Cincinnati Tax Problem Attorney Blog

Elder Law -- Property Tax Homestead Exemption

Thu, 02 Sep 2010 13:52:10 -0500

Most states provide people 65 and older with a reduction on their property tax bills called a homestead exemption. Frequently, this tax reduction is also given to people with disabilities who own their own homes, veterans, and others. The reduction usually must be applied for, and the application period typically begins in January and runs through April. Some application periods run through the first Monday in June, as is the case in Ohio.

Each state has its own system, and it is important to consult with local tax officials to find out exactly what the qualifications are, where the applications can be obtained, and where and when the applications must be filed. (Some states may have suspended this tax exemption due to budget problems.)

A few sites where you can find information on the Internet are:

District of Columbia
Florida
Georgia
Illinois
Maryland
Texas

Your Cincinnati Tax, Probate, Elder Law, and Estate Planning Attorney

Paul A. Nidich
http://paulnidich.webs.com/

Tax Problem -- State sues TV's 'tax lady' for alleged swindles

Tue, 24 Aug 2010 09:31:08 -0500

As I have written on a number of occasions, people find all kinds of ways to get into tax troubles with the Internal Revenue Service. A surprising number of people fail to file their taxes every year. A much larger number of people find they don't have the money to pay their tax bills, especially people who are self-employed. Many small business (and some not so small business) owners fail to pay withholding taxes to the IRS and risk getting into tax trouble both on a business and a personal basis.

Inevitably, when people find themselves in trouble, they also find people all too willing to take advantage of their problems. Many of my clients come to me after they have tried tax relief agencies they have found through advertisements. The story is always the same: "I paid them $X,000, and they didn't do anything. They wouldn't return my telephone calls, but when they finally did call me back, all they wanted was more money."

Here is an article about one of these tax mills being sued for just this type of behavior. I have no idea whether the allegations are true of this attorney, but I wouldn't be very surprised if they were. What surprises me most is the failure of the IRS and local bar associations to protect the public.

If you have a tax problem, give me a call. Talk to me. Check me out. I'm not free, perhaps not even inexpensive. But doing things correctly is always the least expensive choice.

Your Cincinnati Tax, Probate, Elder Law, and Estate Planning Attorney

Paul A. Nidich
http://paulnidich.webs.com/

Most High Income Bracket Taxpayers Won't See Big Increases From Eliminating Bush Tax Cuts

Thu, 12 Aug 2010 09:47:15 -0500

The nonpartisan congressional Joint Committee on Taxation found that the proposed maintenance of the Bush tax cuts for all but individuals earnings at least $200,000 and couples earning at least $250,000 would not have a particularly significant affect on the tax bills of those in the upper two brackets. The report found that the average tax increase for those earning between $200,000 and $500,000 would be $532.

For those earning between $500,000 and $1 million, their tax bill would increase by an average of about $10,000, and the average tax bill for those earning over $1 million would increase approximately $100,000. There are approximately 608,000 taxpayers who earn between $500,000 and $1 million, and 315,000 taxpayers who earn more than $1 million.

The Joint Committee on Taxation expects that there will be approximately 161 million tax returns filed for 2010 with less than 5,000,000 (about 3%) returns filed by those earning more than $200,000. The plan would raise about $38 billion.

Your Cincinnati Tax, Probate, Elder Law, and Estate Planning Attorney

Paul A. Nidich
http://paulnidich.webs.com/

Increased Medicaid Funding Set To Pass After August Recess

Wed, 04 Aug 2010 12:59:29 -0500

The Senate finally passed a test vote that will allow increased Medicaid funding for the first half of 2011 to pass Congress after the House returns from its August recess. GOP Senators Susan Collins and Olympia Snowe, both from Maine, joined Senate Democrats to end debate on the legislation that will provide states with billions of dollars to shore up their Medicaid programs and prevent layoffs and program cuts.

The price of the Republican support seems to be a provision in the legislation to cut food stamp benefits beginning in 2014. Healthcare Blog.

Your Cincinnati Tax, Probate, Elder Law, and Estate Planning Attorney

Paul A. Nidich
http://paulnidich.webs.com/

New Tax Tables Will Save Ohio Taxpayers Millions

Tue, 03 Aug 2010 08:26:10 -0500

Next year, Ohio becomes one of a handful of states that index their income taxes. The Commissioner of the Department of Taxation has issued new tables addressing this issue in which tax brackets will increase by .9% to account for inflation figures released by the federal government.

Although the idea seems quite a change, the actual affect, though, will not be that great. A family earning $25,000 will save $3.70 in state income taxes, while a family earning $1 million will save $26.35 a year. Article

Elder Law -- Life Insurers Give Beneficiaries Checkbooks Not Insurance Proceeds

Fri, 30 Jul 2010 11:16:55 -0500

A recent news story has reported a trend that could be costly to life insurance beneficiaries and could risk the stability of the financial system. In order to retain the assets of life insurance proceeds, some insurance companies send checkbooks to beneficiaries, instead of the insurance proceeds. These checkbooks are tied to investment accounts from which the insurance company profits, are not insured by the federal government, and could upset an already unsteady financial system.

This encourages the beneficiary to use the checks instead of receiving the full proceeds of the life insurance policy. Although the money is in an interest-paying account, the insurance company pays the beneficiary only a portion of the investment income and prevents the beneficiary from making his or her own investment decisions.

Since these investment accounts are not insured by the federal government, something that may not be known or understood by the beneficiary, the beneficiary is at risk of losing the whole proceeds if the insurance company goes under. Further, if enough beneficiaries decide to demand all of their money at the same time, the life insurance company may not be able to meet the demand, causing the kind of "run on the bank" government insurance and regulation is intended to prevent.

The Americans With Disabilities Act -- Happy Birthday

Mon, 26 Jul 2010 00:00:54 -0500

Americans With Disabilities Act To Celebrate 20 Years

Thu, 22 Jul 2010 16:01:16 -0500

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/

Tax Problems - Expenses of Service Animals May Be A Tax Deductible Medical Expense

Fri, 16 Jul 2010 14:24:35 -0500

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/

Elder Law -- Is Avoiding Probate Enough?

Wed, 14 Jul 2010 12:03:01 -0500

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.

Health Care -- New Tool Available From Health and Human Services

Tue, 06 Jul 2010 15:39:01 -0500

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

Elder Law -- Keep Beneficiary Designations Up-to-Date

Thu, 01 Jul 2010 10:46:24 -0500

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

Elder Law -- New Web Site From The Center for Elders and the Courts

Wed, 16 Jun 2010 14:24:40 -0500

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

Election to Expense Certain Depreciable Assets

Tue, 01 Jun 2010 15:06:03 -0500

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

Elder Law -- Planning With An Irrevocable Grantor Trust

Tue, 18 May 2010 11:40:52 -0500

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.