Planning for Divorce

If you are getting a divorce, taxes are probably not highest on your list of concerns. Still, you should consider a number of tax-related issues.

 

Property Settlements

Dividing property in connection with a divorce generally has no immediate consequences for either spouse. However, if the spouse who receives property in the divorce settlement later sells it, there may be a gain to report for tax purposes. So, potential taxes should be a consideration in deciding which spouse will receive which property. If you like to figure out feasible ways to settle divorce and related property disputes at the earliest, then speak to one of top lawyers with full acknowledge of texas divorce laws.

Paterson & Dowding family lawyer Perth

 

Note that a spouse who receives property in a divorce figure any gain on a subsequent sale of the property using the transferring spouse’s basis (e.g., cost), not the property’s value when it was received.

 

Example. Michelle receives 10 acres of unimproved land in her divorce settlement. Her ex-husband bought the land for $25,000. It’s now worth $100,000. If Michelle sells the land for $100,000, she will have to report a taxable gain of $75,000 (the difference between the $100,000 selling price and the $25,000 cost basis).

 

Personal Residence

If a divorcing couple sells their home while they are still married, they are entitled to exclude up to $500,000 of gain from their taxable income if otherwise eligible for the exclusion. If the ownership of the home is simply transferred to one spouse as part of the divorce settlement, there is no taxable gain or loss at the time of transfer. However, should that spouse later sell the house while he or she is unmarried, only a $250,000 exclusion would be available.

Consult Paterson & Dowding family lawyer Perth to get help in deciding on the property rights prior to a divorce.

Retirement Benefits

A divorce settlement often determines how retirement plan benefits will be divided. However, an employer may distribute retirement plan benefits to a former spouse only after receiving a court-issued document that meets the requirements for a qualified domestic relations order (QDRO). The benefits are taxable to the former spouse who receives them pursuant to a QDRO.

 

Dependency Exemption

While the spouse who has legal custody of a child is generally entitled to claim the dependency exemption, this tax advantage is negotiable and can change from year to year. The custodial spouse can waive his or her right to the exemption, allowing the noncustodial spouse to claim it.

 

Tax Credits

Claiming a child as a dependent may impact other tax benefits. For example, if a child is attending college, the spouse who claims the student as a dependent is generally entitled to claim either the American Opportunity Tax Credit or the Lifetime Learning tax credit for tuition paid, assuming eligibility requirements are met. The law also allows a child tax credit of up to $1,000 annually for each qualifying dependent child under age 17.

 

Alimony vs. Child Support

Payments that qualify as alimony under the tax law are deductible by the paying spouse and are considered taxable income to the recipient spouse. Child support payments, on the other hand, are not deductible by the paying spouse and are not included in the recipient spouse’s income. The IRS characterizes payments that are linked to an event or date relating to a child — such as high school graduation or a 21st birthday — as child support rather than alimony. You can contact divorce attorney in Pensacola for any concerns related to the custody of your child.

These are just some of the tax planning issues that could be important in a divorce situation. Give us a call, as always, we’re available for planning assistance.

 

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).

To settle disputes within a family contact Fresno family lawyers for complete legal support.

What are the Tax Ramifications of Selling Rental Real Estate?

As with any significant transaction, the sale of your real estate will have income-tax consequences you’ll want to understand ahead of time. Although much will depend on the details of your specific situation, here are some key concepts to keep in mind.

Gain or Loss?

Figuring gain or loss for tax purposes involves comparing the amount realized on the sale to your “adjusted basis” in the property. Generally, your adjusted basis is equal to the amount you paid for the property, plus the cost of any improvements you made and minus depreciation deductions.

The tax law requires you to net your gains and losses from the sale of your Sea Pines homes or  rental property held longer than one year against each other. If the result is a net gain, it generally will be taxed as long-term capital gain, except to the extent that special rules regarding prior depreciation and losses can result in less favorable treatment. If the netting process results in a net loss, you may deduct it in full against your ordinary income.

Potential Tax Benefit

You may have losses from renting the property that you weren’t allowed to deduct in previous years because of the “passive loss” rules. Those suspended losses generally will be deductible in the year you sell your rental property.

