|
|
Short
& Long Term Capital Gains
Remember
that short-term capital gains are taxed at your highest marginal tax rate
and not the special long-term rates. It is to your advantage to make sure
you hold a capital asset for more than one year if you have a gain and want
to achieve maximum tax savings.
Also,
remember that when you carry over a loss, it retains its character of being
either “long” or “short” term. Under this rule, a long-term capital
loss you carry over to the next tax year will reduce that year’s long-term
capital gains before it reduces that year’s short-term capital gains.
Back
to Tax Archives
|
|
|
Bad
Debt Deductions
If
you have loaned someone money and are now unable to collect the amount owed
to you, you may be able to claim a deduction for a bad debt. There are
differences between business and non-business bad debts, with rules
distinctive to each. You may deduct a non-business bad debt only in the year
in which the debt becomes totally worthless. You may deduct a partially
worthless business debt when the uncollectible amount can be identified with
reasonable certainty.
Back
to Tax Archives
|
|
|
Worthless
Securities
In
order to claim a loss for worthless securities you must be able to
demonstrate that the securities are now totally worthless. A deduction for
partial worthlessness is not allowed. To prove worthlessness you should
secure a statement from a third-party or the company that issued the
security, stating that the security is worthless.
Back
to Tax Archives
|
|
|
Wash
Sales
If
you violate the wash sale time limits, the loss that you are not able to
currently deduct is not permanently lost. A wash sale occurs when you buy a
security within 30 days (before or after) of having sold the same security
at a loss. Instead the disallowed loss is added to the cost of the new stock
or securities you purchased. Your holding period for the new stock or
securities includes the period of time that you held the stock or securities
that you sold.
Back
to Tax Archives
|
|
February |
|
|
Household
employees
If
you hire someone to care for your children and the care is provided in your
home, the IRS will generally consider you an employer. If you pay the
domestic worker more than $1,400 during 2004, you will be liable for the
employer’s share of FICA tax. You need not withhold federal income tax
unless the domestic worker asks you to withhold and you agree. Any tax that
you owe because of your employer status, is generally reported on Schedule
H, “Household Employment Taxes,” which is filed with your Form 1040. You
may also be responsible for Texas unemployment taxes.
Back
to Tax Archives
|
|
|
Higher
Education Expenses
The
deduction for higher education expenses may be available to taxpayers who do
not qualify for the Hope and Lifetime learning credits because their AGI
exceeds the phase-out thresholds. In 2004, the credits are completely phased
out if the taxpayer’s modified AGI exceeds $52,000 or 105,000 for joint
filers; but the maximum $4,000 deduction is available for taxpayers with AGI
up to $65,000 or $130,000 for joint filers.
Back
to Tax Archives
|
|
|
Self-Employed
Retirement
A
person should consider making contributions to a traditional IRA during a
period of slowly reducing tax rates. The increasing contribution amounts
allow you to shelter more of your income from the higher tax rates. The
increasing contribution amounts allow you to shelter more of your income
from the current higher rates. Once the rates have been reduced, you can
change from a traditional IRA to a Roth IRA. You will have to pay income tax
on all your contributions to date, but the taxation will be at the new lower
rate. This will result in a lower tax liability. One must take care,
however, that your income level doesn’t increase to the point where you
will be disqualified from making the conversion to a Roth IRA.
Back
to Tax Archives
|
|
|
Vehicle
Donations in the New Year
If
you donate a vehicle to a charity in 2005, you will now no longer be able to
deduct what the vehicle’s fair market value is according to various
sources, such as Kelly Blue Book. Instead, you will be required to deduct
the amount that the charity subsequently sells the vehicle for. This also
applies to donated boats and airplanes. However, keep in mind that donations
of vehicles valued at under $500 will not be limited to this amount but may
use the fair market value for the vehicle.
Back
to Tax Archives
|
|
March |
|
|
Teachers’
Classroom Deduction
If
you are an instructor, teacher, principal, or aide of children from
kindergarten though 12th grade, you can still deduct the amount
of expenses you incur out of pocket for the classroom. It is limited to $250
as a deduction to get to adjusted gross income. This will apply to the 2004
tax year and to the 2005 tax year before it expires.
