Posts Tagged ‘Jill E. Sugarman’
Tuesday, April 23rd, 2013 by Moore McLaughlin
IRS Tax Tip 2013-60
Certain financial debts from your past may affect your current federal tax refund. The law allows the use of part or all of your federal tax refund to pay other federal or state debts that you owe. Here are six facts from the IRS that you should know about tax refund `offsets.’
1. A tax refund offset generally means the U.S. Treasury has reduced your federal tax refund to pay for certain unpaid debts.
2. The Treasury Department’s Financial Management Service is the agency that issues tax refunds and conducts the Treasury Offset Program.
3. If you have unpaid debts, such as overdue child support, state income tax or student loans, FMS may apply part or all of your tax refund to pay that debt.
4. You will receive a notice from FMS if an offset occurs. The notice will include the original tax refund amount and your offset amount. It will also include the agency receiving the offset payment and that agency’s contact information.
5. If you believe you do not owe the debt or you want to dispute the amount taken from your refund, you should contact the agency that received the offset amount, not the IRS or FMS.
If you filed a joint tax return, you may be entitled to part or all of the refund offset. This rule applies if your spouse is solely responsible for the debt. To request your part of the refund, file Form 8379, Injured Spouse Allocation. Form 8379 is available on IRS.gov or by calling 1-800-829-3676.
Additional IRS Resources:
- Tax Topic 203 – Refund Offsets
- Form 8379 , Injured Spouse Allocation
- Treasury Offset Program – U.S. Treasury Financial Management Service website
IRS YouTube Videos:
- When Will I Get My Refund? – English / Spanish / ASL
- How to Use the Where’s My Refund? Tool – English / Spanish / ASL
IRS Podcasts:
- When Will I Get My Refund? – English / Spanish
- How to Use the Where’s My Refund? Tool – English / Spanish
Tags: asset protection, Asset Protection Planning, Capital gains tax, collection, corporate tax, elder law, elderlaw, Elderlaw/Law For Life, Estate Planning, federal tax refund, income tax, internal revenue code, Internal Revenue Service, IRS and state tax collections, Jill E. Sugarman, Jill Sugarman, mclaughlin & quinn, Moore McLaughlin, offset, offsets, Providence, refund offset, refund offsets, Rhode Island, Rhode Island Division of Taxation, sales tax, state taxes, tax, Tax planning, tax refund, tax refunds, Thomas P. Quinn, Treasury Department's Financial Management Service, Treasury Offset Program, U. S. Treasury
Posted in IRS and state tax collections, Tax Current Events and News, Tax planning
Wednesday, March 27th, 2013 by Moore McLaughlin
The end of the tax filing season is almost here. Even though your tax return is not due until April 15, you can make tax time easier on yourself by starting now. Here are 10 important tips to ensure a smooth process.
1. Gather your records. Round up any documents you will need when filing your taxes, including receipts, canceled checks and other documents that support income or deductions you will be claiming on your tax return. Store them in a safe place.
2. Report all your income. You will need all your Forms W-2, Wage and Tax Statements, and 1099 income statements to report your income when you file your tax return. To ensure you don’t misplace them, add them to your other records.
3. Get answers to questions. Use the Interactive Tax Assistant tool available on the IRS website to find answers to your questions about tax credits and deductions.
4. Use Free File. There is at least one option available for everyone to prepare and e-file a tax return at no cost. Let IRS Free File do the work for you with brand-name tax software or online fillable forms. It’s available exclusively at IRS.gov. If your income was $57,000 or less, you qualify to use free tax software. If your income was higher, or you are comfortable preparing your own tax return, there’s Free File Fillable Forms, the electronic version of IRS paper forms. Visit IRS.gov/freefile to review your options.
5. Try IRS e-file. IRS e-file is the best way to file an accurate tax return. It’s safe, easy and the way most taxpayers file their return. Last year, more than 80 percent of taxpayers used IRS e-file. Many tax preparers are now required to use e-file. If you owe taxes, you have the option to file early and pay by April 15.