Statistics sourced from:https://oceanfronthhi.com/neighborhoods-on-hilton-head/sea-pines-real-estate/

For any help with real estate question go to Redstones Property experts.

 

Are You Getting Divorced? Here’s what You Need to Know About Your Taxes

Divorce opens up a whole new territory of legal, personal, and financial issues. Here are some things to be aware of on the tax front.

 

Alimony and Child Support

 

Alimony payments are tax deductible; child support payments are not. On the other hand, amounts received as alimony have to be included in income for tax purposes, while child support can be received tax free.

 

Dependency Exemption

 

Typically, the parent who has legal custody of a child has the right to claim the dependency exemption. However, parents can agree otherwise. A custodial parent uses IRS Form 8332 to release the exemption.

 

Tax Credits

 

Generally, the parent who claims the child as a dependent also gets the benefit of child-related tax credits, such as the child tax credit and the credit for higher education expenses.

 

Retirement Plan Benefits

 

Retirement plan benefits received from the retirement plan of a former spouse under a court-issued document called a “qualified domestic relations order” are taxable to the recipient.

 

Personal Residence

 

Gain from the sale of a principal residence is not taxable if certain requirements are met. The tax-free ceiling is $500,000 of gain for a married couple and half that amount for a single person.

 

To learn more about tax rules and regulations and divorce, give us a call today. Our knowledgeable and trained staff is here to help.

 

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).

Group-Term Insurance – A Perk to Attract Talent

Employers know that the employees of a business will effectively determine whether the venture will be a success or not. Committed employees who are satisfied with their jobs, and the rewards their jobs bring, are a significant asset of any successful business. That is one of the reasons employers seek out ways to reward employees for their hard work and loyalty.

 

At the same time, of course, employers have to consider the bottom line — and the cost of keeping it healthy. That means staying within a reasonable budget for compensation and benefits. If costs are not kept under control, the overall financial status of the business could be threatened. One particular employee benefit generally meets the necessary requirements and provides advantages for both employees and employers. That benefit? Group-term life insurance.

 

Essentially, group-term life insurance is a program of low-cost renewable term life insurance that covers the lives of a group of individuals, such as the employees of a business. A formula that may be based on age, years of service, compensation or position is used in determining how much insurance coverage is provided. Coverage valued at twice an employee’s salary might be offered, for example. Group-term plans are popular with employees for a number of reasons:

  • Employees receive the insurance coverage at no (or little) cost, depending on whether the plan is contributory.
  • Employees can secure coverage, in most cases, without any physical examination. This can be a substantial benefit for an individual who might otherwise be unable to obtain coverage.
  • The cost of the first $50,000 of life insurance coverage provided to an employee is not included in income for tax purposes. If coverage above that level is provided, the taxable cost to the employee is determined at very reasonable rates.
  • Employees may be permitted to convert their group coverage into individual policies when they leave their employer’s workforce.

 

As for employers, they too find much to appreciate in group-term life insurance plans. Some advantages to consider:

  • A high level of insurance protection for employees can be secured at a reasonable cost, and the insurance premiums paid for the coverage are income-tax deductible by the employer.
  • Employees who are satisfied with their benefits are less likely to leave. That means lower turnover and fewer resources spent locating and training new employees. In addition, having a group-term plan in place may make it easier to attract and retain employees as a business grows.
  • Group-term life insurance programs are relatively easy and economical to administer, further easing the burden for employers.

 

Please give us a call if you would like to learn more about group-term life insurance and how it could benefit your employees and your business. We’d be happy to help.

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).

How to get the Most Benefit Out of Your Donation

Many people want to help worthy causes. You may decide to lend your support to one or more of your favorite nonprofit organizations. Making your gifts before year-end can give you the opportunity to claim a tax deduction for your charitable contributions on your tax return.

 

Give to a qualified organization

 

To gain a tax deduction for your contribution, it must be made to a qualified organization. Among others, qualified organizations include nonprofit groups that are religious, charitable, educational or scientific in purpose. The IRS has an Exempt Organizations Select Check tool on its website (irs.gov) that can help you search for qualified organizations. Note that you can’t deduct contributions to specific individuals or to political organizations and candidates.

