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Tax Law

When to Obtain an EIN for a Trust

By Elder Law, Estate Planning, Tax Law

Question:  I have just taken over my parent’s trust as the successor trustee.  Do I need to apply for an EIN for the trust?

Answer:  It depends on whether the trust has become irrevocable.  If you become successor trustee of a revocable trust prior to the death of the grantor, then you will not need to obtain an employer identification number (“EIN”).  The grantor will continue to report all of the income and expenses of the trust on his or her individual tax return using their own Social Security number.  However, you should know that once the grantor dies, the trust becomes irrevocable.  Once the trust becomes irrevocable, the trust becomes a separate tax-paying entity.  You will need to complete the application for an EIN as soon as possible so you can properly report all post-death transactions under the trust’s EIN.  If you are the trustee of a revocable or irrevocable trust, contact Bach & Jacobs, P.A at (941) 906-1231 for guidance on the proper administration of the trust.   Attorney Fred Jacobs is a Board Certified Tax Lawyer and can advise you on the legal requirements that trustees must comply with under the Florida Trust Code and the Internal Revenue Code.

November 24, 2014
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Do I Need an EIN for my Revocable Living Trust?

By Elder Law, Estate Planning, Tax Law

Q:           Do I need an EIN for my revocable living trust?

A:            No.  If you created a trust, funded it with your money, and reserved the right to revoke it, then the IRS does not consider it a separate tax-paying entity. The the trust will not require its own taxpayer identification number or employer identification number (referred to as an “EIN”).  In fact, you cannot obtain an EIN for a trust that is revocable.  Such a trust does not file its own tax return.  If you would like to know if a trust would be appropriate for your estate plan or tax planning, contact Bach & Jacobs, P.A. at (941) 906-1231.  Attorney Fred Jacobs is a Board Certified Tax Lawyer and can advise you on the use of trusts in your planning.

November 18, 2014
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Beware of paying fees for information you can download for free from Florida County websites

By Elder Law, Tax Law

Question:  A few weeks after having a deed to my residence recorded in the public records, I received a “Recorded Deed Notice” from “Record Transfer Services” in California offering me a copy of my deed and a profile of my property for $83.  Do I need to pay this?  Is this a scam?

Answer:  The short answer is: No, you do not have to pay for these documents and it may be a scam.  In fact, in Sarasota and Manatee counties in Florida, you can obtain the very same information for free by downloading it from the county government websites.   The “notice” you received likely came from a private company.  Such correspondence may be from a private company trying to get you to pay for free public records.  These companies are required to have a disclosure admitting they are not a government agency.  The County Clerks of both Sarasota and Manatee provide electronic copies of deeds recorded in the last 20 years for free download. 

You can search the Sarasota County Clerk’s records here: https://clerkpublicrecords.scgov.net/RealEstate/SearchEntry.aspx and the Manatee County’s Clerk’s records here: http://www.manateeclerk.com/Chips/OfficialRecords/search.aspx

The County Property Appraiser and the County Tax Collector in each of those counties also provides a summary page of information about your property, including the assessed value, tax owed, and legal description—all for free on the agencies’ respective websites. For Sarasota County, the site is: http://www.sc-pa.com/testsearch and Manatee County, it is: http://www.manateepao.com/ManateeFL/search/commonsearch.aspx?mode=parid

October 1, 2014
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Property Tax benefits for the surviving spouse of a 100% disabled Veteran

By Government Benefits, Tax Law, Veterans Affairs

Question: What are the property tax benefits in Florida for the surviving spouse of a 100% disabled Veteran?

Answer:  If a Veteran dies with a rating of 100% service connected disabled, then all Florida property taxes are exempt.  This benefit carries over to the deceased Veteran’s surviving spouse.  The surviving spouse is also exempt from paying property taxes.  If the spouse wishes to move they take the tax value of the home they lived in with their Veteran spouse to their new residence!

April 4, 2014
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How much can I give away as a gift without having to pay gift taxes?

By Estate Planning, Tax Law

Question: How much can I give away as a gift without having to pay gift taxes?

Answer: For gifts made in 2013 and 2014, the gift tax annual exclusion is $14,000. This means that anyone can gift up to $14,000 to another person in these years without using any of their lifetime exclusion for estate, generation skipping and gift taxes. Married couples can gift up to $28,000 to any person in 2013 and 2014.

You only have to begin paying gift taxes after you have transferred more than the lifetime exclusion amount, which is $5,340,000 for 2014.  However, you will have to file a gift tax return on any gifts to a specific individual in excess of $14,000 ($28,000 for married couples), even if you do not actually owe any gift taxes.

