Maine Voices: Playing Both Sides of the Street When It Comes to Residency Can Lead to Tax Problems
With the passage of Question 2, imposing a 3 percent tax surcharge on taxable incomes over $200,000 effective for 2017, the number of people seeking to leave Maine will likely climb. Frequently, the go-to state is Florida, which has no personal income tax, no estate tax and much warmer winters. Other low- or no-income tax states, such as nearby New Hampshire, are also a strong draw. While people have the right to move from one state to another, it is extremely important that the change be made correctly and honestly. Failure to do so can lead to intrusive tax audits and large assessments of back taxes, including interest and penalties. Read the full article at www.pressherald.com.
Read moreEven Math Teachers Are at a Loss to Understand Annuities
Annuities can be hard to fully grasp even in their simplest configuration, where you hand a pile of money to an insurance company, then receive a guaranteed stream of annual income for life. But schoolteachers and other people doing good works are often left to trudge through a morass of contracts tied to some of the most arcane investments, sold by representatives who may not fully understand the inner workings themselves. Read the full article at NYTimes.com.
Read moreIRS Will Now Require Executors to Report Cost Basis to Beneficiaries For Inherited Assets
When a beneficiary inherits property from a decedent, the asset receives a step-up in basis to its value on the date of death – which is both a tax perk for inheritors, and a form of tax simplification (as beneficiaries otherwise may not know what the decedent’s original cost basis was anyway). However, with hard-to-value assets, there may be a disagreement between the valuation for estate tax purposes, and the value used by the beneficiary for cost basis reporting. After all, the estate prefers a small value (to minimize estate taxes) while the beneficiary ideally wants the highest possible value reported (to get a higher basis step up). And in the past, it was even possible for the executor and beneficiary to report different amounts, each to their own benefit (and the detriment of the IRS!). To close this perceived “loophole”, in 2015 Congress created the new IRC Section 1014(f) that requires beneficiaries to use a date-of-death valuation for cost basis purposes that is no larger than the amount reported on the estate tax return, curbing the abuse. In addition, Congress also established the new IRC Section 6035, which requires executors to file a new Form 8971 to notify the IRS who the beneficiaries are, along with a Schedule A that informs both the IRS and the beneficiaries what their inherited cost basis will be. Read the full article at kitces.com.
Read morePhone Scams Continue to be a Serious Threat, Remain on IRS “Dirty Dozen” List of Tax Scams for the 2016 Filing Season
The IRS will never: Call to demand immediate payment, nor will the agency call about taxes owed without first having mailed you a bill. Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe. Require you to use a specific payment method for your taxes, such as a prepaid debit card. Ask for credit or debit card numbers over the phone. Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying. If you get a phone call from someone claiming to be from the IRS and asking for money, here’s what you should do: If you don’t owe taxes, or have no reason to think that you do: Do not give out any information. Hang up immediately. Contact TIGTA to report the call. Use their “IRS Impersonation Scam Reporting” web page. You can also call 800-366-4484. Report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” in the notes. Read the full article at irs.gov.
Read moreLast summer at the lake? How to pass your camp or cottage into new hands
All across Maine, from the wooded mountains on the western border to the open ledges of the islands off the coast, families love their seasonal homes. Large or small, elegant showplaces or rustic hideaways, these places are steeped in history and shared memories. There are many ways to plan for the management and inheritance of even a modest seasonal home, including trusts and family business entities. Read the full article at bangordailynews.com.
Read moreFinding Out Your Power of Attorney Is Powerless
Financial institutions may refuse to accept traditional legal forms long after older clients are capable of filling out alternatives. Read the full article at NYTimes.com.
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