 

Itemize your deductions

 

Your charitable contributions are deductible only if you itemize your deductions (not if you claim the standard deduction). Once income exceeds a specified level, itemized deductions are reduced.

 

Deduct the fair market value of donated property

 

If you donate stock or other noncash property, it usually will be valued at its fair market value for tax-deduction purposes. Donations of used clothing and household items are usually valued for less than the price you paid for them.

 

Pay attention if you receive a benefit

 

If you receive merchandise, tickets to a sporting event or other goods and services because of your contribution, you only can deduct the amount of your contribution that exceeds the value of the benefit you received.

 

Get a receipt

 

To deduct a contribution of any amount, you must maintain a bank or payroll deduction record or a written communication from the organization showing the organization’s name and both the date and amount of the contribution. For a contribution of $250 or more, you will need a contemporaneous written acknowledgment from the organization containing specific information.

 

Learn more

 

Look for additional details on the IRS’s website and consult your tax advisor. To discuss how you might include charitable giving in your estate strategy, please give us a call today.

 

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).

Tax Issues when You get Divorced

When a couple divorces or separates, there are many issues that need to be sorted out. One issue many forget to discuss is taxes. Here is a look at some of the tax issues divorcing couples may encounter.

File Jointly or Separately?

For tax purposes, a person’s marital status is determined on the last day of the tax year, so individuals who separate (but don’t divorce) during the year typically will need to make a choice between filing jointly or separately.

Filing separately may result in the loss of valuable tax credits and deductions. For example, the American Opportunity Tax Credit (for higher education costs) is not available to a married taxpayer who files a separate return. Typically, filing jointly will result in the lowest overall tax.

One reason to consider filing separately is for protection from the other spouse’s future tax liabilities. Generally, spouses who sign joint returns have joint and several liability — meaning that they are each fully liable for unpaid tax liabilities arising out of the return. Moreover, the IRS has the right to pursue the party who is best able to pay the full amount quickly, leaving issues of fairness to be worked out between the two filers. (The “innocent spouse” rules and/or the “separate liability” election may provide protection in some circumstances.)

Alimony Versus Child Support

Alimony represents taxable income to the recipient and a tax deduction for the person paying it. Child support, on the other hand, is not taxed to the recipient, and the person paying the child support gets no deduction for the payments. Because the tax consequences are so significant, a number of technical rules govern what constitutes alimony.

Generally, alimony must be paid in cash (or by check) pursuant to a divorce or separation agreement and terminate upon the death of the recipient. Some people — in the divorce decree or settlement agreement — try to “front-load” their alimony payments by designating payments in the early years as alimony rather than as child support. The IRS has specific rules limiting front-loading.

Property Transfers

Spouses should take care when dividing up assets. The general rule is that no gain or loss is recognized for property transfers if they occur either within one year of the end of the marriage or within six years of the end of the marriage and pursuant to a divorce or separation instrument. However, such transfers may create tax issues down the road, because when the property is sold, the owner may have to pay capital gains tax on the difference between the sale price and the basis (generally, the original cost). As a result, it’s important to consider potential future taxes when negotiating a property settlement.

Child-related Tax Breaks

Only one parent may claim the dependency exemption for a child. Generally, the dependency exemption will go to the parent with physical custody, although numerous subsidiary rules may apply. The rules for claiming the child tax credit generally track those for the dependency exemption. And the general rule for the child and dependent care credit is that the credit will go to the parent with physical custody.

Connect with our team today for all the latest and most current tax rules and regulations.

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).

What are the Tax Advantages of Being a Landlord?

Owning rental property can bring in extra income, but it’s not without its downsides. If the furnace breaks or a pipe bursts, you can be sure you’ll get the call — sometimes in the middle of the night. But for all the hassles being a landlord can bring, there are some bright spots. One of them is the ability to deduct certain expenses from your total rental income on your tax return.

Owning a rental home, apartment, or other residential property may entitle you to take some or all of the following deductions.

House Calls

Real estate taxes and mortgage interest on rental property are potentially deductible, as are fire, flood, theft, and liability insurance premiums. Services, such as lawn care, performed on the rental property and any wages you pay employees in connection with the rental activity may be deductible as well.

Wanted: Tenants

You can deduct expenses associated with renting the property, including management fees, commissions, and cleaning and maintenance.

