Category Archives: Estate Planning

Canceled Debt – Is It Taxable or Not?

Yellow CAUTION signIRS Answers,  ‘Canceled Debt – Is It Taxable or Not?’

If you borrow money and are legally obligated to repay a fixed or determinable amount at a future date, you have a debt. You may be personally liable for a debt or may own a property that is subject to a debt.  If you see yourself in this article, and are unsure of what to do, call us at (619) 589-8680. 

Cancellation of a debt may occur if the creditor cannot collect, or gives up on collecting, the amount you are obligated to pay. If you own property subject to a debt, cancellation of the debt also may occur because of a foreclosure, a repossession, a voluntary transfer of the property to the lender, abandonment of the property, or a mortgage modification. Continue reading

Estate Planning Changes : What 2015 Looks Like

Blank CalendarWealthManagement.com provides insight to Estate Planning for 2015.

The consensus at 48th Annual Heckerling Institute on Estate Planning was that because 2014 is an election year, there’s unlikely to be any major tax reform this year. The year 2015, however, could be a different story.

Continue reading

CSEA Disaster Emergency Planning Brochure

CSEA LogoCSEA ADDS TO CHECKLIST OF “GOTTA HAVE” FOR EMERGENCIES

The California Society of Enrolled Agents produced a brochure of essentials to have in your family-personal plan in the event of an disaster.

They ask, “If your home, office or apartment were to burn down today, or be burglarized, or be destroyed in an earthquake or hurricane, would you have accessible records to reconstruct your assets for tax and insurance purposes? ” This little brochure touches on things you may not have thought of covering.

  • Home Inventory
  • The Evacuation Box
  • Business Records

Just click on the picture below or here and print out a copy of this handy brochure.

CSEA Disaster Preparation Checklist

Cost Segregation? Standard Depreciation?

INVESTMENT IN REAL ESTATE HAS OPTIONS…

shutterstock_165755561Cost segregation deals with the depreciation of real estate enabling investors to dramatically increase the amount of depreciation they write off every year.

For many investors, this tax write-off can help restructure the cash flow of their properties, allowing them to make more income, while still increasing their tax benefits.

WHY SHOULD YOU CARE?

Shifting portions of the property to non-structural status allows a reduction of income tax by generating an extra 30% to 70% in tax depreciation deductions.  The result is increased cash flow.  Additionally,  extra depreciation converts ordinary rental income at your current tax rate to tax-deferred capital gain when you dispose of the property.  This effectively increases your return on investment.  The higher your tax bracket, the more savings to you.

To learn more, or to understand how cost segregation can work for you, read Understanding Cost Segregation 

MarketWatch Highlights Tax Law Changes

Have you planned for these 7 tax law changes?

CALL US - 619-589-8680Seven significant new income tax law changes went into effect at the beginning of the year as a result of two pieces of legislation:

The 2010 Health Care Reform Act
The American Taxpayer Relief Act of 2012

Although the new laws are primarily designed to increase taxes for those with higher levels of income, everyone with earned income is affected. With the first seven months of 2013 behind us, have you begun planning for these changes? Continue reading

Part I : Tips Substantiating Tax Deductions for Charitable Contributions

SUBSTANTIATING CHARITABLE CONTRIBUTIONS

Larger IRSMany charitable organizations described in section 501(c)(3), other than testing for public safety organizations, are eligible to receive tax-deductible contributions in accordance with section 170. Most eligible organizations are listed in Exempt Organizations Select Check (Pub 78 database). Continue reading

Flash – 2013 Short Sellers Get State Tax Relief

 

Franchise Tax Board, State of CAFranchise Tax Board of California 

We updated our website to include information about mortgage debt relief for taxpayers who sold their principal residences through a short sale in 2013.

According to an Internal Revenue Service (IRS) Information Letter dated September 19, 2013, the IRS determined that California taxpayers who sell their principal residences for less than what is owed on the home as part of a short sale, in which the lender agreed to the short sale, do not incur cancellation of indebtedness income. Instead, the amount of forgiven debt is included in the amount realized in determining gain on the sale of that residence.

The IRS guidance is limited to California short sales only. The IRS guidance did not specifically address other types of real estate transactions such as non-judicial foreclosures and mortgage loan modifications.

We will update information and FAQs on our website soon. For more details and updates, please go to ftb.ca.gov and search for mortgage forgiveness debt relief.

 

Pat Michael and his team at US-TaxLaws is your best source for professional tax preparation services with more than 30 years experience and thousands of satisfied clients.
Personal Tax Preparation   Business Tax Preparation   Partnership Tax Preparation
Corporate Tax Preparation   Incorporation-Choice of Entity    Business Support Services    Corporate Compliance    Audit Representation   Retirement Tax Planning   Wills & Trusts   Estate Planning   Bookkeeping   Payroll 

Helping Your Widowed Parent With Legal and Financial Issues

A checklist for helping a surviving parent get organized.

