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Tax Law

What is a pass-through entity?

By Estate Planning, Tax Law

A pass-through entity is a business the profits of which “pass through” to the business owner and are federally taxed at his/her individual rate. Pass-through entities can be both S corporations and limited liability companies. Electing pass-through tax treatment may avoid the double-taxation which might result otherwise, depending on one’s particular situation.

If you are interested in discussing business and estate planning, including electing to have your business designated as a pass-through entity, or if you would like to review your portfolio of assets to determine the best tax plan, attorney Fred Jacobs is a Florida Board Certified Tax Law attorney who can advise you with your case. Call (941) 906-1231 to set up a consultation.

July 11, 2019
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Should I adjust my federal income tax withholding?

By Tax Law

The IRS recommends regularly reviewing your withholding so that you can make sure you are paying neither too much nor too little federal income tax with each paycheck. This can help avoid having taxes owed or refunds due at the end of the year.

Significant life changes such as getting married necessitate that a new Employee’s Withholding Allowance Certificate be submitted to one’s employer. Especially in light of the recent Tax Cuts and Jobs Act, it is wise to at least check on one’s withholding amount based on the Treasury Department’s new income tax withholding tables, found here: https://www.irs.gov/pub/irs-pdf/n1036.pdf.

Attorney Fred Jacobs of Bach, Jacobs & Byrne, P.A. is a Florida Board Certified Tax Law Attorney who can advise you in the tax planning process. Call (941) 906-1231 to set up a consultation.

 

May 6, 2019
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How is the Internal Revenue Service (IRS) involved in probate?

By Probate, Tax Law

It is the duty of the personal representative of an estate to oversee the repayment of debts owed by the decedent as well as to submit the final tax returns for the decedent. It is necessary for the personal representative to complete a final federal individual income tax return (Form 1040), being sure to make note of all income up to date of death as well as any credits or deductions to which the decedent is entitled. Then, the personal representative may need to file Form 1041, the U.S. Income Tax Return for the Estate. For federal gift taxes, Form 709 may be filed; Form 706 is the return filed for the federal estate tax, if it is required.

If the decedent has not kept up to date with his/her tax returns, it is up to the personal representative to pay off the tax returns from previous years from assets of the estate. A personal representative may verify the tax return history of a decedent by submitting Form 4506-T, Request for Transcript of Tax Return.

If you are a personal representative in need of probate assistance or wish to evaluate whether a probate proceeding is necessary to administer an estate, please call the attorneys at Bach, Jacobs & Byrne, P.A. at (941) 906-1231 to schedule a consultation. Attorney Fred Jacobs is a Florida Board Certified Tax Lawyer who can also assist you with the preparation and filing of an estates tax return.

March 15, 2019
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What is a “CLAT”?

By Asset Protection Planning, Tax Law

A Charitable Lead Annuity Trust, or “CLAT,” is one in which designated charitable beneficiaries receive annual payments during the term of the Trust. Upon the termination of the Trust, designated non-charitable beneficiaries receive the remaining assets of the Trust free from the estate or gift taxes which might otherwise apply.

In a CLAT, the owner assigns certain percentages of his/her original charitable donations to be gifted to specific charities, based on original fair market values, every year. Generally, the grantor of a CLAT aims for charitable annuity payments that will equal all or most of the taxable value of the assets in the Trust. In this manner, the grantor can give as many of the remaining assets to his/her beneficiaries as possible, estate-tax-free.

If you are considering this option in creating your Trust, please feel free to contact the attorneys of Bach, Jacobs & Byrne, P.A., highly-skilled in estate planning and high-net-worth tax planning. Call us at (941) 906-1231 to schedule an appointment.

February 25, 2019
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Tax Cuts and Jobs Act of 2017: Estate Taxes

By Tax Law

The recent Tax Cuts and Jobs Act brought with it many changes to federal tax law. In this series of blog posts, we explore what’s new in taxes.

Federal estate taxes are now only applicable to individuals with a taxable estate exceeding $11.2 million and to married couples with a taxable estate exceeding $22.4 million. In 2025, the federal estate tax is set to revert back to the exclusion amounts applicable in 2017.

In Florida, there is no state inheritance tax, so persons with assets of up to $11.2 million or couples with assets of up to $22.4 million do not need to worry about the impact of death taxes on the inheritance they leave to their heirs. The “generation skipping tax” has now also been effectively eliminated for combined estates less than $22.4 million between husband and wife, so it is now possible to establish so-called “dynasty Trusts” in Florida without worrying about subsequent generations inheriting extra generation-skipping taxes.