This Old House

The costs of repairs that keep the property in good condition, such as painting, are deductible in the year you incur them. If you decide on selling your house Strategic REI purchases distressed houses, conducts quality renovations and sells.

Give your old house a brand new look with the services of expert masons near you. Look them up on the internet or learn more at FusionExteriors.com.

Cost Recovery

You generally can begin claiming deductions for depreciation on rental property in the year the property is ready and available for rent. In addition, you can recover the cost of improvements that add value to your property, such as replacing the roof or adding a deck (check out Danny Deck experts), by claiming depreciation over time.

Over the River, Through the Woods

You may be able to deduct the expenses of traveling to your property when the main purpose of your visit is to collect rental income or to manage and maintain the property.

It’s important to keep complete and accurate records of all expenses related to your rental property. Keep in mind that there are tax law limits on deducting losses from rental activities.

Don’t deal with tax issues on your own. Call us right now to find out how we can provide you with the answers you need.

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).

Don’t Forget Your Taxes when You Split Your Assets in a Divorce

Divorcing couples should pay close attention to tax issues, even if spouses are in complete agreement about how to divide their assets. Failing to take taxes into account may leave one spouse with a smaller net share than anticipated. To make all this process simpler just like how people can now file to a social security office in Omaha by online application in the same manner people can now even apply for asset separation due to any form of separation online.

 

Call It Taxable — or Not?

 

The way in which payments made by one spouse to the other are designated can have significant tax consequences. Alimony is generally deductible by the payor and taxable to the recipient. Child support is not tax deductible by the payor and does not represent taxable income to the recipient.

 

Dependent Children

 

Couples with dependent children also need to consider which spouse will be entitled to claim dependency exemptions for the children. This also can be important for determining eligibility for certain tax credits, such as the child tax credit.

 

After-tax Values

 

Dividing assets such as investments means looking beyond their current market values. Since selling an asset in the future may create a tax liability, couples should determine the “adjusted tax basis” (essentially, the cost) of each asset before they reach a settlement. The value of assets that seem equal may no longer be equal after taxes are taken into account.

 

Dividing Retirement Benefits with a QDRO

 

A qualified domestic relations order (QDRO) is a court order that spells out the property rights of a spouse or dependent during a divorce with respect to qualified retirement plan assets (such as the assets in a 401(k) account). A QDRO is required in order to transfer all or a portion of the benefits in a qualified retirement plan from one spouse to the other without losing the plan’s tax advantages. Mistakes can be costly.

 

Beyond Taxes

 

Divorcing couples who want to name new beneficiaries for their life insurance policies, retirement accounts, and other accounts whose assets pass through beneficiary designations should be sure to do so promptly. Otherwise, an ex-spouse beneficiary could receive policy death benefits or assets left in accounts should the account holder die unexpectedly.

 

All of these issues can be complex for divorcing couples. Professional advice is essential so give us a call today for more information.

 

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).

The Ins and Outs of Long-Term Health Care Insurance

Americans are living longer. Given the significant costs involved, the possibility that long-term care might be needed one day is a financial planning concern.

 

Long-term care insurance, as the EHIC application explained, is designed to cover the cost of care for individuals who need assistance with “activities of daily living,” such as bathing and dressing. Medicare and supplementary health insurance policies generally do not cover long-term care services. And Medicaid coverage can only be accessed if an individual meets strict state and federal income and asset guidelines. If you are looking for health insurance you can apply for e111, anyone can apply for it and you will get your own individual insurance card.

 

Some employers provide long-term care insurance as an employee benefit. Long-term care policies are also available to the public. Before making a decision to purchase a particular policy, individuals should compare pricing, costs, and features and investigate the insurer’s financial health.

 

Long-term care policies generally fall into two categories: indemnity and reimbursement. An indemnity-based policy pays a per diem or dollar amount of benefits for an insured’s long-term care expenses, regardless of the insured’s actual expenditures. You can receive benefits of up to $340 per day (or the actual cost of long-term care services, if greater) are income-tax free.

 

A reimbursement policy, on the other hand, does not pay a set dollar amount. Instead, the insurer pays for long-term care expenses incurred up to the policy’s maximum benefit. Policy benefits are income-tax free.