  1. Find assets.
    Often, just one spouse manages most of a couple’s finances. Be sure that your surviving parent knows where important assets are located. Over time, you may find it helpful to make a master list of bank and brokerage accounts, retirement plans, insurance policies, real estate, items in safe deposit boxes, and other significant assets. Make note of sizeable debts as well.
  2. Collect insurance.
    Find out whether your surviving parent is the beneficiary of a life insurance policy and, if so, contact the insurance company and file a claim for benefits. This is one of the first things you can do to ensure there’s enough cash on hand.
  3. Apply for benefits.
    Helping your parent apply for Social Security benefits should be near the top of your list of things to do. Contact the Social Security Administration (www.ssa.gov) for information about survivor’s benefits. In addition, investigate other benefits to which your parent may be entitled, including pension, veterans, or other employment-related payouts.
  4. Change title to jointly owned assets.
    If your parents owned property together — as joint tenants or in another form of joint ownership — the survivor should change the title document to show that he or she now owns the property alone. This will make it easier for your surviving parent to manage the property — and for you to wrap up your surviving parent’s affairs when the time comes. Check title documents for real estate, vehicles, bank or brokerage accounts, and other significant assets to see whether you need to update ownership records.
  5. Update will and trusts.
    Losing a mate will more than likely cause your parent to reevaluate his or her own plans for leaving property at death. If your surviving parent has a will or living trust, you should eventually have him or her review it and change it, if necessary, to reflect your parent’s current life circumstances and wishes. Also take a look at who is named as beneficiary of retirement plans and any other major assets that will pass outside the will or trust.
  6. Take steps to avoid probate court.
    When changing title documents and reviewing your surviving parent’s estate plan, you should consider whether any part of the estate will be subject to probate when he or she dies. Simple probate avoidance methods could save a bundle of time and money — for example, your parent might name pay-on-death beneficiaries for a bank or brokerage accounts that used to be jointly owned.
  7. Update insurance policies.
    If your deceased parent is still named as a beneficiary on insurance policies, those policies will need to be modified, cashed out, or canceled, depending on your parent’s current needs and wishes.
  8. Make a health care directive (living will).
    If your parent hasn’t already prepared a living will and a durable power of attorney for health care, now is the time. These important documents will allow your parent to set out health care wishes and name a trusted person — perhaps you — to oversee his or her care and make medical decisions if that ever becomes necessary. Making health care documents can also open the door to discussing your parent’s feelings about organ donation, burial or cremation, and other final arrangements.For more information, seeHelping a Loved One Make a Power of Attorney.
  9. Make a financial power of attorney.
    This document lets your parent name someone to handle financial matters — from writing monthly checks to managing investments — if he or she ever becomes incapacitated and unable to take care of things alone. Without this document in hand, you or other loved ones would most likely have to go to court to get the necessary authority. For more information, see Helping an Elder Make a Power of Attorney.
  10. Organize documents.
    A world of careful planning won’t do any good if you can’t find important paperwork when you need it. Do what you can to help your mom or dad set up a good filing system. Here are some critical things to keep track of:
    – will, trust, and other estate planning documents
    – powers of attorney
    – bank and brokerage account statements
    – retirement plan statements
    – government benefit paperwork
    – insurance policies
    – business records
    – tax returns
    – credit card and debt information
    – secured places, such as a safe or safe deposit box
    – email accounts and passwords
    – property records for real estate, cars, and other major assets.

Source: NOLO 

Pat Michael and his team at US-TaxLaws is your best source for professional tax preparation services with more than 30 years experience and thousands of satisfied clients.

Personal Tax Preparation   Business Tax Preparation   Partnership Tax Preparation
Corporate Tax Preparation  Incorporation-Choice of Entity   Business Support Services
Corporate Compliance   Audit Representation  Retirement Tax Planning   Wills & Trusts
Estate Planning   Bookkeeping   Payroll 

Moves To Lower Your 2013 Tax Bill

1040 Sm Photo IstockTAX MOVES TO MAKE BEFORE CHRISTMAS.
Ways to reduce your 2013 tax bill. 

December 31 is approaching quickly – and there are some things you can do to lower your tax bill.  We encourage our clients to come in for a review, especially if there are life-situation changes. Did they marry or divorce? Is there are new child? Is there unscheduled income, or benefits. We want to look at that before the close of the year.   

As part of our updates on the laws that are changing, we are sharing valuable articles for your convenience.

This article is the first of two we will bring you from one of MarketWatch of the Wall Street Journal.

 

Continue reading

Congress Looking At New Stuff To Tax

Congress is looking for potential sources of tax revenue and the list includes employer-paid healthcare, retirement plans, medicare and other potential sources.

Continue reading

Second Half 2013 Tax Questions Just To Be Safe

Pat_003_S_Mid Year Tax Questions You Need To Ask  Yourself

This is a good time to take a look at your present financial picture.  Has your income or withholding changed in a significant way? If you are my client – then I need to know.

  Most new tax rules affect incomes above $200K.  Will these new rules affect you?  If you aren’t sure how these new rules will affect your taxes, give me a call.

 Are you sure you are withholding enough to cover your taxes?  Let’s go over your information, and make sure it is where it needs to be.  If it isn’t enough, and you need to make estimated tax payments, I can help you.

√  Significant changes in your income?  If so, it can have a big impact on your taxes.  Don’t get fooled by the “graduated tax rate”.  10% income increase can result in a 20% increase in your taxes.  Don’t wait on this, call me ASAP so we can be sure you are covered.

√  Life-Changing Events?    Divorce, Marriage? New Child?  All these shape how the government looks at you.  If there are job changes, home sale, moves, launching a new business, loss of a job or starting a new one, these are all important events that impact your financial profile.  Let me know about any of these.

√  Unscheduled Income?  Unemployment benefits, social security or pension, sale of an investment property or rental …. all of these can affect your tax rate also.  Let me know as early as possible so we can factor them in.

When it comes to taxes, I’m in a “need-to-know” capacity.  I need to know about anything that can affect your tax rate so you aren’t caught off-guard.

Have a great Autumn!

Taxes, Death… and Marriage?

Marriage – tax advantage?  Maybe yes, maybe no.

Marriage can have a tax-rate advantage, but it depends on the incomes.  Did you know you can actually save tax money if one spouse is making a lot less than the other?  It’s true.  The tax bill of the high-income earner can almost (if not totally) be cancelled out.  Continue reading