December 27, 2019 - Trusts and Estates

• State/local and property taxes are still limited to $10,000 per person/couple. But where can you write them off? On Schedule C if you have a business or Schedule E if you have a rental property. Obviously the taxes must be directly related to the business or rental.
• The long-term capital gains rates are 0%, 15% or 20% depending on your income. But people at higher income levels must also pay net investment tax of 3.8% and additional Medicare tax of 0.9%. Also, depreciation recapture is taxed at 25% and profits on sales of art/antiques/coins at 28%. Then don’t forget state and local income taxes!
• Did a relative die lately and leave an inheritance? The lifetime estate and gift tax exemption for 2019 deaths is $11,400,000 per person ($22,800,000 for a married couple). However, DC and 12 states has an estate tax. Also six states have an inheritance tax. Remember that estate and gift tax is tax on the person who GAVE the inheritance tax. The inheritance tax is on the person who RECEIVED the inheritance.
• Remember that an IRS lien CAN result in the foreclosure of your home even IF your state has a homestead exemption. Federal bankruptcy law lets debtors avoid judicial liens but not statutory liens (these are the kinds levied by the IRS).
• If you’re an employer and you received letters from the IRS about W-2s and 1099s you’ve filed – you’re not alone! The IRS is contacting employers whose W-2s and 1099-MISC information did not match the name/SSN/ITIN combination in the SSA database. You need to find the employee’s correct information and update the 1099/W-2. Also, if you employee did not provide
• If you’re contacted by phone by a private debt collector– you should know two things. First of all, the IRS sends you two letters before outsourcing the debt collection – one notifying you that your accounts were transferred and another written correspondence from the debt collection agency. Secondly, there are only four approved debt collection agencies – CBE, ConServe, Performant and Pioneer.