Attorney Fred Jacobs of Bach, Jacobs & Byrne, P.A. is a Florida Board Certified Tax Law attorney who can advise you throughout the tax planning process. Call (941) 906-1231 to set up a consultation to review your situation.

October 30, 2018
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Tax Cuts and Jobs Act of 2017: Income Taxes

By Tax Law

The recent Tax Cuts and Jobs Act brought with it many changes to federal tax law. In this series of blog posts, we explore what’s new in taxes.

The seven-bracket structure for income taxes has been retained, but there are generally slightly lower tax rates. The marriage penalty is mostly gone, as married filing thresholds and tax rates are now exactly double the single thresholds for all but the two highest brackets.

In terms of personal exemptions: whereas the old system provided $4,150 personal exemptions plus $6,500 standard deductions (for a total of $10,650 per individual, or $21,300 per couple), the new system eliminates personal exemptions in favor of a $12,000 standard deduction per person, or $24,000 per couple.

Attorney Fred Jacobs of Bach, Jacobs & Byrne, P.A. is a Florida Board Certified Tax Law attorney who can advise you throughout the tax planning process. Call (941) 906-1231 to set up a consultation to review your situation.

October 26, 2018
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Tax Cuts and Jobs Act of 2017: Capital Gains Taxation

By Tax Law

The recent Tax Cuts and Jobs Act brought with it many changes to federal tax law. In this series of blog posts, we explore what’s new in taxes.

Capital gains taxes have remained basically the same. Short-term capital gains (assets held less than one year) are still taxed as ordinary income. However, long-term capital gains tax rates are now based on the following taxable income levels, instead of on the old marginal tax brackets:

Long-Term Capital Gains Rate Single Return Taxable Income Joint Return Taxable Income
0% for taxable income up to $38,600 $77,200
15% for taxable income up to $425,800 $479,000
20% for taxable income up to $425,800 $479,000

 

It is important to note that alternative minimum tax rates still apply to long-term capital gains. In 2018, an alternative minimum tax of 28% will apply to any alternative taxable income (including long-term capital gains) in excess of $95,750 for single returns and $191,500 for joint returns.

Attorney Fred Jacobs of Bach, Jacobs & Byrne, P.A. is a Florida Board Certified Tax Law attorney who can advise you throughout the tax planning process. Call (941) 906-1231 to set up a consultation to review your situation.

October 22, 2018
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Tax Cuts and Jobs Act of 2017: Expanded Child Tax Credit

By Tax Law

The recent Tax Cuts and Jobs Act brought with it many changes to federal tax law. In this series of blog posts, we explore what’s new in taxes.

            The child tax credit has been doubled from $1,000 to $2,000 for children under age 17. The refundable amount has also been increased up to $1,400. Finally, “phase-out” thresholds for the child tax credit have been increased to $200,000 of taxable income for individuals and $400,000 for joint returns.

            Attorney Fred Jacobs of Bach, Jacobs & Byrne, P.A. is a Florida Board Certified Tax Law attorney who can advise you throughout the tax planning process. Call (941) 906-1231 to set up a consultation to review your situation.

October 18, 2018
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Tax Cuts and Jobs Act of 2017: Deductions

By Tax Law

The recent Tax Cuts and Jobs Act brought with it many changes to federal tax law. In this series of blog posts, we explore what’s new in taxes.

There have been significant changes to deductible expenses under the new tax law:

  • Mortgage interest deductions for new mortgages are now available only for up to $750,000 for residential mortgages. Previously, the deduction was available for up to $1,000,000.
  • Home equity interest is no longer deductible.
  • The charitable contribution itemized deduction remains, and one can now deduct as much as 60% of adjusted gross income (up from 50%) for contributions to qualified public charities.
  • Medical expenses in excess of 7.5% of adjusted gross income are still deductible. Previously, this deduction was up to 10%.
  • Casualty losses are no longer deductible, except within federal-declared disaster areas.
  • Itemized deductions for state and local taxes now cannot exceed $10,000 on a single or joint return.
  • There are no longer deductions available for investment advisor fees, tax preparation fees, unreimbursed employee expenses, or safe deposit box fees.

            Attorney Fred Jacobs of Bach, Jacobs & Byrne, P.A. is a Florida Board Certified Tax Law attorney who can advise you throughout the tax planning process. Call (941) 906-1231 to set up a consultation to review your situation.

October 12, 2018
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