Keep reading to learn about 529 Plans, a little-known option which may result in big tax savings
Heading into April, tax season is now in full swing. With the April 15th “Tax Day” due date quickly approaching, Americans filing their income taxes should be aware of increasingly-sophisticated scams. Geared towards taxpayers eager to secure a large refund, the scammers employ a wide range of tricks to prey on individuals.
On March 29, 2014, Gov. Andrew M. Cuomo and legislative leaders announced an agreement on New York State’s 2014-2015 budget which included several tax law changes.
On June 26, 2013, the U.S. Supreme Court decided United States v. Windsor, a case involving a same sex couple married in New York, where such marriages are authorized. One of the women died leaving a substantial estate. An estate tax return was filed and the surviving spouse, because of the Defense Of Marriage Act (DOMA), was not entitled to the unlimited spousal deduction that heterosexual couples could take advantage of generally reducing the estate tax on the first death to zero. The spouse filed the return, the IRS disallowed the spousal deduction, and the surviving spouse sued for a refund of taxes paid.
Well, here we are a new year and another new tax law. The American Taxpayer Relief Act of 2012 came to be on January 2, 2013. The law addresses the expiring “Bush Era Tax Cuts” previously addressed on this blog and many, many, other places. Here is what the new tax law does for individuals- note that the fixes are made permanent unless otherwise noted. An important note, “permanent” means there is no set expiration; it does not mean the law cannot be changed again. Finally, not every aspect is addressed here.
The issue of a person’s legal place of residence has significance in matrimonial proceedings and other legal matters affecting where you can sue or be sued or where you must pay taxes among others. Legal residence is primarily a function of intent.
Back in December 2010 there was a much reported flurry of work done on changes to the US Tax laws. One of the big changes was to increase the amount an individuals could pass free of estate or gift (“transfer”) taxes. The changes made it possible to pass during $5,000,000 you life or at death (or combination thereof) without paying either of the transfer taxes. This “exemption amount” was substantially more than in prior years. (The amount is adjusted for inflation and is $5,120,000 for 2012.) Additionally, the then new law made it possible for spouses to share this amount so that a surviving spouse could use any unused portion of a predeceased spouses $5,000,000.
As April 17, 2012 approaches; tax day for the 2011 Individual Income Tax, the question becomes, “file or don’t file my return?” Setting aside tax protest issues – sternly addressed by courts, this question often arises when a taxpayer does not have the money to pay their tax bill. This inability to pay is never acceptable to the IRS as “reasonable cause” not to file your return.
The news is full of talk about President Obama wanting to repeal “The Bush Tax Cuts” for the wealthy. Also, the compromise tax law that passed at the end of 2010 is scheduled to expire or “sunset” on December 31 of this year – sort of automatically repealing the tax cuts for everyone. But what are the tax cuts? How will the changes look basically? That is the key.
As we approach the year’s end, it is not too late to do some 2011 tax planning. Please consider the following suggestions from the IRS that may be helpful. If you have questions about how these issues might apply to your tax situation, please contact Carly Speyer or Stacy Bechakas at 716.636.7600 to discuss.