Attorney Fred Jacobs is Florida Board Certified in Tax Law.  Call Bach & Jacobs at (941) 906-1231 to schedule an appointment with Fred if you have questions about how the gift and estate tax laws affect you and your family.

February 27, 2014
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What is the 2014 federal estate tax rate and lifetime gift exclusion amount?

By Tax Law

Question:  What is the 2014 federal estate tax rate and lifetime gift exclusion amount?        

Answer:  For gifts made or deaths occurring in 2014, the estate, generation skipping and gift tax lifetime exclusion is $5,340,000. For transfers in excess of these limits, the federal government will levy a 40% tax on any amount that exceeds the exclusion amount.

If you need legal advice for tax matters, VA benefits, Medicare, Medicaid planning, estate planning, probate or trust administration, please contact our office for an initial consultation at (941) 906-1231.

February 25, 2014
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What are the tax rules on giving away gifts during your lifetime?

By Estate Planning, Tax Law

Question: I want to give gifts to my family. What are the tax rules on giving away gifts during your lifetime?

Answer: You are free to give away gifts forming part of your estate while you are alive without incurring any federal gift tax or estate tax but there are limits to be aware of which do change from time to time.

For 2014, the limit has been raised to $5.34 million which means that you can gift this amount away during your lifetime without owing this tax. Annually, you are entitled to gift up to $14000 in cash or other assets to as many recipients as you would like which is the annual exclusion amount.

In addition, other gifts which are not subject to tax include:

• Schooling fees, if paid directly to the school

• Medical expenses also if paid directly to the treatment provider

• Gifts to your spouse (if your spouse is a U.S. citizen)

• Gifts to a political organization for its use

• Gifts to certain charities

It is worth noting that the current federal gift/estate tax rate is 40% and that if a gift is subject to taxation then it is the person who makes the gift, not the person receiving the gift, who has to pay the tax due.

For more in depth advice specific to your family’s situation, please contact us and we will be happy to set up an initial consultation with one of our highly experienced tax attorneys.

February 5, 2014
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Federal Income Tax Incentives Conservation Easements Changing in 2014

By Elder Law, Estate Planning, Land Conservation Easements, Tax Law

Question:     Are the federal income tax incentives for donating conservation easements going to change in 2014?

Answer:    The “enhanced conservation easement incentive,” which applied to conservation easements donated in 2013, raised the maximum deduction a donor can take for donating a conservation easement from 30% of their adjusted gross income (AGI) in any year to 50%.  It also allowed qualified farmers and ranchers to deduct up to 100% of their AGI, and increased the number of years over which a donor can take deductions from 6 years to 16 years.  Policy makers at the federal level had given conservation easement donors this tax benefit to encourage them to conserve land.   Because Congress did not renew the enhanced conservation easement incentive prior to the end of the year, it expired on Dec. 31, 2013.  Unless Congress acts, the tax deduction for a donation of a qualified conservation contribution will be the same rates as other charitable gifts. Attorney Sean Byrne of Bach & Jacobs has represented parties in multimillion dollar conservation land transactions and can advise you of your options regarding conservation easement donations.

January 7, 2014
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End of Year Charitable Gifts for Federal Income Tax Reduction

By Tax Law

Question:     I want to reduce my taxes for 2013 by making some gifts to charity before December 31.  Where can I find information on the rules for charitable giving?

Answer:    IRS Publication 526 explains how to claim a deduction for charitable contributions and can be found here on the IRS website.  Additionally, this month the IRS released on its website some brief tips for year end giving that summarize several important tax law provisions that have taken effect in recent years, which can be found here.  To review your current tax liability look for ways to reduce your exposure to federal income taxes, contact Fred Jacobs, a Florida Board Certified Tax Attorney with decades of experience assisting taxpayer with tax planning.

December 30, 2013
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Income Tax Refunds and Medicaid Qualification

By Medicaid Planning, Tax Law

Question:  If I receive a federal income tax refund, could the income from the refund disqualify me for Medicaid?

Answer:    No, the income you receive from a federal income tax refund, even if it is a ‘refundable’ income tax credit (liked the Earned Income Tax Credit), is not counted as income for purposes of Medicaid eligibility.  The Medicaid rules, section 1640.0593 Assets Excluded by Federal Law, states: “Federal income tax returns, including refundable tax credits (EITC and Child Tax Credit) and over-withholding (tax refunds) are excluded as income and assets in the month of receipt and will continue to be excluded as an asset for 12 months from the date of receipt”.  Therefore, reporting the receipt of the tax refund to the Department and Children and Families is not necessary.

November 12, 2013
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