 

Premiums paid for qualified long-term care contracts are deductible as itemized medical expenses, up to certain annual limits. These premiums also include prescription coupons that the beneficiaries can benefit from. Self-employed individuals may deduct the premiums as a business expense.

 

If you would like to discuss long-term care insurance or need help choosing a policy, please contact us today.

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).

Why You Should Use QuickBooks’ Snapshots

QuickBooks provides multiple ways to get information about your customers, and their payments, and your company itself. The software’s Snapshots provide quick, thorough overviews.

What do you do when you need to get information in QuickBooks about customers or about payments they’ve made in QuickBooks? You have several options. You could, for example:

  • Create a report
  • Go to their Customer pages
  • Click on Receive Payments on the Home Page and use the Findarrows (not very elegant or fast, but would be an easy way to find recent payments).

One of QuickBooks’ strengths is its flexibility. It helps you find the exact information you’re looking for in a variety of ways. Which one you choose at any given time depends on what screen you’re working on at the moment and precisely what slice of data you need.

A Home Base

The desktop version of QuickBooks doesn’t have a “dashboard,” like web-based financial applications do. Dashboards are like home pages on steroids. Rather than just providing navigational tools and menus, Snapshots display charts and grids and lists representing the data that you’d most likely want to see when you first log on, like account balances, summaries of income and expenses, and high-priority tasks, with links to related activity screens. You can usually customize these.

QuickBooks’ Reminders tell you what needs to be done either today or very soon. But they don’t reveal anything about your financial status. Snapshots do. There are three versions: Company, Payments, and Customer.

QB-4

Figure 1: The QuickBooks Customer Snapshot sums up each customer’s activity and history in a one-page view.

Many Sections

Let’s look at the Customer Snapshot to see how these work. To find it, click on Snapshots in the left vertical navigation pane. When the window opens, make sure that the Customer tab is active; if not, click on it. Click on the arrow next to the CUSTOMER field in the center of the very top to select a customer.

You’ll see three columns of information here. The left pane displays some commonly sought numbers (like Total Sales) and some numbers that you might have trouble finding any other way (Average days to pay, etc.). In the middle, you’ll see Recent Invoices and Recent Payments. And the right section (not shown in the screen shot) includes two customizable graphs, Sales History, and Best Selling Items.

This is the default layout, the information boxes you’ll see when you first open the Company Snapshot. To remove any of them, click on the X in the upper right corner. You can restore them at any time by clicking the arrow next to Add Content in the upper left and then click the +Add button next to the one you want.

You can also move the blocks into different positions on the page. Grab one by clicking on its header and holding it, dragging it to the preferred position, and releasing it.

Personalized Pages

QB-5

Figure 2: You can add, delete, and move blocks of data around in the Customer Snapshot.

Users who have been assigned access to the data that each Snapshot contains can customize their own views by adding or deleting sections and rearranging them. So each employee can have his or her own unique-looking Snapshots, though the real-time data in all of them will be the same.

Note: If you’ve given employees besides yourself access to QuickBooks, it’s important that you assign permission levels to them. You probably don’t want everyone to be able to see and modify everything in your file. We can help you set these up.

Other Snapshots

The other two Snapshots are more complex, containing more data options. They can, however, be customized in the same ways that you personalized the Customer screen. The Payments Snapshot can give you a quick update on things like Recent Transactions and A/R by Aging Period.

The Company Snapshot lets you display up to 12 lists and charts, including:

    • Account Balances,
    • Customers Who Owe Money,
    • Expense Breakdown, and,
    • Vendors to Pay.

This would be a good page to use as your dashboard (home page), especially since it can also show you your Reminders. With the Company Snapshot open, go to Edit | Preferences | Desktop View | My Preferences and click on the button in front of Save current desktop. Remove the checkmark in front of Show Home page when opening company file if one is there.

QuickBooks’ Snapshots can get you up to speed quickly on critical elements of your accounting file, but there are other reports that you should run regularly, including complex standard financials reports that require expert analysis. We can help you interpret these, which in turn will help you make smarter, more informed business decisions.

…from the Team of Professional at RE-MMAP We are just a click or call away. www.re-mmap.com and phone # (561-623-0241).