Back
to Tax Archives
|
|
|
Investments
in Qualified Small Businesses
A
substantial tax advantage exists for an individual that invests in certain
small businesses that operate as corporations. The tax advantage is that the
investor is allowed to exclude 50% of the gain realized from the sale of
qualified small business stock. To qualify though, the stock must be held
for at least five years and the investor must have acquired the stock at its
original issue. In addition, this rule applies to stock issued after August
10, 1993 by a C corporation that operates an active business and has less
than $50 million in gross assets.
Back
to Tax Archives
|
|
|
Avoiding
Penalties by "Annualizing" Income
If
your income varied a lot in 2004 (the amount you received did not get
distributed evenly throughout the year for one reason or another), you can
reduce, or eliminate, the amount of estimated tax penalty you might have
taken by annualizing your income. This lets the IRS know that your income
did not come in equal amounts during 2004 and that your estimated payments
were made based on actual amounts received throughout the year. If you did
have insufficient tax payments at the end of 2004 (because of a large payoff
at year end from a capital gain, for example) you can always make up for
this shortfall by paying more on your final installment (usually due January
15th) or conversely your employer can withhold more before the
end of the year. This is allowed because additional withheld tax is treated
as coming from all four quarters of the year.
Back
to Tax Archives
|
|
|
Deductible
Travel Expenses for You (Boss) and Your Spouse (Employee)
The
deductibility of travel expenses is another reason to have your spouse
working with you in your business. If
their presence fills a legitimate business need, then the cost of the spouse
accompanying you on your business trip as an employee of your business will
be fully deductible. If any portion of the trip is recreational, you will be
required to prorate the expenses for both yourself and your spouse between
what is business and what is not. The costs of your return back to your tax
home will still be deductible even tough your trip may turn to pleasure
following business.
Back
to Tax Archives
|
|
|
Meals
and Entertainment Deductions for the Self-Employed
Ticket
prices to sporting events or theatrical shows purchased through a local
ticket broker will not be entirely deductible. The face value of the ticket
only will be deductible for income tax purposes. So, if you have bought
tickets that are worth $50 that you paid $200 for, you will only have $50
that may be deducted.
Back
to Tax Archives
|
|
April |
|
|
Self-Employed
Home Office Deductions
Before
you think about whether you are eligible to take the home office deduction,
first determine the tax consequences on the sale of your home. The portion
allocated as your home office will not qualify for the exclusion of capital
gains on the sale of a principal residence if the business use of the
property takes place in a separate structure, such as a detached garage.
Because you are required to allocate the sale gain between residential and
business use, the capital gains tax on the sale of the business portion of
the home may be larger than the total depreciation deduction that you
benefit from in prior years. In that case, a home office deduction may not
generate a net tax advantage over time.
Back
to Tax Archives
|
|
|
Retirement
for an Employee Spouse
One
of the benefits of employing your spouse is that they are regarded as an
employee to whom you can then offer retirement benefits to, such as a
retirement plan. You will then be able to shelter more of your business’
net earnings in a tax preferred account, which will increase the family
wealth at retirement.
Back
to Tax Archives
|
|
|
Deductibility
of Moving Costs Related to Employment
You
are able to deduct the moving costs that come with starting a new job if you
are able to meet a time and distance test. Your move can meet the distance
test if your new place for work is at least 50 miles further from your old
home than your old workplace was.
If it is a first job, then your new place of work must be at least 50 miles
from the previous place you lived in order to meet the distance test. Also,
remember that this requires a time test where you are a full-time employee
at your new job for 39 weeks during the first 12 months following the move.
Back
to Tax Archives
|
|
May |
|
|
Estimated
Taxes in Your Future?
Most
people pay taxes once a year. However some people are required to make
estimated payments four times a year. This may be you if these following
instances apply to your individual situation:
-
Income
came this year from areas you forgot to consider when you filed your W-4
withholding form for the year.
-
A
nanny was hired and you paid her federal payroll tax. These can be paid
quarterly or in one lump sum when your taxes are filed in April.
-
You
or your spouse became self-employed during the year, making you
susceptible to self-employment taxes.
-
There
were some large capital gains in the stock market you received during
the year, but you didn’t change your withholding amount.
If
you think any of those might apply to you, consider next if the following
applies to you.
-
Your
2005 tax bill net of salary withholding to be less than $1,000.
-
You
are a U.S. citizen or resident whose tax bill for 2004 was zero.
If
these previous two apply to your situation, you will not need to make
estimated payments. Anyone else may need to make estimated payments for the
year.