6. Weigh your filing options. You have several options for filing your tax return. You can prepare it yourself or go to a tax preparer. You may be eligible for free, face-to-face help at a volunteer site. Weigh your options and choose the one that works best for you.
7. Use direct deposit. Combining e-file with direct deposit is the fastest and safest way for you to get your refund.
8. Visit the IRS website. The IRS website at IRS.gov is a great place to find everything you need to file your tax return. This includes many online tools, filing tips, answers to frequently asked questions, the latest tax law changes, forms and publications.
9. Remember number 17. Check out Publication 17, Your Federal Income Tax, on the IRS website. It’s a complete tax resource that includes information such as whether you need to file or how to choose your filing status.
10. Review your return. Don’t rush. We all make mistakes when we rush. Mistakes slow down the processing of your return. Be sure to double check all Social Security numbers and math calculations on your return as these are the most common errors. If you run into a problem, remember the IRS is here to help. Start with IRS.gov.
Additional IRS Resources:
- Interactive Tax Assistant tool
- IRS Free File
- E-file Options
- Free Tax Return Preparation for You by Volunteers
- 1040 Central
- Publication 17, Your Federal Income Tax
IRS YouTube Videos:
- Record Keeping – English | Spanish | ASL
- Do Your Taxes for Free: Taxes Made Less Taxing – English | Spanish
- All About IRS.gov – English | Spanish | ASL
IRS Podcasts:
- File Your 1040EZ Using Free File – English | Spanish
- Do-It-Yourself Free Tax Preparation – English | Spanish
- New Online Tools – English
- Tax Return Errors – English | Spanish
Tags: 1031 exchange real estate investment, April 15, asset protection, Asset Protection Planning, business tax, Capital gains tax, collection, corporate tax, Estate Planning, income tax, internal revenue code, Internal Revenue Service, IRS, IRS and state tax collections, Jill E. Sugarman, Jill Sugarman, mclaughlin & quinn, Moore McLaughlin, Providence, Rhode Island, state taxes, tax, Tax planning, Thomas P. Quinn
Posted in Asset Protection Planning, IRS and state tax collections, Tax Current Events and News, Tax planning
Tuesday, March 5th, 2013 by Moore McLaughlin
If you paid for medical or dental expenses in 2012, you may be able to get a tax deduction for costs not covered by insurance. The IRS wants you to know these seven facts about claiming the medical and dental expense deduction.
1. You must itemize. You can only claim medical and dental expenses for costs not covered by insurance if you itemize deductions on your tax return. You cannot claim medical and dental expenses if you take the standard deduction.
2. Deduction is limited. You can deduct medical and dental expenses that are more than 7.5 percent of your adjusted gross income.
3. Expenses paid in 2012. You can include medical and dental costs that you paid in 2012, even if you received the services in a previous year. Keep good records to show the amount that you paid.
4. Qualifying expenses. You may include most medical or dental costs that you paid for yourself, your spouse and your dependents. Some exceptions and special rules apply. Visit IRS.gov for more details.
5. Costs to include. You can normally claim the costs of diagnosing, treating, easing or preventing disease. The costs of prescription drugs and insulin qualify. The cost of medical, dental and some long-term care insurance also qualify.
6. Travel is included. You may be able to claim the cost of travel to obtain medical care. That includes the cost of public transportation or an ambulance as well as tolls and parking fees. If you use your car for medical travel, you can deduct the actual costs, including gas and oil. Instead of deducting the actual costs, you can deduct the standard mileage rate for medical travel, which is 23 cents per mile for 2012.
7. No double benefit. Funds from Health Savings Accounts or Flexible Spending Arrangements used to pay for medical or dental costs are usually tax-free. Therefore, you cannot deduct expenses paid with funds from those plans.
You’ll find more information in IRS Publication 502, Medical and Dental Expenses. Also see Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans. They are available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).
