New Tax Break for Rental Real Estate Owners

The IRS recently clarified the terms under which rental real estate owners can qualify for a new tax break under section 199A of the Internal Revenue Code. The section provides a tax deduction of up to 20 percent of an entity’s qualified business income, or QBI, for many owners of pass-through entities, including sole proprietorships, partnerships and S corporations. (QBI is defined as the net amount of qualified items of income, gain, deduction and loss from any qualified “trade or business,” but the law does not include a clear rule defining what constitutes a “trade or business.”) For rental real…..

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Medicare launches app to help determine coverage

Do you need to know if a procedure is covered by Medicare? There’s an app for that. Medicare has launched a free app, called “What’s Covered,” that gives beneficiaries a quick way of determining if the program covers a medical item or service. The app offers information on what is covered under Medicare Parts A and B and provides details on basic costs. It includes a list of covered preventive services. It does not, however, provide information on extra benefits that Medicare Advantage plans may offer that Original Medicare does not, such as certain vision, hearing or dental benefits. Among…..

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Most are taking Social Security at the wrong time

A recent report found that almost no retirees are making financially optimal decisions about when to take Social Security and are losing out on more than $100,000 per household as a result. The average Social Security recipient would receive 9 percent more income in retirement if he or she made a financially optimal decision. When claiming Social Security, you have three options: you may begin taking benefits between age 62 and your full retirement age, you can wait until your full retirement age, or you can delay benefits and take them anytime up until you reach age 70. If you…..

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Raising grandchildren? EITC may be an option

Working grandparents who support their grandchildren may qualify for the earned income tax credit, which could reduce the amount they pay in taxes by thousands of dollars, or allow them to receive a refund. The earned income tax credit is a benefit for working people with low to moderate incomes who have dependents, a category that includes grandparents. (Taxpayers without a dependent may also qualify, but it is more difficult.) To be able to claim the credit, you must be raising a child who: is your son, daughter, adopted child, stepchild, foster child, brother, sister, half-brother, half-sister, step-sister or a…..

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How gifts can affect Medicaid eligibility

We’ve all heard that it’s better to give than to receive, but if you think you might someday want to apply for Medicaid long-term care benefits, you need to be careful, because giving away money or property can interfere with your eligibility. If you transfer certain assets within five years before applying for Medicaid, you will be ineligible for a period of time under federal Medicaid law, depending on how much money you transferred. This is known as a transfer penalty. Even small transfers can affect eligibility. While federal law allows individuals to gift up to $15,000 a year without…..

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Is it better to use joint ownership or a trust to pass down a home?

When leaving a home to your children, it is possible to avoid probate by using either joint ownership or a revocable trust, but which is the better method? If you add your child as a joint tenant on your house, you will both have an equal ownership interest in the property. If one joint tenant dies, his or her interest immediately ceases to exist and the other joint tenant owns the entire property. This has the advantage of avoiding probate. A disadvantage of joint tenancy is that creditors can attach the tenant’s property to satisfy a debt. For example, if…..

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Avoid these mistakes when setting up a trust

When setting up a revocable trust, you need to be diligent about asset transfers, beneficiary designations and funding formulas. Failure to complete certain steps can prevent the trust from acting as you intended, creating additional cost and unintended consequences for your estate. Common issues include the following: Failure to transfer assets Setting up a trust is just the first step. You must accurately transfer assets into the trust in order for its proper function to take effect. If assets are not transferred into a trust, they will still be subject to public probate court on your death. Failure to update…..

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Setting up a medical ID on your phone

You may already be familiar with the idea of setting an “in case of emergency” contact that displays on the lock screen of your phone to let emergency personnel know whom to call if you’re found alone unconscious or unable to speak. Smartphone providers now offer enhanced options that let you provide even more emergency information, such as medical conditions and allergies. Newer iPhones make it easy with their integrated Health app, but there are ways Android users can provide similar information. Medical ID on an iPhone On an iPhone running iOS 8 or later, launch the built-in Health app…..

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Naming a guardian for your children

Resist the urge to avoid naming a guardian as part of your estate plan simply because it’s not easy to imagine someone else raising your children. If you don’t, you leave the guardianship of your children up to the courts if you pass away. Think about who, starting with your family members, would be the best choice. Remember that the guardian you choose doesn’t also have to handle money for your children. Assuming you have life insurance and other assets set up to take care of your children, the trustee will be in charge of managing those assets on behalf…..

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Life insurance trusts: fund or collapse?

An Irrevocable Life Insurance Trust (ILIT) has long been a fundamental tool for managing federal estate tax liabilities. But with a sizable increase in the federal estate tax exclusion, some families are wondering if their ILIT is even relevant anymore. An ILIT owns your life insurance policy for you, essentially removing it from your estate. ILITs were popular for their ability to shelter life insurance proceeds from estate taxes. They also give the grantor the ability to direct who benefits from the trust and how the proceeds are to be used. But the Tax Cuts and Job Act doubled the…..

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