More
information can be obtained by downloading the IRS Publication 505 from the
IRS’s website at: http://www.irs.gov/pub/irs-pdf/p505.pdf
Back
to Tax Archives
|
|
|
Write
Off Your Wardrobe!
Even
though it is important to look good at work, this does not mean a person
will be able to deduct the cost of what they wear. If you are in a job that
requires you to wear a uniform to work, you will be able to write off the
cost of your clothing. However, if the attire is diverse enough that it can
be worn away from your line of work, it will not be deductible because it
then does not qualify as a uniform. For example, a suit is not deductible,
even if the employer requires it. However, a postal worker’s attire is
because that is not clothing you can (or should) wear away from your job. Of
course, a suit can be worn in other places. Additionally, the dry cleaning
associated with the uniform is deductible. Other people that would be able
to deduct their clothing and cleaning costs could include pilots, nurses,
and mechanics. These costs are deductible as itemized deductions above 2% of
adjusted gross income.
Back
to Tax Archives
|
|
|
Thinking
About Adopting?
You
may not know that expenses you incur in the adoption of a child are
deductible. To be eligible expenses, the child must be under 18 years of age
or else physically or mentally unable of taking care of themselves. Expenses
can include attorney’s fees, traveling fees, court costs, adoption fees,
and meals while away on travel. These expenses must be directly incurred in
connection with adopting a child. So, expenses for adopting a child of your
spouse or surrogate parenting would not be allowed. Also, it must be legal
to be an eligible expense.
The
amount of the credit is $10,390 for each child or effort to adopt a child.
Use form 8839 to claim the credit. The credit will be phased out for high
income people. Know that credits for foreign children will be allowed only
if the adoption is successful. For domestic adoptions, the credit may be
claimed whether or not the adoption was successful. A special needs child
that is adopted will allow for the full credit even if no expenses were
incurred in the adoption. A special needs child may be determined by the
child’s age, race, ethnic background, or whether the child has a handicap.
Employer’s can provide adoption assistance also that can be excluded from
the adoptive person’s income.
Back
to Tax Archives
|
|
|
Are
You a Foreigner?
If
you are someone that must work overseas for long periods of time during the
year or over many years, you may qualify to receive the foreign earned
income exclusion on wages earned. If you are a U.S. citizen, you may qualify
to be either a bona fide resident of the country you are in or else qualify
under the physical presence test. This exclusion allows up to $80,000 in
money earned abroad to be excluded from your taxable income. You could
qualify for the bona fide residence test if you maintained your tax home
outside the United States for an entire tax year. This would allow you to
come to the United States for more than 35 days a year without losing your
status, provided the trips you took back to the States were temporary.
Failing this, you could still qualify under the physical presence test,
which would allow up to 35 days in the Unites States during any 12
consecutive month period, measured at any point in the year. This would also
apply to U.S residences, not just U.S. citizens. So, if you went abroad June
1, you would prorate the amount of the year you were overseas times the
maximum amount. This would be $46,667 (the percentage of seven months
divided by twelve months times the $80,000 threshold). Using this scenario
under the bona fide residence test, however, you will have to remain in that
other country without interruption through all of 2006 (the next entire tax
year) before attaining bona fide residency, but again, it would allow you
more days in the Unites States.
Back
to Tax Archives
|
|
|
Mortgage
Interest Credit
Most
taxpayers with a mortgage deduct the mortgage interest as an itemized
deduction on Schedule A. However,
certain taxpayers are allowed to take a portion of their mortgage interest
as a tax credit, reducing their tax liability.
To
be eligible to take the tax credit, taxpayer must first qualify for the
mortgage credit certificate program. The
household income must be under certain limits based on the number of persons
in the household. Also, the
taxpayer must be a “first time home buyer”.
A first time home buyer is a person who has not owned a home in the
last three years. The
certificates are obtained from state and local governments and the mortgage
must be obtained from a participating mortgage company.
The
credit is the sum of the certificate credit rate, which is reflected on the
issued certificate, times the mortgage interest paid during the year.
The credit rate may not be less than 10% or more than 50%.
If the credit rate on the certificate is greater than 20%, the
maximum allowable credit is $2,000. The
credit is limited to the regular income tax less the alternative minimum tax
less certain other tax credits. Any
unused portion of the credit is carried forward for three years.
Back
to Tax Archives
|
|
June |
|
|
Retirement
Account Distributions
Certain
life events require immediate cash that people just don’t have lying
around. While there are several
sources to obtain the cash needed, some people resort to taking money out of
the retirement accounts. If they
have not reached a certain age there are tax consequences when doing this.
