family member); (3) providing a home or lending money to purchase a home (Legal Flag: Is the loan properly documented for tax and estate distribution purposes?); (4) assisting in the purchase of ‘big ticket’ items (Legal Flag: How will this change, if at all, the distribution of your estate assets upon death?);  (5) taking care of grandchildren (Legal Flag: Are guardian appointments in place for minor grandchildren if the parents are not living?) 

 Although providing the types of support in the above examples can often strain their own financial resources, a majority of the respondents said that they enjoy being able to help their family members (whether grandchildren, adult children or aging parents.)

  The UBS survey results (and the Legal Flags noted) illustrate the importance of having a comprehensive financial and estate plan in place.  A good financial and estate plan helps achieve your own financial goals and needs, along with the financial needs of multi-generational family members.  A solid financial and estate plan will address, among other things, retirement planning, medical and health care planning, long term care planning, tax planning and estate and trust planning. 

Be aware that the Legal Flags identified above raise only a fraction of the issues that should be considered when completing your comprehensive financial and estate plan. 

  So how would you respond to the following questions:

1)  Do you consider yourself wealthy?

2) What do you think it takes to be considered wealthy in America today?

3) Are you confident that you have a good financial plan for the future?

  I would be interested in your responses.  Please let me know if I can answer any questions you may have on any of these issues.

  The entire UBS report entitled “What is Wealthy?” can be found on their website:  http://www.ubs.com, UBS Investor Watch, 3Q 2013.

 This post was previously published on my website as: How do Americans define “Wealthy?” 

 Working to Preserve Your Wealth and Protect Your Future . . . in a Changing World.

 

This post has been brought to you by The Law Office of Barbara Ann Dalvano.  This information is provided for educational purposes only and to generate ideas, provoke thought and facilitate conversation. It is not intended to create an attorney-client relationship.  Each person’s situation is different and this information should not be relied upon and cannot be relied upon as legal, tax, accounting or investment advice.  Please refer to the disclaimer on this site.

 

Barbara Ann Dalvano, Esq.

Phone and Text Message:  (719) 963-2933

Email Address:  barbaradalvano@yahoo.com

 Feel free to visit our website at http://www.attorneybarbaradalvano.weebly.com

Tidbits From a Conference

Those who have read the Profile and Bio on my website know that I am active in a professional organization – the American College of Trust and Estate Counsel (“ACTEC”). 

Here is a description of ACTEC from their official website: www.actec.org :

The American College of Trust and Estate Counsel is a national organization of approximately 2,600 lawyers elected to membership by demonstrating the highest level of integrity, commitment to the profession, competence and experience as trust and estate counselors…Its members work to teach those who aspire to enter the field and to improve and reform laws, procedure and standards while working with their peers and other professional organizations.

 Various ACTEC conferences are held throughout the year and the professional programs presented by ACTEC are outstanding.   Here is a summary of just a few of the “hot” topics that were discussed during one of the meetings last year (2013): 

  1.   Mineral interests.  More and more clients inherit oil and gas interests and more often than not, the mineral interests span more than one state.  There are many legal issues related to transferring ownership of mineral interests including properly classifying the mineral interest as a royalty interest, a working interest, an overriding royalty interest, a production payment interest or something else.  Taxation of the “fruits” of the mineral interest, as well as sorting out who bears the costs of making the mineral interest productive are just some of the interesting aspects of working with mineral interests in estate planning and probate administration. 

  2.   Subchapter “S” corporations and trusts.  “S” corporations are creatures of the federal tax law.  In general, the income, gains, deductions and losses of an “S” corporation conducting a business activity are “passed-through” to its shareholders and are reported on the separate federal and state income tax returns of the shareholders.  Generally, “S” corporations do not pay a separate corporate level federal income tax.  Often, clients who are shareholders of “S” corporations want to transfer some of their stock in the corporation to trusts for the benefit of their children and grandchildren.  These trusts need to meet technical federal tax rules so that not only are the trusts eligible shareholders of the “S” corporation, but also so that the corporation is able to continue to take advantage of the favorable status as an “S” corporation.  There are different planning and drafting options available for designing the appropriate type of trust to be a qualified shareholder in an “S” corporation.  In many cases, attention also needs to be given to how the new “net investment income tax” of 3.8% and the Medicare surtax of .9% can be minimized when trusts hold stock in an “S” corporation.

  3.   Migrating between states.  There are approximately 11 states that have a property ownership regime between spouses known as “community property.”  The rest of the states are “common law” property ownership states.  Interesting issues arise when a married couple moves from a “community property” state to a “common law” property state and vice versa.  Similar issues arise when a married couple lives in one type of property ownership state but owns assets, particularly real estate, in another type of property ownership state.  Married couples who migrate from one state to another (or who purchase property outside of their “home” state) must be mindful of taking appropriate actions to obtain or maintain the federal income tax “basis step-up” benefit of “community property;” the same federal income tax benefit does not apply for “common law” property ownership.  These issues now also affect a same sex couple whose relationship is recognized as a marriage in some states. 