Additional IRS Resources:
- Publication 502, Medical and Dental Expenses
- Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans
IRS YouTube Videos:
- Medical and Dental Expenses – English | Spanish | ASL
IRS Podcasts:
- Medical and Dental Expenses – English | Spanish
Tags: asset protection, Asset Protection Planning, business tax, Capital gains tax, corporate tax, Dental Expenses, elder law, elderlaw, Elderlaw/Law For Life, Estate Planning, income tax, internal revenue code, Internal Revenue Service, IRS, IRS and state tax collections, itemize deductions, Jill E. Sugarman, Jill Sugarman, mclaughlin & quinn, Medical and Dental Expenses, medical expenses, Moore McLaughlin, Providence, Rhode Island, Rhode Island Division of Taxation, state taxes, tax, Tax planning, Thomas P. Quinn
Posted in Estate Planning, Tax Current Events and News, Tax planning
Tuesday, January 15th, 2013 by Moore McLaughlin
The American Taxpayer Relief Act of 2012 (2012 Taxpayer Relief Act) extends through 2013 the provision which allows individuals who are at least 70½ by the end of the year to exclude from gross income qualified charitable distributions up to $100,000 from a traditional or Roth IRA that would otherwise be included in income. Married individuals filing a joint return are allowed to exclude a maximum of $200,000 for these distributions ($100,000 per individual IRA owner).
Congress waited until it was too late to make a 2012 qualified charitable distribution before extending the benefit, so it provided two forms of relief. First, you may elect to treat a qualified charitable distribution made in January of 2013 as having been made on December 31, 2012. Second, you may treat any portion of a distribution made in December 2012 as a qualified charitable distribution if it is transferred to a qualified charity in January of 2013. When these relief provisions are properly executed, the distribution made or transferred in January 2013 counts toward the $100,000 exclusion limitation and the required minimum distribution for the 2012 calendar year.
A review of your tax return indicates that you may be eligible to take advantage of these opportunities. As you may know, IRA owners must either withdraw the entire balance or start receiving periodic distributions from their traditional IRAs by April 1 of the year following the year in which they reach age 70-½. The minimum distribution that is required each year is computed by dividing the IRA account balance as of the close of business on December 31 of the preceding year by the applicable life expectancy. An IRA owner who does not make the required withdrawals may be subject to a 50-percent excise tax on the amount not withdrawn.
Many taxpayers like you, who receive taxable distributions, also contribute to charitable organizations. You can reduce your taxable income by excluding up to $100,000 of your IRA distribution from gross income when you transfer it directly to a charitable organization. This exclusion is available for taxable Roth IRA distributions as well as minimum required distributions from a traditional IRA.
Although a charitable contribution may be motivated by humanitarian reasons rather than by tax considerations, it is, nevertheless, wise to take tax considerations into account when making a contribution. Since this distribution must be made by the IRA trustee directly to a qualified (i.e., 50-percent) charitable organization, you should review your charitable tax giving as soon as possible. Please call our office at your earliest convenience to discuss this option.
Tags: American Taxpayer Relief Act of 2012, asset protection, Asset Protection Planning, business tax, Capital gains tax, charitable contribution, charitable organization, corporate tax, Jill E. Sugarman, Jill Sugarman, Long-term care, long-term care insurance, mclaughlin & quinn, Medicaid, Medicaid planning, Moore McLaughlin, Providence, Rhode Island, Roth IRA distributions, tax, Tax planning, Thomas P. Quinn
Posted in Asset Protection Planning, Current Events, Elderlaw/Law For Life, Estate Planning, Self-directed IRAs, Tax Current Events and News, Tax planning
Tuesday, August 28th, 2012 by Moore McLaughlin
If you’ve recently updated your status from single to married, you’re not alone – late spring and summertime is a popular period for weddings. Marriage also brings about some changes with your taxes. Here are several tips for newlyweds from the IRS.
