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TAX TALK: Three Considerations After Filing Your Taxes

Posted by Hal Zemel, CPA, J.D., LL.M. on Jul 13, 2020 9:20:00 AM

The tax filing deadline for 2019 tax returns has been extended until July 15 this year, due to the COVID-19 pandemic. After your 2019 tax return has been successfully filed with the IRS, there may still be some issues to bear in mind. Here are three considerations.

  1. Some tax records can now be thrown away

You should keep tax records related to your return for as long as the IRS can audit your return or assess additional taxes. In general, the statute of limitations is three years after you file your return. So, you can generally get rid of most records related to tax returns for 2016 and earlier years. (If you filed an extension for your 2016 return, hold on to your records until at least three years from when you filed the extended return.)

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Topics: TAX TALK

T&E TALK: A CRT Can Benefit You and Your Favorite Charity

Posted by Scott T. Ditman, CPA/PFS on Jul 13, 2020 7:00:00 AM

Are you a multitasker? If so, you may appreciate an estate planning technique that can convert assets into a stream of lifetime income, provide a current tax deduction and leave the remainder to your favorite charity — all in one fell swoop. It’s the aptly named charitable remainder trust (CRT).

A CRT in Action

You can set up one of two CRT types: a charitable remainder annuity trust (CRAT) or a charitable remainder unitrust (CRUT) and fund it with assets you own. The trust then pays out income to the designated beneficiary or beneficiaries — for example, the trust creator or a spouse — for life or a term of 20 years or less. Alternatively, if certain requirements are met, you can choose to have income paid to your children, other family members or an entity.

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Topics: T&E TALK

TAX TALK: Some are Required to Return Economic Impact Payments Sent in Error

Posted by Hal Zemel, CPA, J.D., LL.M. on Jul 6, 2020 9:20:00 AM

The IRS and the U.S. Treasury had disbursed 160.4 million Economic Impact Payments (EIPs) as of May 31, 2020, according to a new report. These are the payments being sent to eligible individuals in response to the economic threats caused by COVID-19. The U.S. Government Accountability Office (GAO) reports that $269.3 billion of EIPs have already been sent through a combination of electronic transfers to bank accounts, paper checks and prepaid debit cards.

Eligible individuals receive $1,200 or $2,400 for a married couple filing a joint return. Individuals may also receive up to an additional $500 for each qualifying child. Those with adjusted gross income over a threshold receive a reduced amount.

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Topics: TAX TALK

T&E TALK: Business Succession and Estate Planning: It can be Complicated

Posted by Scott T. Ditman, CPA/PFS on Jul 6, 2020 7:00:00 AM

Transferring a family business to the next generation requires a delicate balancing act. Estate and succession planning strategies aren’t always compatible, and family members often have conflicting interests. By starting early and planning carefully, however, it’s possible to resolve these conflicts and transfer the business in a tax-efficient manner.

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Topics: T&E TALK

SALT TALK: NYC Council Approves Bill to Reduce Interest Rate for Late Payments of Certain Property Tax Payments Due July 1, 2020

Posted by Wayne K. Berkowitz CPA, J.D., LL.M. on Jun 29, 2020 11:40:00 AM

On June 25, 2020, the New York City (NYC) Council approved a bill to reduce the interest rate for late payments of certain NYC real estate taxes due on July 1, 2020. The Mayor is expected to sign the bill, which would subject certain properties to a lower interest rate for late payment if paid by October 15, 2020.

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Topics: SALT TALK

TAX TALK: What Qualifies as a COVID-19 Distribution from a Retirement Plan?

Posted by Hal Zemel, CPA, J.D., LL.M. on Jun 29, 2020 9:20:00 AM

As you may know, the Coronavirus Aid, Relief and Economic Security (CARES) Act allows “qualified” people to take certain “coronavirus-related distributions” from their retirement plans without paying tax.

So how do you qualify? In other words, what’s a coronavirus-related distribution?

