by NFS | Oct 12, 2012 | Archives
The following questions and answers provide information to same-sex domestic partners, same-sex individuals in civil unions and same-sex couples whose marriage is recognized by state law (for convenience, these individuals are referred to as “same-sex couples” and each individual is referred to as a “same-sex partner” in these questions and answers). Below this information are questions and answers for same-sex couples who reside in community property states and are subject to their state’s community property laws:
Q. Can same-sex partners who are legally married for state law purposes file federal tax returns using a married filing jointly or married filing separately status?
A. No. Same-sex partners may not file using a married filing separately or jointly filing status because federal law does not treat same-sex partners as married for federal tax purposes.
Q. Can a taxpayer use the head-of-household filing status if the taxpayer’s only dependent is his or her same-sex partner?
A. No. A taxpayer cannot file as head of household if the taxpayer’s only dependent is his or her same-sex partner. A taxpayer’s same-sex partner is not one of the related individuals described in the law that qualifies the taxpayer to file as head of household, even if the same-sex partner is the taxpayer’s dependent.
Q. If a child is a qualifying child under section 152(c) of both parents who are same-sex partners, which parent may claim the child as a dependent?
A. If a child is a qualifying child under section 152(c) of both parents who are same-sex partners, either parent, but not both, may claim a dependency deduction for the qualifying child. If both parents claim a dependency deduction for the child on their income tax returns, the IRS will treat the child as the qualifying child of the parent with whom the child resides for the longer period of time. If the child resides with each parent for the same amount of time during the taxable year, the IRS will treat the child as the qualifying child of the parent with the higher adjusted gross income.
Q. Can a same-sex partner itemize deductions if his or her partner claims a standard deduction?
A. Yes. A same-sex partner may itemize or claim the standard deduction regardless of whether his or her partner itemizes or claims the standard deduction. Although the law prohibits one spouse from itemizing deductions if the other spouse claims the standard deduction (section 63(c)(6)(A)), same-sex partners are not spouses as defined by federal law, and this provision does not apply to them.
Q. If a same-sex couple adopts a child together, can one or both of the same-sex partners qualify for the adoption credit?
A. Yes. Each same-sex partner may qualify to claim the adoption credit on the amount of the qualified adoption expenses paid or incurred for the adoption. The same-sex partners may not both claim credit for the same qualified adoption expenses, and neither same-sex partner may claim more than the amount of expenses that he or she paid or incurred. The adoption credit is limited to $13,360 per child in 2011. Thus, if two same-sex partners each paid qualified adoption expenses to adopt the same child, and the total of those expenses exceeds $13,360, the maximum credit available for the adoption is $13,360. The same-sex partners may allocate this maximum between them in any way they agree, but the amount allocated to a same-sex partner may not be more than the amount of expenses he or she paid or incurred. The same rules generally apply in the case of a special needs adoption. The total credit for such an adoption is limited to $13,360, but the amount that each same-sex partner may claim is not limited by the amount of expenses paid or incurred.
Q. If a taxpayer adopts the child of his or her same-sex partner as a second parent or co-parent, may the taxpayer (“adopting parent”) claim the adoption credit for the qualifying adoption expenses he or she pays or incurs to adopt the child?
A. Yes. The adopting parent may claim an adoption credit to the extent provided under the law. The law does not allow taxpayers to claim an adoption credit for expenses incurred in adopting the child of the taxpayer’s spouse. However, this limitation does not apply to adoptions by same-sex partners because same-sex partners, even if married for state law purposes, are not treated as spouses under federal law.
Q. Do provisions of the federal tax law such as section 66 (treatment of community income) and section 469(i)(5) (passive loss rules for rental real estate activities) that apply to married taxpayers apply to same-sex partners?
A. No. Like other provisions of the federal tax law that apply only to spouses or married taxpayers, section 66 and section 469(i)(5) do not apply to same-sex partners because federal law does not treat same-sex partners as married for federal tax purposes.
Q. Is a same-sex partner the stepparent of his or her partner’s child?
A. If a same-sex partner is the stepparent of his or her partner’s child under the laws of the state in which the partners reside, then the same-sex partner is the stepparent of the child for federal income tax purposes.
by NFS | Oct 2, 2012 | Archives
Summer has come to an end. Now that the hottest days, family vacations and back-to-school rush are behind us, it’s a great time to give some attention to your personal finances. Prepare for the coming months – and the holidays on the horizon – with these fall tips:
- Pay quarterly estimated taxes. If you’re self-employed or you have extra income you haven’t reported on your W-2, now’s the time to make sure you’re paying both state and federal quarterly estimated income taxes so you don’t get stuck with a big bill from Uncle Sam in April. September 17th was the deadline to pay your third quarter estimates, but don’t let that stop you from sending something in anyway.
- Prepare for the cooler months. Although you may still have summer on your mind, staying warm gets expensive when winter hits. Many utility companies offer “budget billing” plans that allow you to spread your heating costs over the year while avoiding a surprisingly large bill for a particularly cold month. Also, winterizing your home this fall conserves energy and saves money.
- Start saving for the holidays. It may sound excessive to start thinking about the holidays in October, but Christmas is a less than 90 days away. Now is a great time to create a holiday spending plan. For instance, if you plan to spend $300 on gifts, you should start saving $3-4 per day to get there. Stashing away cash in advance allows you to buy gifts for everyone on your list without taking on debt. Resolve to start a “Christmas Club” savings account in the New Year to jump-start your savings habit.
