The Americans With Disabilities Act -- Happy Birthday
July 26, 2010
July 22, 2010
Americans With Disabilities Act To Celebrate 20 Years
On July 26, 1990, President George H. W. Bush signed what he declared to be "the first comprehensive declaration of equality for people with disabilities." He further called for the destruction of "The Shameful Wall of Exclusion."
Since that day, there have been many court decisions interpreting the Americans with Disabilities Act. Some of these decisions, and particularly some decisions of the Supreme Court, narrowed the scope of the law intended by Congress when it passed the ADA. This led to Congress passing the ADA Amendments Act of 2008 that President George W. Bush signed on September 25, 2008.
All Americans should celebrate the twentieth anniversary of the ADA on July 26, 2010, and remember that the law as it now exists was passed by two different Congresses and signed by two different Presidents, both named Bush.
Your Cincinnati Tax, Probate, Elder Law, and Estate Planning Attorney
Paul A. Nidich
http://paulnidich.webs.com/
July 16, 2010
Tax Problems - Expenses of Service Animals May Be A Tax Deductible Medical Expense
In a letter to a member of Congress, the Internal Revenue Service recently re-iterated its position that the costs related to buying, training, and maintaining a service animal may be a deductible medical expense for a taxpayer. The tests regarding the deductibility of expenses for service animals are not different from other expenses that qualify for medical expense deduction.
Medical care includes amounts paid for the diagnosis, cure, mitigation, treatment, or prevention of a disease or affecting any structure or function of the body. Service dogs have been widely used in the past to mitigate the effects of physical disabilities. More recently, service animals are being used to mitigate the effects of conditions such as autism and other types of mental disabilities.
The expense must be for a mitigation related to the diagnosed medical condition and not merely the general health of an individual.
To learn more or to discuss tax issues, please contact me at 513.563.1595.
Your Cincinnati Tax, Probate, Elder Law, and Estate Planning Attorney
Paul A. Nidich
http://paulnidich.webs.com/
July 14, 2010
Elder Law -- Is Avoiding Probate Enough?
I had a new client come to my office recently. She was looking for Medicaid planning advice for her husband's parents. (This is a very frequent occurrence.) Her mother-in-law was suffering from dementia but was still able to live at home. Her father-in-law was 85 years old but in good health and led a fairly active life.
She told me that about 7 years ago, her in-laws had wills, a living will, and a revocable living trust drafted. She said her parents' total assets were worth about five hundred thousand dollars, and the revocable trust was drafted solely to avoid probate. I was dumfounded that the attorney who drafted the plan did not draft a durable financial power of attorney nor discuss Medicaid planning with the couple. After all, the husband was already 78 years old!
I explained that Medicaid had a five-year look-back period on transfers of assets for less than fair market value. I suggested that her in-laws might want to have a new irrevocable trust drafted. We also discussed the possibility of an irrevocable grantor trust, a special type of irrevocable trust that causes income to the trust to be taxed to the individual's personal return, rather than taxed at the higher trust rates.
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July 6, 2010
Health Care -- New Tool Available From Health and Human Services
The Department of Health and Human Services has created a web site to help people search out information about the new health care reform legislation. Health Care There is a lot of misinformation about the new law, some of which goes into effect this year.
If you have particular questions about the new law, try this web site, first, before getting second- or third-hand information that might very well be wrong.
Your Cincinnati Tax, Probate, Elder Law, and Estate Planning Attorney
Paul A. Nidich
http://paulnidich.com
July 1, 2010
Elder Law -- Keep Beneficiary Designations Up-to-Date
Failure to keep beneficiary designations up-to-date can be a very costly mistake. Most people have some life insurance, retirement accounts, IRAs, and other contracts that designate a recipient or beneficiary. When the primary beneficiary becomes disabled, enters a nursing home, or dies, the owner of these contracts frequently fails to update the beneficiary designation. This can cause problems with probate, estate taxes, especially state estate taxes, and inheritances.
Your Cincinnati Elder Law Attorney
Paul A. Nidich
http://paulnidich.webs.com
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June 16, 2010
Elder Law -- New Web Site From The Center for Elders and the Courts
The National Center for State Courts has created a web site called the Center for Elders and the Courts. This site provides useful information about the following topics: "Aging Issues," "Guardianship," "Elder Abuse," and "State Laws."
The Center for Elders and the Courts also produces a Newsletter and provides Links to many important resources. These resources will help both seniors and attorneys who provide services to seniors.
Sincerely,
Your Cincinnati Elder Law Attorney
Paul A. Nidich
http://paulnidich.webs.com
June 1, 2010
Election to Expense Certain Depreciable Assets
Section 179 of the Internal Revenue Code permits a taxpayer to elect to treat certain property that would otherwise be required to be depreciated to be treated as a deductible expense. Previously, the limits of the amount of the deduction were limited to $125,000 reduced by the amount the property cost that exceeded $500,000. These two figures were to be adjusted for inflation with the last adjustment increasing the $125,000 to $135,000 and the $500,000 to $530,000.
The 2008 Stimulus Act changed these two figures to $250,000 and $800,000, respectively, without any inflation adjustment for 2008 and 2009. The HIRE Act extended the $250,000 and $800,000 limits for 2010.
