If you give someone money or property during your lifetime, you may be subject to federal gift tax. The federal gift tax exists for one reason: to prevent taxpayers from avoiding the federal estate tax by giving away their money before they die. When it comes into play, the tax is owed by the gift giver and not by the recipient. You probably have never paid it and probably will never have to.
There are a many different benefits offered by the Social Security Administration, and knowing your options and requirements is essential. Don’t expect the Social Security Administration to know who you married, who you divorced, whether your spouse or ex-spouse died, whether or not you are caring for a young or disabled child, or if you are taking care of dependent parents. You need to equip yourself with some knowledge of the benefit provisions, ask if you don’t know, and/or find a well-informed advisor. Decisions made regarding claiming Social Security are critically important. This is the third piece of a series of articles with the objective of assisting you in making better decisions regarding claiming Social Security.
I am often asked whether it is a good idea for elderly parents to transfer their home to their children. I always ask: “Why do you want to do this?” The most common reason is to protect the house in the event one or both of the parents need nursing home care.
First, I want to emphasize that there is no easy answer to this question without knowing the full asset and income picture, as well as the health status of the parents. If I get all that information, the answer can be easy (for me!).
While there may be a lot of wisdom in the proverb “May your charity increase as much as your wealth,” there can also be wealth in properly planning your charitable giving. This wealth is derived from the economic benefit that can result from tax savings achieved by implementing certain charitable giving strategies.
Bunching of deductions is one such charitable contribution strategy. Because the Tax Cuts & Jobs Act limits many allowable itemized deductions beginning in 2018 and increases the standard deduction, many taxpayers will find that the standard deduction is more beneficial than itemizing, thus losing the tax benefit of making the gift.
Social Security is a valuable resource for older and disabled workers as well as the worker’s survivors and dependents. It provides 90% of the cash flow for one-third of retirees. It delivers 28% of the cash flow for high income retirees. A mistake in claiming these benefits can be permanent and costly to the worker and his/her family. This is the second in a series of articles on Social Security. The objective of the series is to help you make better decisions regarding claiming benefits. To make good decisions we need to identify, determine, and appreciate certain terms and concepts. The theme of this installment is the procedure used to calculate Social Security benefits and a brief discussion of average benefits. Estimating your benefits is the essential first step in the SS decision-making process.
The Tax Cuts & Jobs Act (TJCA) repealed the deduction for business entertainment beginning in 2018. This includes expenditures for taking clients to sporting events and shows, and paying for season tickets for various sporting events. Generally, any dues for social clubs such as country clubs or athletic clubs will also be non-deductible.
Most business-related meals will be 50% deductible. If no business is discussed, the meal is not deductible for tax purposes and should be classified as entertainment.
Deductions will be permissible for sponsorship payments, net of the fair market value of any meals and entertainment, as well as for payments for professional dues and meetings such as civic organizations, trade associations and professional organizations.
Proper classification of the above-cited expenditures will be important for proper tax reporting. Accordingly, it is essential to have your company’s internal accounting set up appropriately. Please contact us if you would like assistance in identifying and classifying these expenses to treat them correctly on your tax return.
By Terri L. Marakos, CPA
New Jersey Health Insurance Mandate to be effective in 2019: In response to the repeal of the Affordable Care Act’s (ACA) federal health insurance mandate that will become effective in 2019, legislation was signed on May 30, 2018 by New Jersey Gov. Phil Murphy whereby New Jersey will impose a similar mandate effective in taxable years beginning January 1, 2019. The New Jersey law requires all state residents to have health insurance or pay a penalty. The penalty will be calculated based upon the current federal formula, which is 2.5% of income or $695 per adult taxpayer and $347 per child, whichever is greater. A family’s maximum penalty is $2,085. The penalty is designed to increase each year that someone is not covered, but cannot exceed the price of a lower-cost bronze-level plan on New Jersey’s ACA marketplace. The cost of such a plan averaged just under $3,300 in 2017.
New Jersey is the second state to enact a health insurance mandate. In 2006, Massachusetts was the first state to adopt an individual mandate. Other states are currently developing similar legislation.
By Terri L. Marakos, CPA
To pre-pay or not to pre-pay? That was the question that was the topic of many discussions relating to taxes at the end of 2017. However, it only scratches the surface of the issues resulting from the passage of the Tax Cuts and Jobs Act (Act). Most, if not all, taxpayers will be affected by the sweeping reforms. Listed below are selected federal Act provisions and selected state tax provisions that may impact you for 2017 and beyond. In light of these changes, we recommend that you begin tax planning as soon as possible. That was the question that was the topic of many discussions relating to taxes at the end of 2017. However, it only scratches the surface of the issues resulting from the passage of the Tax Cuts and Jobs Act (Act). Most, if not all, taxpayers will be affected by the sweeping reforms. Listed below are selected federal Act provisions and selected state tax provisions that may impact you for 2017 and beyond. In light of these changes, we recommend that you begin tax planning as soon as possible.
By Arthur M. Brown, JD, LLM, CPA
Levine, Staller, Sklar, Chan & Brown, P.A.
Many of our clients associate estate planning with tax planning. While estate planning is often driven by a desire to minimize estate tax, tax savings is only one aspect to consider. Recent increases in the exemption amounts for federal and New Jersey estate tax may make some clients think they no longer need to consider and execute an estate plan, but this could be a critical mistake. More often than not, clients must focus on the “who”, “what”, “when” and “how” a client’s estate will pass to his or her beneficiaries.
By Clayton Himstedt, CPA, MBA
The passing of a loved one is often a very difficult time in an individual’s life. In the case of a long term illness, the loved one has the time to inform family members of the estate assets and the proper distribution of those assets. Unfortunately, there is not always an opportunity to inform family members about the estate. In the cases where a loved one passes suddenly, family members are often left to scramble to locate the deceased’s assets and the will, if one exists. This first part of this article will focus on some steps that all individuals should put in place to assist their family members.