- Notify the Social Security Administration It’s important that your name and Social Security number match on your next tax return, so if you’ve taken on a new name, report the change to the Social Security Administration. File Form SS-5, Application for a Social Security Card. The form is available on SSA’s website at www.ssa.gov , by calling 800-772-1213, or visiting a local SSA office.
- Notify the IRS if you move IRS Form 8822, Change of Address, is the official way to update the IRS of your address change. Download Form 8822 from IRS.gov or order it by calling 800-TAX-FORM (800-829-3676).
- Notify the U.S. Postal Service To ensure your mail – including mail from the IRS – is forwarded to your new address, you’ll need to notify the U.S. Postal Service. Submit a forwarding request online at www.usps.com or visit your local post office.
- Notify your employer Report your name and/or address change to your employer(s) to make sure you receive your Form W-2, Wage and Tax Statement, after the end of the year.
- Check your withholding If you both work, keep in mind that you and your spouse’s combined income may move you into a higher tax bracket. You can use Publication 505, Tax Withholding and Estimated Tax, to help determine the correct amount of withholding for your marital status, and it will also help you complete a new Form W-4, Employee’s Withholding Allowance Certificate. Fill out and print Form W-4 online and give it to your employer(s) so the correct amount will be withheld from your pay.
- Select the right tax form Choose your individual income tax form wisely because it can help save you money. Newlywed taxpayers may find that they now have enough deductions to itemize on their tax returns rather than taking the standard deduction. Itemized deductions must be claimed on a Form 1040, not a 1040A or 1040EZ.
- Choose the best filing status A person’s marital status on Dec. 31 determines whether the person is considered married for that year for tax purposes. Tax law generally allows married couples to choose to file their federal income tax return either jointly or separately in any given year. Figuring the tax both ways can determine which filing status will result in the lowest tax, but filing jointly is usually more beneficial.
Bottom line: planning for your wedding may be over, but don’t forget about planning for the tax-related changes that marriage brings. More information about changing your name, address and income tax withholding is available on IRS.gov. IRS forms and publications can be obtained from IRS.gov or by calling 800-TAX-FORM (800-829-3676).
Tags: asset protection, Asset Protection Planning, Capital gains tax, Estate Planning, income tax, internal revenue code, Internal Revenue Service, IRS, IRS and state tax collections, Jill E. Sugarman, Jill Sugarman, mclaughlin & quinn, Moore McLaughlin, Providence, Rhode Island, state taxes, tax, Tax planning, Thomas P. Quinn
Posted in Asset Protection Planning, Estate Planning, Tax Current Events and News, Tax planning
Tuesday, August 28th, 2012 by Moore McLaughlin
Contributing money and property are ways that you can support a charitable cause, but in order for your donation to be tax-deductible, certain conditions must be met. Read on for six things the IRS wants taxpayers to know about deductibility of donations.
1. Tax-exempt status. Contributions must be made to qualified charitable organizations to be deductible. Ask the charity about its tax-exempt status, or look for it on IRS.gov in the Exempt Organizations Select Check, an online search tool that allows users to select an exempt organization and check certain information about its federal tax status as well as information about tax forms an organization may file that are available for public review. This search tool can also be used to find which charities have had their exempt status automatically revoked.
2. Itemizing. Charitable contributions are deductible only if you itemize deductions using Form 1040, Schedule A.
3. Fair market value. Cash contributions and the fair market value of most property you donate to a qualified organization are usually deductible. Special rules apply to several types of donated property, including cars, boats, clothing and household items. If you receive something in return for your donation, such as merchandise, goods, services, admission to a charity banquet or sporting event only the amount exceeding the fair market value of the benefit received can be deducted.
4. Records to keep. You should keep good records of any donation you make, regardless of the amount. All cash contributions must be documented to be deductible – even donations of small amounts. A cancelled check, bank or credit card statement, payroll deduction record or a written statement from the charity that includes the charity’s name, contribution date and amount usually fulfill this record-keeping requirement.