- Teach children to save. When kids return to school, they often have a renewed sense of focus and determination. Schools across the country are incorporating financial literacy into the classroom. Take this opportunity to talk to your children about money and the importance of saving. Your efforts will be rewarded as your child develops an understanding of financial principles and positive financial habits. HarborOneU in Mansfield has a great free class called “Piggy Bankers” that can help.
- De-clutter and donate. As summer winds down and you start spending more time inside, take a hard look at all the stuff you’ve been stockpiling. Sorting through clothes you no longer wear along with electronics and unused household items can free-up space and even make you a little cash. Sell items at a local consignment shop or donate them (by making a tax-deductible contribution).
- Conquering the Clutter in your Financial Closet. You need only to keep credit card receipts, ATM transactions, and deposit and debit card receipts until you verify the transaction on your monthly statements and then you can shred them. Always remember that any financial transaction, receipt or account statement should be shredded. NEVER throw them in the trash.
PERMANENT items you may want to keep:
- Educational records
- Employment records
- Health records
- Retirement and Pension Plan information
- Contents of your safe deposit box
CURRENT items, which need to be reviewed every 3-6 years, before deciding whether to continue keeping or shredding them include:
- Cancelled checks
- Bank statements
- Insurance policies
- Home purchase, repair and improvement records
- Warranties
- Income tax records
by NFS | Sep 27, 2012 | Archives
How often I recall the tale of the three toads…
They decided to cross the road to a greener field on the other side,
but were momentarily delayed by a deep rut in the auto tracks.
Two toads hopped over the rut successfully,
but the third misjudged the distance and fell in.
His friends waited for him as he tried to jump out but failed.
Finally, they deserted him and went on across the field.
A few moments later,
they were amazed to see their friend hopping merrily toward them.
“What happened?
The last we saw, you were in a rut and couldn’t get out.”
“I know,” he replied. “But a car came along and I had to!”
Please call my office if you’re in a “financial rut”…
we may be able to help.
To read the Full NFS September ’12 Retirement Readings, click here
by NFS | Sep 25, 2012 | Archives
For Taxable Corporate Income:
| From: |
To: |
The Tax Is: |
Plus: |
Of the Amount Over: |
| $0 |
$50,000 |
$0 |
15% |
$ 0 |
| 50,000 |
75,000 |
7,500 |
25% |
50,000 |
| 75,000 |
100,000 |
13,750 |
34% |
75,000 |
| 100,000 |
335,000 |
22,250 |
39% |
100,000 |
| 335,000 |
10,000,000 |
113,000 |
34% |
335,000 |
| 10,00,000 |
15,000,000 |
3,400,000 |
35% |
10,000,000 |
| 15,00,000 |
18,333,333 |
5,150,000 |
38% |
15,000,000 |
| 18,333,333 |
unlimited |
5,150,000 |
35% |
18,333,333 |
Are you making effective use of corporate dollars to achieve your personal financial security goals?
To read the Full NFS Spetember ’12 Business Briefs, please click here
by NFS | Sep 19, 2012 | Archives
For the Death Benefit:
- To replace earning power at death
- To pay for cash needs that arise at death
As a Disciplined Savings Program*:
- To help pay for educational costs
- To supplement retirement income
- To take advantage of business opportunities
- For financial emergencies
Because of the Risk of Waiting:
- To replace earning power at death
- To pay for cash needs that arise at death
For the Tax Advantages:
- Death proceeds are received free of income tax
- Cash value accumulations are tax deferred
- Cash value loans or withdrawals* are free of tax, as long as the policy stays in force
- Accelerated death benefits are received free of income tax
In Recognition of Personal Responsibility to:
- Family
- Banker
- Mortgage company
For the Flexibility:
- Benefits may be available regardless of whether the policyowner lives, quits, dies or becomes disabled
- Life insurance is portable; benefits are not lost due to job changes
* Withdrawals and loans will reduce the policy’s death benefit and cash value available for use.
To Read the entire NFS September ’12 Financial Facts, click here.
Please call my office for an appointment if I can assist in evaluating your life insurance needs. Remember, September is LIFE INSURANCE AWARENESS MONTH!
by NFS | Sep 17, 2012 | Archives
As a young insurance agent, Mark Wandall didn’t needed to be convinced to buy life insurance. But even Mark would be amazed at all that the insurance has meant for his wife, Melissa, and for many other people he never met.
Mark was just 30 when he was killed in an auto accident less than a mile from his Bradenton, Fla., home. He was the passenger in a car that was broadsided by a driver who ran a red light. He died less than a week after celebrating his first wedding anniversary and just 19 days before the birth of his daughter, Madison Grace.
The life insurance has allowed Melissa to remain in the family home, take time off from her career so she can be a full-time mom, and put money into a college fund for Madison Grace.
The insurance has also given Melissa the opportunity to keep Mark’s spirit alive through two important causes. She formed the Mark Wandall Foundation to raise money for worthy causes in her community. She also is the driving force behind a citizens’ coalition pushing for a new state law, the Mark Wandall Traffic Safety Act, that would stiffen criminal penalties for red-light running. “Melissa is making a difference in the community and in the state of Florida,” says Joseph St. Onge, ChFC, a family friend who worked with Mark at John Hancock Financial Network.
Life insurance has provided Melissa with options that wouldn’t otherwise have been available to a young, single mother. “Without it, I don’t think I would have the time or the energy to put into the foundation and the coalition,” says Melissa. “It has allowed me to do these things and to be at home with my daughter.
If you want to provide something for your family, please contact our office.
-from lifehappens.org
