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Federal estimated tax payments are designed to ensure that certain individuals pay their fair share of taxes throughout the year. If you don’t have enough federal tax withheld from your paychecks and other payments, you may have to make estimated tax payments. This is the case if you receive interest, dividends, self-employment income, capital gains, a pension or other income that’s not covered by withholding. Individuals must pay 25% of...
Read moreGetting divorced and dividing up assets is no easy matter. At least you can sell a house, a car or certain other possessions and distribute the proceeds to the two ex-spouses according to ownership rights under the law. But liquidating other types of property, such as assets in a qualified retirement plan, can be more complicated. Using a qualified domestic relations order (QDRO) may provide for the transfer of assets...
Read moreLet’s say you own real estate that has been held for more than one year and is sold for a taxable gain. Perhaps this gain comes from indirect ownership of real estate via a pass-through entity such as an LLC, partnership or S corporation. You may expect to pay Uncle Sam the standard 15% or 20% federal income tax rate that usually applies to long-term capital gains from assets held for...
Read moreNavigating the complexities of tax law can be difficult, especially when faced with an unexpected tax bill due to the errors of a spouse or ex-spouse. The reason for such a bill has to do with the concept of “joint and several” liability. When a married couple files a joint tax return, each spouse is liable for the full amount of tax on the couple’s combined income. Therefore, the IRS...
Read moreA difficult aspect of planning your estate is taking into account your family members’ needs after your death. Indeed, after you’re gone, events may transpire that you hadn’t anticipated or couldn’t have reasonably foreseen. While there’s no way to predict the future, you can supplement your estate plan with a trust provision that provides a designated beneficiary a power of appointment over some or all of the trust’s property. This...
Read moreMany Americans receive disability income. Are you one of them, or will you soon be? If so, you may ask: Is the income taxed and if it is, how? It depends on the type of disability benefit and your overall income. The key issue is: Who paid for the benefit? If the income is paid directly to you by your employer, it’s taxable to you just as your ordinary salary...
Read moreWhen an employer is ready to sponsor a new qualified retirement plan for its employees, it will have many options to choose from. Although “401(k)” may be the first thing that comes to mind, some lesser-known plan types could suit the needs of some organizations under certain circumstances. One example is a cash balance plan. Allocating credits Most qualified retirement plans in action today, including 401(k)s, are defined contribution plans....
Read moreDivorce entails difficult personal issues, and taxes are probably the farthest thing from your mind. However, several tax concerns may need to be addressed to ensure that taxes are kept to a minimum and that important tax-related decisions are properly made. Here are six issues to be aware of if you’re in the process of getting a divorce. 1. Personal residence sale In general, if a couple sells their home...
Read moreOn the one hand, you want your estate plan to achieve certain “technical” objectives. These may include minimizing gift and estate taxes, and protecting your assets from creditors’ claims or frivolous lawsuits. On the other hand, you also want your plan to achieve “aspirational” goals. These may include preparing your children or grandchildren to manage wealth responsibly, promoting shared family values or encouraging charitable giving. One trust to consider including...
Read moreThe current estate tax exemption amount ($13.61 million in 2024) has led many people to feel they no longer need to be concerned about federal estate tax. Before 2011, a much smaller exemption resulted in many people with more modest estates attempting to avoid it. But since many estates won’t currently be subject to estate tax, it’s a good time to devote more planning to income tax saving for your...
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