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Pamela Avraham

Special Needs Trust Seminar

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Urbach & Avraham, CPAs

INVITES YOU TO A

Complimentary Seminar on Special Needs Trusts  

for your Disabled Family Member

Wednesday, May 22, 2019 from 8:00 a.m. to 9:45 a.m.

At 1581 Route 27, Suite 201, Edison, NJ 08817

As a service to our clients, we are pleased to host guest speaker,

Shirley B Whitenack, Esq. of Schenck, Price, Smith & King, LLP 

Shirley will discuss:

  • Brief overview of Special Needs Trusts
  • First and third-party Special Needs Trusts
  • Sole benefit of trusts- allows seniors to give money to a
    disabled person without incurring a Medicaid penalty-
    both elderly and disabled person can receive Medicaid benefits

Shirley Whitenack is a partner at Schenck, Price, Smith & King in Florham Park, NJ. She helps NJ families with elder and special needs law, estate planning and administration and trust & estate litigation. She is a Past President of the National Academy of Elder Law Attorneys and a member of the Special Needs Alliance, an invitation-only group of special needs planning attorneys. Shirley publishes and lectures on topics related to guardianship, elder and special needs law, planning for incapacity and availability of government benefits, Supplemental Security Income (SSI) and Social Security Disability (SSD), Medicaid planning and estate and trust litigation.

Please RSVP to Pamela at pma@ua-cpas.com

Bagel breakfast will be served!

 

Complimentary Seminar on Medicaid and Long-Term Care

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Urbach & Avraham, CPAs  INVITES YOU TO A

Complimentary Seminar on Medicaid

Elder Care

And Long-Term Care/Nursing Home Care

Wednesday, March 27, 2019 from 8:00 a.m. to 9:45 a.m.

At 1581 Route 27, Suite 201, Edison, NJ 08817

As a service to our clients, we are pleased to host guest speaker,

Mark R Friedman, Esq. of Friedman Law 

Mark will discuss:

  • Brief overview of basic estate planning documents
  • Long term care in a nursing home
  • Will the government take my money? Medicaid eligibility
  • Should I put my house in my kid’s name? How gifts affect Medicaid

Mark R. Friedman is an attorney practicing with FriedmanLaw in Bridgewater, NJ. He helps NJ families navigate the complexities of Medicaid, long-term care, nursing homes and asset protection. He serves on the Executive Committee of the NJ State Bar Association’s Elder and Disability Law Section, and  lectures the public and other lawyers on legal issues affecting seniors and people with disabilities.

Please RSVP to Pamela at pma@ua-cpas.com

Bagel breakfast will be served!

 

Don’t Forget About the Medical Expense Deduction

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The Tax Cuts and Jobs Act of 2017 lowered the threshold for the deduction of medical and dental expense.

Medical Expense Deduction

The new law permits taxpayers to deduct unreimbursed medical expenses that are in excess of 7.5% of their adjusted gross income (AGI), down from 10% previously. This change, unlike others, was made retroactive to January 1, 2017. To be deductible, the expenses may not be reimbursed by insurance or elsewhere. For example, a family with AGI of $60,000 would have to spend more than $4,500 on unreimbursed medical expenses to qualify for any deduction. That floor rate may seem high, but with the increases in medical costs in recent years, expenses can add up quickly. Many families have no, or little, coverage for vision care or dental care. And an unexpected illness or accident can lead to thousands of dollars of unreimbursed expenses.

Out-of-Pocket Expenses

Only out-of-pocket costs can be deducted, that is, expenses not paid for by insurance or an employer. And expenses that are paid with money from tax-advantaged accounts (such as health savings accounts or flexible spending accounts) are not deductible either. Nor are any health insurance premiums automatically drawn from your paycheck on a pretax basis.

Nonetheless, the list of medical expenses that can qualify for the deduction is quite long. Medical insurance, long-term care insurance, doctors’ bills, tooth repairs, eyeglasses and contact lenses, hearing aids, laboratory fees, oxygen, psychiatric care, stop-smoking programs, surgery, medical equipment and X-ray costs, for example, can all qualify. Medical travel and lodging also qualify for the deduction. In addition, the expenses of dependent family members can also qualify for deduction.

New Tax Deduction for Owners of Qualified Businesses

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Good news for partnerships, S corporations, sole proprietorships, and estates and trusts

(pass-throughs) which can deduct  up to 20% of their Qualified Business Income (QBI) under new IRS Section 199(A).

What is Qualified Business Income? Qualified Business Income is net income that is received from a Qualified Trade or Business. Capital gains, and dividend and interest income are not considered business income. Guaranteed payments or wages paid to owners are excluded.
What is a Qualified Trade or Business? A Qualified Trade or Business is any trade or business that is not a “Specified Service Trade or Business” defined by the IRS as the following:
• businesses in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, or brokerage services,
• any banking, insurance, financing, leasing, investing, or similar business,
• operating a hotel, motel, restaurant, or similar business, and
• businesses involved in investing and investment management, trading, or dealing in securities

Income Limitation for Specified Service Trade or Businesses Owners of a Specified Service Trade or Business may take the QBI Deduction if their taxable income for 2018 is below $157,500 for single filers ($315,000 for Married Filing Joint) to be eligible for the full deduction. For 2019 these limits are $160,700 for single filers and $321,400 for Married Filing Joint to be eligible for the full deduction.

How is the QBI Deduction Calculated? The QBI Deduction usually is the smaller of 20% of the Qualified Business Income or 20% of taxable income. For example, a single self-employed lawyer has $150,000 of QBI. His taxable income is $138,000(below the income limitation). Therefore, his QBI deduction is $27,600, which is 20% of his taxable income.