5. Large donations. All contributions valued at $250 and above require additional documentation to be deductible. For these, you should receive a written statement from the charity acknowledging your donation. The statement should specify the amount of cash donated and/or provide a description and fair market value of the property donated. It should also say whether the charity provided any goods or services in exchange for your donation. If you donate non-cash items valued at $500 or more, you must also complete a Form 8283, Noncash Charitable Contributions, and attach the form to your return. If you claim a contribution of noncash property worth more than $5,000, you typically must obtain a property appraisal and attach it to your return along with Form 8283.
6. Timing. If you pledge to donate to a qualified charity, keep in mind that for most taxpayers contributions are only deductible in the tax year they are actually made. For example, if you pledged $500 in September but paid the charity just $200 by Dec. 31 of that same year, only $200 of the pledged amount may qualify as tax-deductible for that tax year. End-of-year donations by check or credit card usually qualify as tax-deductible for that tax year, even though you may not pay the credit card bill or have your bank account debited until after Dec. 31.
Bottom line: your support of a qualified charitable organization may provide you with a money-saving tax deduction, but conditions do apply. For more information, see IRS Publication 526, Charitable Contributions, and for information on determining value, refer to Publication 561, Determining the Value of Donated Property. These publications are available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).
Tags: charitable gift, charity, elder law, Estate Planning, income tax, Internal Revenue Service, IRS, Jill E. Sugarman, Jill Sugarman, mclaughlin & quinn, Moore McLaughlin, Providence, Rhode Island, seniors, state taxes, tax, Tax planning, Thomas P. Quinn
Posted in Asset Protection Planning, Elderlaw/Law For Life, Estate Planning, Tax planning
Wednesday, July 11th, 2012 by Moore McLaughlin
For Rhode Island property tax purposes, legislation is enacted that increases the amount of the homestead exemption protected from attachment from $300,000 to $500,000. The legislation provides that the exemption extends to an owner of a home or an individual who rightfully possesses the premises by lease, as a life tenant, or as a beneficiary of a revocable or irrevocable trust who occupies or intends to occupy the home as his or her principal residence. An exemption, freeze of tax rates and/or valuation granted to any individual created by a public law or municipal ordinance would not be affected by the transfer of an ownership interest in property if the transferor: (1) retains a life estate in the property; (2) transfers an ownership interest while leasing the property back, but only where the lessee was the owner of the property prior to the transfer to the lessor; or (3) transfers the property to a revocable or irrevocable living trust. The individual must reside in the property, and the individual or a trustee must be legally obligated to pay property tax on the property by contract, agreement, the terms of the trust instrument, or otherwise by law. These provisions are applicable to any such transfer, regardless of when the transfer is made. Effective June 21, 2012.
Tags: asset protection, Asset Protection Planning, collection, elder law, elderlaw, Elderlaw/Law For Life, Estate Planning, homestead exemption, income tax, IRS, IRS and state tax collections, Jill E. Sugarman, Jill Sugarman, lien, mclaughlin & quinn, Medicaid, Medicaid planning, Moore McLaughlin, Providence, real estate, Rhode Island, Rhode Island Division of Taxation, Rhode Island homestead exemption, seniors, state taxes, tax, Tax planning, Thomas P. Quinn
Posted in Asset Protection Planning, Bankruptcy, Elderlaw/Law For Life, Estate Planning, Financial workout, IRS and state tax collections, Tax Current Events and News, Tax planning
Thursday, May 24th, 2012 by Moore McLaughlin
More and more seniors are living together without getting married. According to U.S. Census data, the number of cohabiting seniors nearly doubled between 1989 and 2000. For some seniors, marriage isn’t financially worth it‚ they don’t want to lose their former spouses’ military, pension, or Social Security benefits. Other seniors don’t want to have to pay their partners’ medical expenses or deal with the objections of children worried about their inheritance.