If
the person taking the distribution has not reached age 59 ½, there will be
a 10% penalty on the distribution, which is in addition to the regular
income tax on the amount taken. There
are several exceptions to the 10% penalty rule which include:
-
Death
or disability of the participant
-
Distributions
after leaving service which are equal periodic payments over the
participant’s lifetime
-
Distributions
after leaving service provided the participant reached age 55
-
Distributions
to a nonparticipant under a qualified domestic relations order
-
Distributions
not exceeding deductible medical expenses and
-
Certain
distributions by ESOP’s of dividends on employer securities.
If
you have no other choice but to take an early distribution from your
qualified retirement plan, the proper amount of tax withholding should be
deducted from the distribution. This
includes the income tax at your marginal rate plus the 10% penalty.
If you think you will just pay the tax next year when you file your
return, remember: You are most
likely taking the money for “emergency” purposes.
All of the money you take is probably going to the spent, leaving
nothing for taxes when the time comes.
Back
to Tax Archives
|
|
|
Health
Savings Account (HSA)
Beginning
in 2004, individuals covered by a high-deductible health insurance plan and
not eligible for Medicare may be able to open a HSA - a tax-favored savings
plan in which individuals make deposits to pay qualified health
expenses. Employers can also contribute to a HSA plan. Note: A
high deductible plan has an annual deductible of at least $1,000 for
individual coverage and at least $2,000 for family coverage.
Back
to Tax Archives
|
|
|
Reduced
Capital Gains Tax Rates The
maximum tax rate on net long-term capital gains is 15 percent. For
taxpayers in the 10 or 15 percent tax brackets, net long-term capital gains
are taxed at 5 percent. To qualify, an asset must be held for more
than one year before selling. Capital gains on investments held for
one year or less may be taxed at rates as high as 35 percent. On
collectibles held for more than one year, the maximum capital gains tax
remains at 28 percent.
Back
to Tax Archives
|
|
|
Offset
Capital Gains with Losses Net
capital losses are fully deductible against capital gains. If your
losses exceed your gains, you can deduct up to $3,000 in net capital losses
against ordinary income ($1,500 if married filing separately). Any
remaining capital losses may be carried over to the next year.
Back
to Tax Archives
|
|
July |
|
|
Individual
Retirement Accounts (IRAs)
You
may contribute up to $3,000 to fund a traditional or Roth IRA. Those
age 50 or older can make a catch-up contribution of $500. Traditional
IRA contributions may be deductible depending on your AGI and whether or not
you are covered by an employer's pension plan. Roth IRA contributions
are not deductible, but the earnings accumulate tax-deferred and may be
withdrawn tax-free if you meet the qualified distributions
requirements.
Back
to Tax Archives
|
|
|
Employer-Sponsored
401(k)
Pre-tax
contributions to employer-sponsored retirement plans reduce your taxable
wages. Matching contributions and income earned within your plan are
also tax-deferred. The employee contribution limit for 2005 is $14,000 (up
from $13,000 in 2004). Employees over 50 years of age may make a
catch-up contribution of $4,000 for 2005 (up from $3,000 in 2004).
Back
to Tax Archives
|
|
|
Dependent
Care Credit
Parents
who, in order to work, must pay for the care of a dependent under the age of
13 may be eligible for a tax credit of between 20 and 35 percent of
qualifying expenses. For 2004, the dollar limit on the expenses toward
which you can apply the credit percentage is $3,000 for the care of one
dependent and $6,000 for two or more. This credit can also apply to
care of your disabled spouse who is unable to care for himself or herself,
or for care of any disabled person who is unable to care for himself or
herself that you can claim as a dependent. For more information,
consult: http://www.irs.gov/pub/irs-pdf/i2441.pdf
Back
to Tax Archives
|
|
August |
|
|
Child
Tax Credit
The
Child Tax Credit allows you to reduce your federal income tax by $1,000 for
each qualifying child under the age of 17. This credit is phased out
if your modified AGI is above a certain amount.
Back
to Tax Archives
|
|
|
Education
Tax Credits
Two
popular credits can help defray the cost of education. The Hope
Credit, worth up to $1,500 for each qualifying student, is available for
each of the first two years of college. A Lifetime Learning Credit of
up to a maximum of $2,000 can be used by anyone for undergraduate, graduate,
and professional degree courses. Both credits are phased out as
modified AGI increases from $85,000 to $105,000 for joint filers and from
$42,000 to $52,000 for single filers. You cannot claim both credit for
the same student in the same tax year.