  4.   IRAs.  Under current federal income tax law (2013), an IRA owner can name younger, non-spouse family members as designated beneficiaries to receive the IRA account on the owner’s death.  If properly drafted, the designated beneficiaries can receive distributions from the IRA account over their respective life expectancies – sums that are not withdrawn remain in the IRA to continue to grow income-tax deferred.  A young beneficiary could have a life expectancy of decades.  This is known as the “stretch” IRA and provides a terrific federal income tax benefit.  The “stretch” IRA provides a nest egg that can grow substantially over time (depending of course, upon investment performance), unimpeded by current taxation.  The “stretch” IRA is so popular that Congress might seek to eliminate it.  In one of many revenue raising proposals floated over the last few years, the “stretch” IRA would be limited to a five year period, rather than decades that can be achieved in certain circumstances under current tax law.  Stay tuned for more information on this as it develops. 

  5.   Portability of Estate Tax Exemption.  Each individual dying during 2013 can pass property with a value of up to $5,250,000 to his or her family members (unlimited amounts can be passed to a surviving spouse if certain requirements are satisfied).  This is commonly referred to as the “exemption” amount.  The federal estate tax law now permits a deceased spouse to “leave” his or her exemption amount to his or her surviving spouse thereby doubling the value of property that the surviving spouse can subsequently leave to family members without federal estate tax.  This is a very big paradigm shift in the federal estate tax law; estate planning options have increased and become more flexible for many clients as a result.  One drawback, however, is that Wills and Trusts that were prepared years ago may not work as originally intended when the exemption amount was much smaller and was not “portable” between spouses.  If you have not reviewed your Wills or Trusts in the last two years, now is a very good time to do so to make sure that your estate plan actually operates as intended under the new law. 

  Working to Preserve Your Wealth and Protect Your Future in a Constantly Changing World.

  This post has been brought to you by the Law Office of Barbara Ann Dalvano.  This information is provided for educational purposes only and to generate ideas, provoke thought and facilitate conversation.  It is not intended to create an attorney-client relationship.  Each person’s situation is different and this information should not and cannot be relied upon as legal, tax, accounting or investment advice. Please refer to the entire Disclaimer on this site.

  Barbara Ann Dalvano, Esq.

Phone and Text Message:  (719) 963-2933

Email Address:  barbaradalvano@yahoo.com

LinkedIn:  http://www.linkedin.com/in/attorneybarbaradalvano

  Feel free to visit our website at http://www.attorneybarbaradalvano.weebly.com.

Life Events From The IRS

During the hectic tax season, I noted that the IRS has offered an interesting posting on their website, http://www.irs.gov. Within the thousands of pages of regulations, bulletins, forms and suggestions lay a hidden gem titled:
Life Events That May Have Tax Consequences for Seniors and Retirees.
Here is an abbreviated list from the IRS listing, and some of my thoughts, additions, and notations about the life events listed.
All of these events have not only “tax consequences” but also long term financial consequence.
Note: The ‘life event’ is in bold text followed by its tax considerations.

Retirement Planning
Choosing an IRA based retirement plan
Deciding when to take Social Security disbursements
Learning about available tax sheltered plans
Alternative Minimum Tax
Mutual Fund Distribution
Knowing the rules governing pensions and annuities

Job Loss
Tax Impact of Job Loss
Tax Impact of Unemployment
Medical Savings Accounts
Sale of Assets/Investments

Starting a New Career
Tax Withholding and Estimated Tax
Employee’s Withholding Allowance
Business Use of Your Home
Travel, Entertainment, Gift and Car Expenses
Self Employment

Persons With Disabilities
Credit for Elderly or Disabled
Taxpayers With Disabilities

Decedents
Survivors, Executors and Administrators (tax rules governing)
Fiduciary Relationships (rules governing)
Claiming Refund That is Due To a Deceased Taxpayer

Divorce/Separation
Tax Facts for Seniors with a Change in Marital Status (IRS bulletin)
Community Property
Tax Rules for Divorced or Separated Parents
Alimony
Child Custody

Marriage
Innocent Spouse Relief
Same Sex couples
Community Property

Disasters and Casualties
Basis of Assets (lost in a disaster)
Casualties, Disaster and Theft tax issues

My own listing of “life events” would also include:

Selling/Buying a Home
Moving Expenses
First Time Homeowners
Expenses of Selling a Home

Selling/Transferring a Business

Relocating Internationally

Sale/Transfer of Income Property

If you are facing a “life event” and need advice, give me a call.

Working to Preserve Your Wealth and Protect Your Future in a Constantly Changing World.

This post has been brought to you through the Law Office of Barbara Ann Dalvano. This information is provided for educational purposes only and to generate ideas, provoke thought and facilitate conversation. It is not intended to create an attorney-client relationship. Each person’s situation is different and this information should not and cannot be relied upon as legal, tax, accounting or investment advice. Please read the entire disclaimer for more important information.

Barbara Ann Dalvano, Esq.
Phone and Text Message: (719) 963-2933
Email Address: barbaradalvano@yahoo.com

Feel free to visit our website at http://www.attorneybarbaradalvano.weebly.com.