There are risks to cohabiting without marriage, however. You have no rights with regard to your partner’s health care decisions. In addition, you may be considered “common law” married by a court after you die, possibly causing a dispute between your partner and your children. If you and your partner plan to live together without getting married, you can take a number of steps to ensure that you are protected and your wishes are followed.
- Sign a cohabitation agreement. If you live in a state that recognizes common law marriage or even if you don’t (some courts have recognized the rights of unmarried partners who lived together in non-common law states), you may want to enter into a cohabitation agreement with your partner. The agreement can state your intentions not to marry or to make any claims against each other. It can also specify the division of household expenses and what will happen to your house in the case of death or breakup. You should consult a lawyer for assistance in drawing up an agreement.
- Provide access to health care decision making. If you are not married, you have no right to participate in your partner’s health care decisions or even, in some circumstances, to visit your partner at the hospital. To avoid this situation, you need several documents. You can sign a Health Insurance Portability and Accountability Act (HIPAA) medical release to allow each other access to the other’s medical information. In addition, you should have a health care proxy and/or a durable power of attorney for health care, naming your partner as your agent to make health care decisions.
- Sign a durable power of attorney. A power of attorney allows your partner, or whomever you appoint, to make financial decisions for you if you become incapacitated. Without a power of attorney, the court will have to appoint a conservator or guardian to make those decisions and the judge may not choose the person you would prefer.
- Update your will. Your will should be clear about what happens to your possessions when you die, including your house and its contents. It is particularly important to specify what will happen to your house if it is owned by only one partner.
- Think about the tax consequences of gifts. Married couples can leave each other as much as they want without paying estate taxes; unmarried couples cannot. If you want to leave money to your partner, consult an estate planning attorney or tax expert to find ways to limit estate taxes. For more on estate planning, contact Jill E. Sugarman, Esq. at JSugarman@McLaughlinQuinn.com.
Look into registering as domestic partners. Some cities and states have domestic partnership laws, which may allow unmarried couples to take advantage of their partners’ health insurance or to participate in health care decisions.
Tags: asset protection, Asset Protection Planning, assisted living facilities, cohabitation agreement, durable power of attorney, elder law, elderlaw, Elderlaw/Law For Life, Estate Planning, income tax, Jill E. Sugarman, Jill Sugarman, Long-term care, long-term care insurance, mclaughlin & quinn, Medicaid, Medicaid planning, power of attorney, Providence, Rhode Island, seniors, social security, veterans
Posted in Asset Protection Planning, Elderlaw/Law For Life, Estate Planning, Tax planning
Tuesday, May 15th, 2012 by Moore McLaughlin
Private fee-for-service (PFFS) plans are a way to give private insurance companies access to the vast Medicare market and are part of an effort to further privatize Medicare. PFFS plans are the fastest-growing Medicare Advantage plans on the market. While the additional benefits these plans often offer may look attractive, Medicare beneficiaries should look carefully before they leap into one.
In a PFFS, Medicare pays a set amount each month to a private insurer to provide health coverage on a fee-for-service basis to Medicare beneficiaries. Unlike a health maintenance organization (HMO) or preferred provider organization (PPO), PFFS members can choose from any Medicare-approved provider as long as the provider is willing to accept the plan’s payment terms. PFFS plans differ from original Medicare in that there is no limit to the premiums or co-payments a PFFS can charge. PFFS plans may offer additional benefits, such as vision or dental, but members may have to share some of the costs with Medicare. PFFS plans may let providers charge up to 15 percent above the plan’s payment amount for services.
Although the additional benefits offered through a PFFS plan may seem advantageous, a report by the Medicare Rights Center finds that private Medicare plans actually offer many disadvantages compared to original Medicare. For example, care can be more expensive because co-payments may be higher. In addition, it may be more difficult to find a doctor who will accept the plan’s payment terms. PFFS plans have also come under scrutiny for their aggressive marketing practices. Sales agents have been accused of fraud for signing up seniors who were not aware how PFFS plans differed from original Medicare.