Back
to Tax Archives
|
|
|
Dividends Dividend
income from a domestic or qualified foreign company is taxed at 15 percent
(5 percent for taxpayers in the 10 and 15 percent tax brackets). To
qualify for this tax rate, you must buy the stock at least one day before
the ex-dividend date and hold it for at least 60 more days. The
ex-dividend date is the last date on which shareholders of record are
entitled to receive the upcoming dividend.
Back
to Tax Archives
|
|
|
Tuition
Deduction and Student Loan Interest For
2004 and 2005, the maximum deduction for higher education tuition and
qualifying fees is $4,000. You qualify for the deduction if your
modified AGI is under $65,000 for single filers and $130,000 for joint
filers. This deduction phases out for single filers with AGI between
$65,000 and $80,000 and for joint filers with AGI between $130,000 and
$160,000. Taxpayers
whose AGI falls into qualifying limits can deduct up to $2,500 in student
loan interest, regardless of whether they itemize.
Back
to Tax Archives
|
|
September |
|
|
Educational
Travel Expenses for Professionals
Deductions
are allowed for educational travel reasons if it is ordinary and/or
necessary adjunct to a business activity, such as maintaining or enhancing
employment skills within the current related line of business.
Back
to Tax Archives
|
|
|
Deducting
Business Start-Up and Expansion Expenses
Start-up
cost and expansion expenses in a trade or business can be recouped as tax
deductions either the year the cost takes place or the follow year by either
immediate expensing or a 60-month amortization if such cost has a useful
life beyond one year.
Back
to Tax Archives
|
|
|
Take
Steps to Increase Deductions
The
larger the number of deductions you claim, the smaller your taxable income
will be and the less taxes you'll owe. The
best ways to boost deductions is to pay as many business expenses possible
during the taxable year, such as stocking up on supplies, getting equipment
or vehicle maintenance done in November or December, and prepaying rents,
taxes, and insurances that are due at the beginning of the following year.
Back
to Tax Archives
|
|
|
Home
Office Deduction
As
a small-business owner, you may qualify to take a home office tax deduction
if you use a portion of your home for business purposes.
The home office must be your principal place of business used
regularly and exclusively for business only, and that there is no other
fixed location where you conduct substantial administrative and management
activities of your business.
Back
to Tax Archives
|
|
October |
|
|
Job
Hunting Expenses
You
can deduct expenses incurred form the start to the finish of a job search,
if done in your current field of work or are a retired service man or woman.
This is not allowed if entering into a new field for the first time
or have a prolonged absent within the field.
Expenses such as typing and printing resumes, postage, phone calls,
travel to interviews, employment agency cost, job counselor cost, and
referral services cost can be deducted as miscellaneous expenses under
itemized deductions.
Back
to Tax Archives
|
|
|
Work
Opportunity
Tax Credit
WOTC
is available on an elective basis for employers who hire individuals from
one of eight targeted groups; families eligible to receive benefits under
the Temporary Assistance for Needy Families (TANF) program, high-risk youth,
qualified ex-felons, vocational rehabilitation referrals, qualified summer
youth employees, qualified veterans, families receiving food stamps, and
persons receiving certain Supplemental Security Income (SSI) benefits. The
credit equals 40% of qualified wages (reduced to 25% for employment of 400
hours or less.
Back
to Tax Archives
|
|
|
Tax
Breaks for Commuting to Temporary Job Locations
If
you usually work or perform services at a regular place or places of
business on a regular basis, you are then allowed to deduct your daily
transportation costs of travel to a temporary work location if the job at
the temporary work location is expected to last one year or less.
Back
to Tax Archives
|
|
|
Property
Transfers Between Spouses
No
gain or loss will be recognized on any transfer of property between spouses
during their marriage, or former spouses incident to a divorce. This rule
also applies when one spouse transfers property in trust for the benefit of
the other spouse during marriage; however, if transferred to former spouse
in trust it is treated as a sale to the extent that the liabilities on the
property exceed its basis. Transferred
of property do not include alimony, which is always taxable.
Back
to Tax Archives
|
|
|
Frequent
Flyer Miles
Federal
tax rules do not require that you report your frequent flyer miles as part
of your income. This includes
situations in which miles are earned either for business travel or for
personal expenditures.