Good news for staffing firms, and the real estate industry! The IRS proposed regulations clarify that the following businesses qualify for the QBI deduction with  no income limitation: staffing firms, real estate agents and the rental of tangible or intangible property to a related business. Other rental real estate properties may qualify if the activity rises to the level of a business.

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Limitations for Qualified Businesses – these businesses have no income limitations but may be limited based on the business’s W-2 wages and unadjusted basis in qualified property. The amount of the tax deduction will vary depending on the specific taxpayer circumstances.
Want to maximize your deduction? Whether your business is a Qualified Business or a Specified Service Trade or Business and regardless of your income level, there are numerous tax moves one can do to maximize this new Sec 199(A) deduction- even for 2018! Please consult with us about your situation.

Home Equity Loan Interest is Still in Play in 2018

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Most of us will agree that our biggest investment is in our home. So, it shouldn’t surprise you that your house or condo is your first port-of-call whenever there’s a need to borrow money. And the easiest way to draw funds against the security of real estate is by arranging a Home Equity Loan.

Home Equity Loans have New Limitations

Home Equity funding helps us in important ways:

  • Number one, the interest rates payable on this type of loan are arguably the lowest available.
  • Secondly, you can get the cash working for you quickly with the least bother, paperwork and tedious protocol.
  • Then there’s the third big reason: help from Uncle Sam.

Up to now all interest payments on a Home Equity Loan were tax-deductible. It made borrowing almost a no-brainer! Who wouldn’t opt for already-low interest rates to be pulled even lower? Benefits like this are rare in our modern world where it seems like everything, including financing fees, are only going up.

Well, it’s time for a retake on the “Uncle Sam thing”: the new taxation laws as per the Tax Cuts and Jobs Act of 2017, enacted in December of the same year, have removed some delectable treats from the traditional “Home Equity feast”.

Is it likely to change your borrowing behavior anytime soon? No, but it should give you pause. There’s a certain logic to it that really can’t be argued with.

Here are the new Home Equity items to keep in mind:

  • The amount you can borrow is tied to the value of the residence, be it a primary or secondary home. The I.R.S. has decided that your total loan value cannot be more than the original cost of the home (plus the cost of substantial improvements) as a start.
  • And in combination with all other mortgages cannot exceed $750,000. So Home Equity lending is not the bottomless well some may believe it to be.
  • Tax breaks haven’t disappeared but at the same time, they simply are not what they used to be. Any Home Equity draws you make from now on have to be used to build, renovate or essentially improve your residence to qualify the interest payable on them for a tax deduction.

On this last point, for example: if you use your new funds to pay off student loans, reduce your credit card debt or splurge it on a vacation, nobody is going to stop you. What they are going to stop is anyone claiming tax relief for this type of expenditure for the foreseeable future.

Don’t hesitate to consult with our professional tax team when it comes to making your Home Equity decisions, or to clarify your thinking on any tax matter. We often see benefits buried under the “strict letter of the law” – we could make a difference.

NJ Death Taxes are not all Dead

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Prior to 2018, all NJ estates in excess of two million dollars were subject to the NJ estate tax. As of Jan. 1, 2018, NJ repealed its long-standing estate tax. Even out-of staters with beach houses no longer are subject to the NJ estate tax.

When Aunt Em passed away, you as the favorite niece expect to inherit without any NJ death tax. Not so fast, the wicked witch is still not dead.

NJ Inheritance Taxes are still haunting us

New Jersey imposes two death taxes- the estate tax and the inheritance tax. The inheritance tax in NJ is alive and kicking. This tax has different rates depending on who the beneficiaries are.

Is anyone exempt from this inheritance tax? Immediate family members, who are Class A beneficiaries, can inherit without paying the tax. Class A beneficiaries include spouses, parents, grandparents and descendants- children, grandchildren and great-grandchildren of the deceased.

What are the rates? For assets passing to Class C beneficiaries the rate is 11% to 16% for amounts in excess of $25,000. This class of beneficiaries includes siblings, and the spouse, widow or widower of a child of the decedent. For assets passing to all other beneficiaries (Class D beneficiaries-nieces, nephews, sisters and brothers-in-law, cousins, etc.) the inheritance tax rate is 15% to 16%.

Any surprise situations? Frequently there are unusual situations which unexpectedly trigger the NJ Inheritance Tax. Uncle Henry, a widower, leaves all his assets to his children. No NJ Inheritance tax- right? Read the Will carefully. Henry had been living with his girlfriend in recent years and left her the right to remain in his home for two years after his passing. This right to live in the home is called a life estate. It is an asset subject to NJ inheritance tax in this case because the recipient, his girlfriend, is a Class D beneficiary.

Grandpa Zeke was widowed and remarried. He leaves all his assets to his grandchildren and to the grandchildren of his second wife. Step-children are Class A beneficiaries and exempt from the inheritance tax. However, step-grandchildren are not Class A beneficiaries but rather Class D and subject to the tax.

How is the tax paid? The NJ Inheritance Tax Return, Form IT-R for residents or Form IT-NR for non-residents, must be filed with the state and the tax paid within eight months after the decedent’s date of death. The state automatically places liens against a decedent’s property until inheritance taxes are paid, or it is established that the recipient of the property is exempt.

Need estate tax planning? We work with many qualified estate tax attorneys who are wizards in estate taxation and can assist you in estate planning. Our CPA firm prepares NJ Inheritance Tax Returns and assists executors in filing timely and paying the lowest tax possible.