Before you enroll in a PFFS plan, look closely at the monthly premium, co-payments, and the cost of extra benefits to make sure that this is a plan you can afford. You can call 1-800-MEDICARE or go to www.medicare.gov to compare plans.
Prescription drug coverage
Some PFFS plans offer prescription drug coverage. If the plan you choose has drug coverage, you must use the coverage offered by that plan. You may not enroll in a separate drug plan. If your PFFS plan does not offer prescription drug coverage, you can either switch to another plan that has drug coverage or add this coverage separately.
Switching plans
You can only switch to a different PFFS plans or back to original Medicare at certain times of the year. You can switch during the election period from November 15-December 31 or during the open enrollment period from January 1-March 31 of each year. Note that if you are switching from a PFFS plan with drug coverage to one without, the only time you can add drug coverage is during the election period from November 15-December 31.
For more information on how PFFS plans work, click here.
Tags: asset protection, Asset Protection Planning, assisted living facilities, elder law, elderlaw, Elderlaw/Law For Life, Estate Planning, health maintenance organization, Jill E. Sugarman, Jill Sugarman, Long-term care, long-term care insurance, Massachusetts, mclaughlin & quinn, Medicaid, Medicaid planning, Medicare, Medicare Advantage, nurses, nursing homes, PFFS, Private fee-for-service, Providence, Rhode Island, seniors, social security
Posted in Asset Protection Planning, Elderlaw/Law For Life, Estate Planning
Wednesday, May 2nd, 2012 by Moore McLaughlin
If you are caring for your mother or father, you may be able to claim your parent as a dependent on your income taxes. This would allow you to get an exemption ($3700 in 2011) for him or her.
There are five tests to determine whether you can claim a parent as a dependent:
- The person you are claiming as a dependent must be related to you. This shouldn’t be a problem if you are claiming a parent (in-laws are also allowed). Keep in mind, however, that foster parents do not count as a relative. To claim a foster parent, he or she must live with you for a year as a member of your household.
- Your parent must be a citizen or resident of the United States or a resident of Canada or Mexico.
- Your parent must not file a joint return. If your parent is married, he or she must file separately. There is an exception if your parent is filing jointly, but has no tax liability. If your parent files a joint tax return solely to get a refund, you can claim him or her as a dependent.
- Your parent must not have a gross income of $3,700 (in 2011) a year or more. Gross income does not include Social Security payments or other tax-exempt income. (For those with incomes above $25,000, some portion of Social Security income may be includable in gross income.)
- You must provide more than half of the support for your parent during the year. Support includes amounts spent to provide food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities. Even if you do not pay more than half your parent’s total support for the year, you may still be able to claim your parent as a dependent if you pay more than 10 percent of your parent’s support for the year, and, with others, collectively contribute to more than half of your parent’s support. To receive the exemption, all those supporting your parent must agree on and sign the applicable Multiple Support Declaration (Form 2021).
If you cannot claim your parent as a dependent because he or she filed a joint tax return or has a gross income above $3,700 (in 2011) but you have been paying your parent’s medical expenses, you may be able to deduct those expenses from your taxes. For more information on this, contact your CPA or one of the tax attorneys at McLaughlin & Quinn, LLC.
Tags: asset protection, Asset Protection Planning, assisted living facilities, dependent, elder law, elderlaw, Elderlaw/Law For Life, Estate Planning, exemption, income tax, income taxes, internal revenue code, Internal Revenue Service, IRS, IRS and state tax collections, Jill E. Sugarman, Jill Sugarman, Long-term care, long-term care insurance, mclaughlin & quinn, Medicaid, Medicaid planning, Moore McLaughlin, Multiple Support Declaration, nursing homes, parent, Providence, Rhode Island, seniors, tax, Tax planning
Posted in Asset Protection Planning, Elderlaw/Law For Life, Estate Planning, Tax planning
