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Planning Your Future – Part 1 | Tax Tip of the Week | No. 204 June 26, 2013

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You Really Need to Plan for This – Part 1

Our death and possibility of developing an incapacitating illness are not pleasant things to think about.  But planning for them, however, must be addressed.

We are going to run a four part series of Tax Tips that will highlight some of the primary legal steps you should consider. NOTE: We are NOT attorneys.  Please consult with an attorney before following any of these suggestions.

Should you develop a chronic illness, you will need to care both for your person and for your property.   With a chronic illness, you may have a higher probability that you will not be able to manage your property and will need assistance during your lifetime. In addition, there will be a need to make sure that your testamentary transfers are upheld if a relative questions your ability or your capacity to make those decisions.

Power of Attorney

There are several types of powers of attorney for managing your property. With a chronic illness, you may not have the physical or mental capability to manage your property. A designated person can be of great assistance to you in making sure that your property is managed and used for your best care.

A general power of attorney will permit your selected representatives to have complete control over all of your financial affairs. It is quite powerful, but must also be granted carefully so that the person uses that broad power appropriately. You must have a very high level of trust in the person to give him or her general power of attorney.

A special power of attorney is a grant of limited rights. For example, a person may have the right to lease or sell your principal residence. If you are transferred to a care facility and will no longer be able to return home, it may be good to give a person the legal right to sell your residence.

A “springing” power of attorney can be particularly useful if you have a chronic illness. In the event that you are incapacitated or unable to function effectively, then your selected agent may assume the rights under your power of attorney. With a springing power, there can be difficulty in determining whether the lower level of incapacity is sufficient to trigger the power. For this reason, some states have specific requirements and restrictions on springing powers.

If your designated agent for the power of attorney has fairly broad power, you may wish to include the ability for that person to make gifts to family or gifts to charity. Typically, the right to make gifts enables your agent to continue your current pattern of gifts to family or to charity. Your agent will decide if the resources in your estate allow both the making of gifts and providing for your care.

More on this subject next week…..

As always, give us a call with any questions or concerns you may have.
You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

 

Which Group Describes You? | Tax Tip of the Week | No. 203 June 19, 2013

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One in Three People Likes Doing Income Taxes 

The following is an interesting survey we came across recently:

True, most Americans (56 percent) have “a negative reaction” to doing their income taxes and 26 percent say they “hate” doing them – but there’s still 34 percent who also say they either like (29 percent) or love (5 percent) doing their taxes, according to a pre-Tax Day survey of 1,003 adults done by the Pew Research Center.

When asked why they like doing their income taxes, 29 percent of respondents said that they expect to get a refund, 17 percent “just don’t mind it” or they are good at it, and 13 percent said that doing their taxes gives them a sense of control. The same percentage cited a feeling of obligation.

Other, detailed findings:

•Among those who dislike or hate doing their taxes, most cited the hassles of the process or the amount of time it takes: 31 percent said that it is complicated, requires too much paperwork or that they are afraid of making mistakes, while 24 percent said that it is inconvenient and time-consuming.

•Twelve percent said they dislike doing their taxes because of how the government uses tax money. Five percent of those who dislike or hate doing their income taxes said that it is because they pay too much in taxes.

•Forty-one percent of those with family incomes of less than $30,000/year said they like or love doing their income taxes, compared with 30 percent of those with incomes of $75,000 or more.

•Three out of five Republicans said they dislike or hate doing their taxes.

•Among Independents, 62 percent dislike or hate doing their taxes and 31 percent “like or love it.”

•Among Democrats, 46 percent either dislike or hate doing their taxes, while two out of five like or love it.

•A third of Americans surveyed said they do their own taxes, while 56 percent said someone else prepares their taxes.

No matter which group describes your attitude about preparing income tax returns—-we are here to help when you need us.

As always, give us a call with any questions or concerns you may have.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

 

Every Little Bit Helps…. | Tax Tip of the Week | No. 202 June 12, 2013

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$1 Billion Rebate to Ohio Employers

After being proposed by Gov. Kasich, the Ohio Bureau of Workers’ Compensation Board of Directors has now approved a nearly $1 billion rebate to employers in Ohio who were part of the state fund workers’ compensation coverage from July 1, 2011 to June 30, 2012.

The Bureau intends to issue the rebate between now and the end of August of this year.  The rebate is based upon, roughly, a 56% premium rebate to employers.

This activity was generated as a result of the Bureau determining that its reserves were higher than expected/necessary.  Employers should understand that if they were self-insured during the above-referenced rating year, they are not entitled to receive the rebate.

The Bureau of Workers’ Compensation may contact employers directly for additional information needed to issue the rebate check, so a prompt response to any information requested by the Bureau would obviously be in your company’s best interest.

Please Note:  This Tax Tip is a reprint of a notice sent by our legal friends at Coolidge Wall Co.  Special thanks go to David Korte.

As always, give us a call with any questions or concerns you may have.
You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.

Noncustodial Parents Beware | Tax Tip of the Week | No. 201 June 5, 2013

Posted by bradstreetblogger in : Tax Planning Tips, Tax Preparation, Tax Tip, Taxes, Taxes, Uncategorized , add a comment

We Have Been Urging This Form for Years….

In a divorce situation when the couple has minor children, it is common to see the divorce decree will allow one spouse to claim the children as dependents in even years and the other spouse in odd years.

Over time, unfortunately, the custodial spouse seems to “forget” this sometimes.  To protect the noncustodial spouse, the IRS requires a Form 8332 ( www.irs.gov/pub/irs-pdf/f8332.pdf) to be attached to the tax return.

A recent court case (Shenk, 140 TC No. 10) underlines the importance of properly using the Form 8332.  In this court case Mr. Shenk argued he was entitled to claim exemptions taken by his ex-wife.  The failure to have her sign an 8332 to release her claim to the exemption also cost him head-0f-household filing status and the ability to claim the child tax credit for the kids.  Since Mr. and Mrs. Shenk divorced prior to 2009, more liberal rules could have been applied to substantiate his filing.  He could have attached a signed copy of the separation agreement or divorce decree in lieu of Form 8332.

For divorces after 2008, the IRS will only accept a properly signed Form 8332 in cases where an ex-spouse improperly claims exemptions of minor children.  This case is one of several that the courts have maintained that this form is the only acceptable remedy.

We have been urging attorneys, and separating parents, for years to get this form signed at the time of the divorce when all the other paperwork is being executed.

As always, give us a call with any questions or concerns you may have.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt – the guy behind TTW

…until next week.