If you are in a position to purchase depreciable property in 2010, remember these Section 179 provisions when you file your 2010 income taxes.
Your Cincinnati Tax Attorney
Paul A. Nidich
http://paulnidich.webs.com
May 18, 2010
Elder Law -- Planning With An Irrevocable Grantor Trust
Trusts are used by estate planners, Medicaid planners, special needs trust planners, and tax attorneys for a variety of reasons. A particular type of trust, an irrevocable grantor trust, is particularly useful in Medicaid planning.
There are two elements to this type of trust: a) it is irrevocable, but b) it is a grantor trust. The fact that it is irrevocable allows transfers to the trust to avoid being counted as an asset of the individual for Medicaid purposes, if the transfers occur more than 60 months prior to the "baseline date." The baseline date is the first date the individual has both applied for Medicaid and is institutionalized. Therefore, the sooner an individual's assets are transferred into an irrevocable trust, the sooner the 60 month period expires.
The second element is that the trust is designed to be a grantor trust, a significant tax saving. The income of a grantor trust is taxed to the individual who created the trust, rather than being taxed as income to the trust. Income of trusts have the highest rate of taxation applied, while no individual, no matter how rich, pays a tax rate even close to the tax rate of a trust.
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May 12, 2010
Estate Tax Problem -- A Possible Resolution
On April 22nd, the Senate Budget Committee approved and sent to the Senate its Budget Resolution for Fiscal Year 2011 that begins on October 1, 2010. There are many provisions that deserve notice, but one issue that has plagued estate planners and taxpayers alike has been the issue of the estate tax.
The budget resolution contains a provision that would make the 2009 estate tax provisions applicable to 2010 and 2011. These include the $3.5 million exemption (which would now be indexed for inflation) and a top rate of 45%.
The existing law, left over from President Bush's administration, has no estate tax applicable to 2010, but the tax would be restored in 2011 with a top rate of 55% and an exemption of $1 million.
Your Cincinnati Tax Attorney
Paul A. Nidich
http://paulnidich.webs.com
May 3, 2010
Autism Community Losses A Hero
This entry is not what one would expect on a blog by a tax attorney, but the loss of Dr. Stanley Greenspan is quite sad news. Dr. Greenspan's specialty as a psychiatrist was working with infants to seven year-olds who had been diagnosed with autism. Much to my wife's and my chagrin, we did not take our son to see Dr. Greenspan until our son was "too old." What if . . . ? is one of the many paths parents of children with autism and other severe disabilities cannot allow themselves to travel.
Dr, Greenspan left behind a great body of work that many will still be able to take advantage of, but his loss is a great tragedy. He will be greatly missed. Tribute.
April 29, 2010
Health Care Reform -- Small Business Tax Credit
The Internal Revenue Service has created a video to help small businesses understand the new tax credits that are now available after the passage of the Health Reform Legislation in March, 2010. The video lasts for a minute and ten seconds.
Your Cincinnati Tax Attorney
Paul A. Nidich
http://paulnidich.webs.com
April 27, 2010
Tax Problem -- Identity Theft -- Someone Stole My Social Security Number
Taxpayers can have major problems with the Internal Revenue Service when someone steals their social security number and gives it to their employer. The key is two-fold: protect your social security number from theft and respond aggressively to any notification by the IRS.
Typically, a taxpayer will first become aware of someone using his or her social security number by receiving a notice from the IRS. This notice, CP 2000, informs the taxpayer that income reported to the IRS associated with the taxpayer's social security number was not reported by the taxpayer on a certain year's income tax return.
The notice also gives the taxpayer specific information about the discrepancy, such as how much was earned and the employer. This information alerts the taxpayer that someone else gave his or her social security number to the employer for whom the taxpayer did not work.
If you get this notification, immediately take the following action:
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April 25, 2010
Tax Problem -- Trust Fund Recovery Penalty
Employers are required to withhold three types of taxes from their employees' paychecks: income tax, social security tax, and Medicare tax. Depending upon the size of the business and the payroll, employers are then required to pay over to the government these withheld taxes within certain time periods.
Many employers who are having cash flow problems are tempted not to pay these withheld taxes to the government. Those that fall prey to this temptation instead use the withheld money to try to keep their businesses afloat. Not only is this illegal, but the IRS will usually catch up with these businesses and assert a civil trust fund recovery penalty against all people in the business whom it thinks fits the definition of a "responsible person."
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March 23, 2010
New Tax Benefits for Employers
Employers received two new potential tax benefits in recent legislation signed by President Obama. The Hiring Incentives to Restore Employment Act (HIRE) created two new incentives to encourage employers to hire and retain unemployed workers.
The first incentive would allow employers to avoid matching Social Security contributions for unemployed workers hired after February 3, 2010 and before January 1, 2011. While the employer would still have to withhold the employee's FICA, Medicare, and income taxes, the employer would only have to match the Medicare withholding, a saving of 6.2% of the wages paid to the new hire.
The second incentive, a general business tax credit, would be allowed to businesses who retain the newly hired employee for a period of at least one year. The credit will be worth up to $1,000 per employee and will be taken on the employer's 2011 income tax returns.
