Tax Planning

Before You File Your 2016 Taxes, Review These Tax Breaks for the Disabled

Published on: March 13, 2017 | By McCulloch & Miller, PLLC

There is some kindness in the tax code, especially when it comes to the disabled and their care givers. There are a few tax breaks that are intended to alleviate some of the financial burden.

Even when a disabled person is able to work, they or their caregivers must incur many additional costs, from transportation needs to medicines and special supplies for care. A study by the Centers for Disease Control and Prevention reported that one out of every five Americans lives with a disability. If this includes you or someone you care for, you’ll want to know about some tax tips that are designed to help. A recent article in Yahoo Finance, “8 Tax Tips for People With Disabilities (and Their Caregivers),” offers some useful details.

ABLE accounts. These accounts are newer savings vehicles for those who become blind or disabled before the age of 26. The accounts are like 529 college savings accounts—the account grows tax-free and can be spent on eligible expenses with no taxes. Contributions to these accounts don’t qualify for a federal tax credit or deduction. However, Iowa, Michigan, and Nebraska offer state tax benefits for contributing.

RMDs for Retirement Accounts: What You Need to Know

Published on: December 16, 2016 | By McCulloch & Miller, PLLC

New Year’s Eve is the deadline for taking RMDs if you are older than 70 ½. Haven’t started yet? Get on this right away to get it done in time. Otherwise, be prepared to pay a penalty.

You still have a little time to beat the last minute rush on taking your Required Minimum Distributions (RMDs) from traditional IRAs and 401(k)s, according to Kiplinger’s “FAQs About Required Minimum Distributions for Retirement Accounts.” However, you had better hurry if you are older than 70 ½. You only have until December 31^st and any delays could be expensive. Remember that you aren’t the only one making this transaction at this time of year, and you’re hardly alone in waiting until the last minute.

Here is some additional information to help you meet your deadline for IRA withdrawals and some special rules for 401(k)s.

From Inside the Firm: Tom’s “Do’s and Don’ts” for Succession Planning

Published on: December 2, 2016 | By McCulloch & Miller, PLLC

TOM’S 8 TIPS FOR SUCCESSION PLANNING^{(1) ©}

Realize that your Exit Strategy is not business as usual. Get knowledgeable guidance e.g. from financial/legal advisors (team approach). Start now.

Be realistic about objectives: Is it first and goal to go or is it a goal line defense?

From Inside the Firm: Tom’s Tax Tips for Succession Planning

Published on: November 18, 2016 | By McCulloch & Miller, PLLC

TOM’S 9 TAX TIPS AND FACTS RELATED TO SUCCESSION PLANNING(1)©

1. Estate tax, the cruelest tax. You are taxed once on the income you earn. You save some of what you earn and are successful. If you die with “too much”, you are taxed again on your hard earned savings.

2. Only Federal; Texas does not have an estate or an inheritance tax.

Will You Need a Will in Texas if the Estate Tax is Eliminated?

Published on: October 28, 2016 | By McCulloch & Miller, PLLC

Regardless of which candidate becomes president and what changes are made in coming years, there will still be a need for estate planning in Texas, and that includes regular folks as well as the ultra-wealthy.

If the U.S. federal estate tax were to be eliminated, there will still be plenty for single family offices and estate planning attorneys to do, according to a Forbes article, “If the U.S. Federal Estate Tax Goes Away, What Will Single-Family Offices Likely Do?” Wills are still going to be needed to provide direction as to how assets are to be distributed, and all estate plans will likely need to be reviewed and revised in light of changes to the law. For the single family office, there will still be much to do.

Life insurance purchased to pay estate taxes will also need to be reviewed. One way to do this is to convert permanent policies with meaningful cash values into private placement life insurance policies (PPLI).

Don’t Bury Your Tax Returns, Use Them for Informed Financial Decisions

Published on: October 26, 2016 | By McCulloch & Miller, PLLC

Most Houstonians like to stash away our tax forms as soon as we file our taxes, but that’s a mistake.

When it comes to making financial decisions, you want to arm yourself with as much information as possible. One often overlooked source is your Form 1040, advises CNBC in “Use your tax return for more than paying taxes.” Sharing this document with your Houston estate planning attorney will allow them to get a clearer picture of your situation as well.

Lines 1-5 (Filing status). If you need to check a different box for your filing status, you should review your estate plan. If you get married or divorced, you'll need to update your will and the beneficiaries for life insurance and retirement plans.

How a Taxable Investment Account Can Be Good for Your Retirement

Published on: October 24, 2016 | By McCulloch & Miller, PLLC

We’ve been so inundated with the idea of tax-free investment accounts that the taxable investment account’s role in retirement planning is underutilized and overlooked.

If you’re like most Americans, you’ve got at least one and maybe a few retirement accounts. You like the tax benefits that come from having IRA's, 401k's, 403b's, 457b's and defined benefit plans. You know you’ll have to pay income taxes when you start taking distributions from them, except for the Roth accounts, but seeing those accounts grow makes you feel good. And if you have a Roth, you like knowing that even if you aren’t getting a deduction now, distributions will be tax free. But there are other kinds of investment accounts for retirement planning.

As Physician’s Money Digest says in “10 Reasons You Need a Taxable Investment Account,” taxable retirement accounts are ignored because we’re so focused on IRS-approved retirement accounts. But you might think about supplementing your savings with a taxable retirement account. This can be a regular, old-school investment portfolio that’s not linked to any government regulations and that you’re building for retirement.

Trusts: Not Always the Best Option

Published on: August 31, 2016 | By McCulloch & Miller, PLLC

Trusts are not right for everyone, so they need to be fully explored before being created.

If someone says you need a trust as part of your estate plan, you should speak with an experienced estate planning attorney before moving forward. A recent post from NJ 101.5, “The disadvantages to trusts,” notes that there are situations when a trust is not the right planning tool.

Trusts can save on estate taxes but are typically subject to higher income tax rates than those of an individual taxpayer once the “grantor” (i.e., trustmaker) dies. Trusts have to pay income taxes on the income they generate by the assets they hold. Such irrevocable trusts hit the top bracket at a very low income threshold: $12,400 of taxable income in 2016. The top income tax bracket for an individual doesn’t happen until his or her income exceeds $415,050. Also, the additional 3.8% net investment income tax applies at low thresholds.

Mid-Summer is Time for a Midyear Financial Checkup

Published on: August 19, 2016 | By McCulloch & Miller, PLLC

While the number of people making New Year’s financial resolutions are on the rise, we would do well to make a midyear financial check a regular part of the summer season.

The good news is more than 30% of Americans did give some thought to making financial resolutions this past New Year, according to a survey from Fidelity Investments. The goals were nothing out of the ordinary. They were simply the things we should all be doing with our money: saving more, spending less and getting rid of debt.

If you were one of these go-getter and goal-setters, this summer is a perfect time to look at your progress, says US News in “Keep Your Money Goals on Track with a Midyear Financial Checkup.”

Cross-border Financial Planning Helps Expats Move Home and Retirees Live Their Dreams

Published on: August 17, 2016 | By McCulloch & Miller, PLLC

Moving a lifetime of possessions in or out of the country is one thing, but moving money from country to country without losing it takes a new kind of financial planner.

Whether you are retiring to a small cottage in the Cotswolds or coming home after a career that kept you in Asia’s booming manufacturing markets, there is a new type of professional who can help with one of the most potentially costly parts of the move: moving money across borders.

Nasdaq’s recent article, “Money Crossing Borders Requires Special Planning,” says the good news is that a new kind of financial planning is emerging to help people navigate the potential pitfalls of such moves.