Back
to Tax Archives
|
|
November |
|
|
Zero-Coupon
Bond or TIP
If
a zero-coupon bond or a treasury inflation-protected security is purchased
but not held in a tax-deferred account, the interest accrued must be
included in your income every year even if not paid to you until maturity. As
a result, investing in these bonds don’t reduce your current years income.
Back
to Tax Archives
|
|
|
Flexible
Spending Accounts
Successful
use of FSA’s requires careful estimating of health care and/or dependent
care expenses. Money put into
this type of account can only be used for reimbursements of qualified
expenses during the year. If the
expenses during the year are less than the amount in the account, the money
remaining will be lost.
Back
to Tax Archives
|
|
|
Long-term
Planning
The
difference between the highest individual tax bracket rate (35%) and the
capital gains rate (15%) is 20%. This
become very valuable to high tax bracket individuals when determining the
holding period of investments because long-term capital gains receive the
favored rate, while short-term gains or ordinary income are taxed at
individual rates.
Back
to Tax Archives
|
|
|
Selling
of Mutual Funds
When
determining your capital gain or loss for selling a mutual fund, be sure to
add in all of the already taxed items (reinvested interest, dividends,
capital gain distributions, and sales charges) to the original cost basis.
This in turn will decrease the amount of capital gains or increase
the amount of deductible capital losses.
Back
to Tax Archives
|
|
|
|
|
December |
|
|
Sale
of Principal Residence
When
selling a principal home, the gain can be excluded from income if it was
owned and occupied by you as a principal residence for two or more years out
of a five-year period. However
if unable to take the above exclusion, partial exclusion may allowed if the
home was sold due to a change in place of employment, health reasons, or
unforeseen reasons.
Back
to Tax Archives
|
|
|
Retirement
Contributions
Even if a deduction or credit isn’t received for your retirement
plan contribution, a tax savings is still obtain because the income or gain
that is realized in the retirement plan will be tax deferred.
A desirable result is still achieved by having the retirement
plan’s income or gain grow on a tax-deferred basis over a long period of
time.
Back
to Tax Archives
|
|
|
Traditional
IRA Distributions
Distributions
from a traditional IRA are not subject to the 10% tax on early withdrawals
is the amount is used to 1) pay qualified higher education expenses, 2) pay
expenses incurred for qualified first-time home buying expenses ($10,000
lifetime limit), and 3) to purchase health insurance of an unemployed
individual if proper conditions are met.
Back
to Tax Archives
|
|
|
Funding
Keogh Plans
Keogh
plans and some other types of retirement plans must be established by the
end of your tax year. However,
the Keogh plan may be funded for the prior year up to the due date of your
return for that year, including extension filings.
Back
to Tax Archives
|
|
|
|
|
2006
- January |
|
|
401K
Plan
It
is important to be aware of the tax consequences of an outstanding 401k plan
loan balance if you are planning on leaving your employer.
If your loans are not paid off by the termination of employment,
prior to you rolling over your plan proceeds into some other plan, your
employer will reduce or offset your vested 401k plan benefit by the unpaid
balance of the loan. The offset
is considered a distribution of funds, which is required to be included in
your gross income, along with a early withdrawal penalty unless other
exceptions are met.
Back
to Tax Archives
|
|
Underpayment
Penalties for Retirees
There
is an exception form the estimated tax rules for some newly retired
retirees. If you retire after
the age of 62, you can apply for relief from underpayment penalties if the
underpayment results from reasonable cause and not due to willful neglect.
This relief is available only in the year of retirement or in the
proceeding tax year.
Back
to Tax Archives
|
|
Umbrella
Insurance
Umbrella liability insurance is designed to supplement the liability
coverage provided by homeowners and automobile insurance policies.
When purchasing an umbrella liability policy, it is recommended that
the policy limits should be at least equal to your net worth to provide
adequate protection.
Back
to Tax Archives
|
|
|
Maximizing
Estate Tax Savings
Instead
of leaving everything to your spouse, the use of a marital deduction trust
and a non-marital trust will often maximize estate tax savings.
The non-marital trust provides the surviving spouse with needed
income during their life. However,
because the survivor lacks control over that trust, the assets are not
included in their estate upon death. On
the other hand, the marital deduction trust provides the survivor with the
bulk of the funds needed during life. If
planned correctly, the two trusts will help ensure that the liability for
estate taxes is minimized.
Back
to Tax Archives
|
