New Spending Package Includes Sweeping Retirement Plan Changes
The $1.4 trillion spending package enacted on December 20, 2019, included the Setting Every Community Up for Retirement Enhancement (SECURE) Act, which had overwhelmingly passed the House of Representatives in the spring of 2019, but then subsequently stalled in the Senate. The SECURE Act represents the most sweeping set of changes to retirement legislation in more than a decade. Continue reading “The SECURE Act will affect all of our retirement plans.”
These credits are quite different. First, the child tax credit. The purpose of this credit is simply to provide tax relief for parents, working or not, who have qualifying children under the age of 17. A qualifying child may be a dependent child, stepchild, adopted child, sibling, or stepsibling (or descendant of these individuals), or an eligible foster child. The child must be a U.S. citizen or resident and must live with you for over half the year. Continue reading “What is the difference between the child tax credit and the child and dependent care tax credit?”
Like most wage-earning employees, your 16-year-old will most likely have to pay Social Security tax on her earnings. Of course, every rule has its exceptions. In this case, there are three. She may be exempt from paying Social Security taxes if she (1) works in the family business, (2) works in domestic service, or (3) delivers newspapers. Continue reading “Does my 16-year-old have to pay Social Security tax on her earnings?”
Even though tax filing season is well under way, there’s still time to make a regular IRA contribution for 2018. You have until your tax return due date (not including extensions) to contribute up to $5,500 for 2018 ($6,500 if you were age 50 or older on December 31, 2018). For most taxpayers, the contribution deadline for 2018 is April 15, 2019 (April 17 for taxpayers who live in Maine or Massachusetts).
You can contribute to a traditional IRA, a Roth IRA, or both, as long as your total contributions don’t exceed the annual limit (or, if less, 100% of your earned income). You may also be able to contribute to an IRA for your spouse for 2018, even if your spouse didn’t have any 2018 income.
You can contribute to a traditional IRA for 2018 if you had taxable compensation and you were not age 70½ by December 31, 2018. However, if you or your spouse was covered by an employer-sponsored retirement plan in 2018, then your ability to deduct your contributions may be limited or eliminated, depending on your filing status and modified adjusted gross income (MAGI). (See table below.) Even if you can’t make a deductible contribution to a traditional IRA, you can always make a nondeductible (after-tax) contribution, regardless of your income level. However, if you’re eligible to contribute to a Roth IRA, in most cases you’ll be better off making nondeductible contributions to a Roth, rather than making them to a traditional IRA.
Continue reading “There’s Still Time to Contribute to an IRA for 2018”
I just made a gift. Do I have to file a gift tax return
A federal gift tax return must be filed if any gifts you made during the calendar year were other than:
- Gifts to your U.S. citizen spouse
- Gifts to a political organization for its own use
- Gifts to qualified charities, if no other interest has been transferred for less than adequate consideration or for other than a charitable use
- Gifts totaling $15,000 (in 2018, $14,000 in 2017) or less to any one individual, unless you and your spouse are “gift-splitting”
- Amounts paid on behalf of any individual as tuition to an educational organization or to any person who provides medical care for an individual
However, you may want to file a gift tax return in certain circumstances even if the rules do not require it. For example, you should consider filing whenever you sell hard-to-value assets, such as real estate or stock in a family business, to a relative. This is because the IRS can claim that transactions between family members were actually gifts in disguise. Disclosing such transactions on a gift tax return means that the IRS has only three years to challenge the value.
If you file a federal gift tax return, you must use Form 709 and file by April 15 of the year following the year in which the gift was made.
The federal gift tax rules are complex. If you believe you have made gifts that might be subject to gift tax, you should consult an experienced tax specialist. Check with your state about its own rules regarding gifts, too.
IMPORTANT DISCLOSURES Continue reading “Gift Tax ?”
Charitable giving can play an important role in many estate plans. Philanthropy cannot only give you great personal satisfaction, it can also give you a current income tax deduction, let you avoid capital gains tax, and reduce the amount of taxes your estate may owe when you die.
There are many ways to give to charity. You can make gifts during your lifetime or at your death. You can make gifts outright or use a trust. You can name a charity as a beneficiary in your will or designate a charity as a beneficiary of your retirement plan or life insurance policy. Or, if your gift is substantial, you can establish a private foundation, community foundation, or donor-advised fund.
Making outright gifts
Continue reading “Charitable Giving”