Early Distribution Basics

In general, if you withdraw money from an IRA or eligible retirement plan before you reach age 59½, you must pay a 10% early withdrawal tax. This is in addition to any tax you may owe on the income from the withdrawal. There are several exceptions to the general rule. For example, you don’t owe the additional 10% tax if you become totally and permanently disabled or if you use the money to pay qualified higher education costs or medical expenses.

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Topics: TAX TALK

T&E TALK: Concealing a Trust Could Run Afoul of State Law

Posted by Scott T. Ditman, CPA/PFS on Jun 29, 2020 7:00:00 AM

You may have good intentions in keeping a trust a secret from its beneficiaries. Perhaps you have concerns that, if your children or other beneficiaries know about the trust, they might set aside educational or career pursuits. Be aware, however, that the law in many states forbids this practice by requiring a trust’s trustee to disclose a certain amount of information about the trust to the beneficiaries.

Enforcing the Uniform Trust Code

The Uniform Trust Code (UTC), which now 34 states (and the District of Columbia) have adopted, requires a trustee to provide trust details to any qualified beneficiary who makes a request. The UTC also requires the trustee to notify all qualified beneficiaries of their rights to information about the trust.

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Topics: T&E TALK

TAX TALK: Good Records - Key to Tax Deductions, Trouble-free IRS Audits

Posted by Hal Zemel, CPA, J.D., LL.M. on Jun 22, 2020 9:34:47 AM

If you operate a small business, or you’re starting a new one, you probably know you need to keep records of your income and expenses. In particular, you should carefully record your expenses in order to claim the full amount of the tax deductions to which you’re entitled. And you want to make sure you can defend the amounts reported on your tax returns if you’re ever audited by the IRS or state tax agencies.

Certain types of expenses, such as automobile, travel, meals and office-at-home expenses, require special attention because they’re subject to special recordkeeping requirements or limitations on deductibility.

It’s interesting to note that there’s not one way to keep business records. In its publication “Starting a Business and Keeping Records,” the IRS states: “Except in a few cases, the law does not require any specific kind of records. You can choose any recordkeeping system suited to your business that clearly shows your income and expenses.”

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Topics: TAX TALK

T&E TALK: Should You “Park” Your Vehicle in a Living Trust?

Posted by Scott T. Ditman, CPA/PFS on Jun 22, 2020 7:00:00 AM

Using a revocable trust — sometimes referred to as a “living trust” — is a common estate planning strategy to manage one’s assets during life and to avoid probate at death. For the trust to be effective, you must “fund” it, meaning transferring ownership of your assets to the trust.

Perhaps you have collectible automobiles or other valuable vehicle types. Should you consider transferring them to your revocable trust? If you still owe money on an auto loan, the lender may not allow you to transfer the title to the trust. But even if you own the vehicle outright (whether you paid cash for it or a loan has been paid off), there are risks in making such a transfer.

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Topics: T&E TALK

TAX TALK: Can Seniors Deduct Medicare Premiums?

Posted by Hal Zemel, CPA, J.D., LL.M. on Jun 15, 2020 9:20:00 AM

If you’re age 65 and older, and you have basic Medicare insurance, you may need to pay additional premiums to get the level of coverage you want. The premiums can be costly, especially if you’re married and both you and your spouse are paying them. But there may be a silver lining: You may qualify for a tax break for paying the premiums.

Tax Deductions for Medicare Premiums

You can combine premiums for Medicare health insurance with other qualifying health care expenses for purposes of claiming an itemized deduction for medical expenses on your tax return. This includes amounts for “Medigap” insurance and Medicare Advantage plans. Some people buy Medigap policies because Medicare Parts A and B don’t cover all their health care expenses. Coverage gaps include co-payments, co-insurance, deductibles and other costs. Medigap is private supplemental insurance that’s intended to cover some or all gaps.

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Topics: TAX TALK

About Berdon Blogs

Our experts examine the latest trends, economics, business conditions and industry issues to provide timely information you need to maximize your tax advantages and meet your financial goals.

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T&E TALK: Gain insights into how changes in tax laws, shifts in the financial markets, and regulatory concerns will impact assets and affect preserving and transferring wealth.

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