Articles

IRS: Account transcripts can serve as estate tax closing letter

A recent IRS notice confirms that an account transcript issued by the IRS qualifies as a substitute for an estate tax closing letter, as long as the transcript includes the proper transaction code. An estate tax closing letter indicates that the IRS has accepted an estate tax return and that the estate’s federal tax liabilities have been satisfied. Once the letter has been received, it makes it clear to the executor of the estate that it

Retirement accounts: Tips for taxpayers turning 70 1/2

It’s a big year for the first set of baby boomers: They’re turning 70 1/2. And that means getting prepared for their first mandatory distributions from tax-sheltered retirement accounts. The first thing to keep in mind is that the amount of your required annual withdrawal is based on the assets in the account as of the prior December 31. For a taxpayer with multiple 401(k) plans, he or she must take a proportional distribution from each

New law allows individuals to create special needs trusts

Buried in a new federal law is a tiny change that will now allow individuals to set up their own special needs trusts. The sum total of the change is two words — “the individual” — intended to correct a more than 20-year-old error. The change is called the Special Needs Trust Fairness Act. Authorized under the Omnibus Budget Reconciliation Act of 1993, special needs trusts protect assets and allow an individual to maintain eligibility for

In will contest, no need to oversell decedent’s capacity

Imagine a situation where a loved one dies and there is a contest over the validity of the will. The question arises: What was the decedent’s mental state in drafting the will? A typical, knee jerk answer is that the decedent had a perfectly clear state of mind. However, testamentary capacity doesn’t require such a high level of clarity in communication and comprehension. Further, overstating a decedent’s capacity might actually lead a trier of fact to

Changes proposed by Trump could open up big estate planning opportunities

With proposals to repeal the federal estate tax and the generation-skipping transfer (GST) tax on the table, the new administration may be opening up some rare estate planning options. Under President Donald Trump’s proposal, the current step-up in basis for income tax purposes on assets owned at death would be limited to $10 million of assets. The intention, according to the proposal, is to exempt small businesses and family farms. It’s likely that assets exceeding $10

2013 unclaimed tax refunds

The IRS announced that an estimated one million taxpayers who did not file an income tax return in 2013 could claim their share of $1 billion in unclaimed refunds for the 2013 tax year. The law gives most taxpayers a three-year time period to claim a tax refund. After that time, the money belongs to the U.S. Treasury. So if you did not file in 2013, to be safe, send your 2013 tax return via certified

Springtime remodeling – know the tax impacts

Spring fever often influences homeowners to update and remodel. Maybe you’re considering a new project, too. You may need to replace your deck or remodel your kitchen. If you have a remodeling project coming up, you should understand the tax consequences. If your project qualifies as an improvement to your home, you’ll enjoy some tax benefits. But if the project is a repair, there’s generally no tax benefit. Unfortunately, it’s not always easy to tell the

IRS interest rates remain the same for second quarter 2017

Interest rates charged by the IRS on underpaid taxes and applied by the IRS on tax overpayments will remain the same for the second quarter of 2017 (April 1 through June 30). Therefore, the rates will be as follows for individuals and corporations: For individuals: 4% charged on underpayments; 4% paid on overpayments.

Apply for an extension if you can’t file by April 18

Tax time can be stressful, but don’t panic if you can’t file your tax return on time. There’s still time to get an automatic six-month deadline extension. There are four ways to obtain an extension: File a paper copy of Form 4868 with the IRS and enclose your payment of estimated tax due. File for an extension electronically using the IRS e-file system on your computer. Using Direct Pay, the Electronic Federal Tax Payment System, pay

What’s due on April 18?

Tuesday, April 18, is a major tax deadline. Here are some of the tax filing and related deadlines: 2016 individual income tax returns. Calendar-year 2016 C corporation income tax returns. 2016 annual gift tax returns. 2016 IRA contributions. 2017 individual estimated tax first quarter installment. 2013 individual tax return amendments unless the 2013 return had a filing extension.

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