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Important Differences Between Executors And Trustees In An Estate Plan

Mitchell R Miller Estate And Trust Attorney
The terms executors and trustees are both used in estate planning. Before looking at the similarities and differences between these two estate plan administrators, let’s review the difference between a will and a living trust:
  • A will is a legal document directing the disposition of assets upon a person’s death.
  • A living trust is a legal arrangement under which property is transferred to a trustee to administer in accordance with the instructions of the person who sets up the living trust. A trust may continue for a long period of time – both before and after the death of the person whose trust it is.

Executors are named in a will to carry out (execute) your instructions after your death. If you only have a will and don’t have a living trust – the executor of your will is the one who will be responsible for getting your estate through probate.

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199A Rental Real Estate Safe Harbor Excludes Certain Businesses

William Byrnes

Not all taxpayers will be able to take advantage of the Section 199A safe harbor for rental real estate. While the safe harbor does apply to residential rental real estate, taxpayers are not entitled to rely upon the safe harbor if the taxpayer uses the property as a residence during the tax year.

Notably, if the real estate is rented or leased under a triple net lease, the safe harbor remains unavailable under the final rule. When satisfying the “hours of rental real estate services” criteria, only certain activities are counted toward the 250-hour threshold. Activities such as rent collection, advertising the rental, property maintenance, negotiating leases and managing the real property generally count toward the threshold. However, the taxpayer’s activities as an “investor” are not counted.

Similarly, if any property within the rental real estate enterprise is classified as a specified service trade or business, the safe harbor is unavailable for the entire business. For more information on the final safe harbor rule, visit Tax Facts Online. Read More

Have a question? Contact William R Byrnes

 

401(k) Contribution Limit Increases To $19,500 For 2020; Catch-Up Limit Rises To $6,500

IRS

The Internal Revenue Service announced that employees in 401(k) plans will be able to contribute up to $19,500 next year.

The IRS announced this and other changes in Notice 2019-59, posted today on IRS.gov. This guidance provides cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2020.

Highlights Of Changes For 2020

The contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $19,000 to $19,500.

The catch-up contribution limit for employees aged 50 and over who participate in these plans is increased from $6,000 to $6,500.

The limitation regarding SIMPLE retirement accounts for 2020 is increased to $13,500, up from $13,000 for 2019.

The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs and to claim the Saver’s Credit all increased for 2020. Read More

Will Bitcoin Ever Be Regulated?

Annette Nellen

This guest post is provided by Albaron Ventures and raises a question relevant to application of laws, reporting requirements, and more, to virtual currency, aka cryptocurrency. Many laws such as those dealing with taxation, banking, and credit card usage and liability are based on a third party handling most transactions such as to resolve problems that may occur between a merchant and customer regarding a credit card charge. How can such rules work in a decentralized system? What happens when they cannot so work? Read on …

Albaron Ventures notes:
“Before diving deeper, it’s worth asking whether Bitcoin can be regulated in the first place.  The cryptocurrency was built with the primary purpose of being decentralized and distributed– two very important qualities that could make or break Bitcoin’s regulation.”

Please visit their website for the complete article.

And, consider that technology and smart contracts can create new opportunities for decentralized transactions such as matching a buyer and seller or service provider and service recipient.

What do you think? Contact Annette Nellen

 

Economic Nexus Versus Cookie Nexus: What You Need To Know

Monika Miles - Economic Nexus Versus Cookie Nexus

Although the precedent for economic nexus was set in June 2018, states were attempting to come up with ways to collect and remit sales tax from online transactions long before the Wayfair case made it to the courts.

Massachusetts and Ohio, for example, decided to define the computer code from internet cookies as a tangible item that could establish a physical presence nexus. However, once Wayfair passed, was this “cookie nexus” still in effect? The answer is, “Yes.” However, as always, regulations are still more complicated and confusing.

Massachusetts’ Cookie And Economic Nexus Rules

As Avalara explains:

  • Massachusetts’ economic nexus provisions require remote sellers to collect and remit state sales tax if the sales are greater than $100,000 in the current or previous calendar year. However, if you make sales of less than $100,000 into the state, you fall under a small seller exception and don’t need to worry about sales tax.
  • The cookie nexus required companies with more than $500,000 in internet sales and more than 100 transactions to collect and remit sales tax, if the company placed “cookie” onto the computers of MA customers. If your business falls under these thresholds, the provisions don’t apply to you.

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Opportunity Zones: The Next Tax Shelter?

Mitchell R Miller

The 2017 Tax Cuts and Jobs Act provided new benefits to taxpayers to encourage investment in economically disadvantaged areas. The benefits are extensive but they require careful compliance with the regulations governing the new program.

The Opportunity Zone program permits people to invest the proceeds of a recent capital gain in one or more designated “Qualified Opportunity Zones” to defer and reduce that original capital gain.

A. Here’s how it works:

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Survey Dispels Myth Of Wealthy Americans Abroad And Why Middle Class Americans Abroad Are Forced To Renounce U.S. Citizenship

John Richardson On FATCA

Introduction

This blog post features the research of Laura Snyder. It is (I believe) the single and most comprehensive study of (1) the U.S. legislation that is understood to apply to Americans abroad and (2) the disastrous impact this legislation has on them. To put it simply, Congress is forcing Americans Abroad to renounce their U.S. citizenship.

The bottom line is that for Americans Abroad:
“All Roads Lead To Renunciation!”

And now over to Laura Snyder with thanks.

“I Feel Threatened by My Very Identity:”

US Taxation and FATCA Survey

Introduction

In autumn 2018 I worked with a France-based association of Americans living overseas to organize an online survey addressing the topics of FATCA and US taxation. The survey was open for participation for a period of about six weeks, from late September to early November. The survey was conducted using the open source software LimeSurvey.

Approach and Methodology

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What Is A CDP Hearing And What It Does For You

If for some reason, you find yourself defaulting on a tax payment or two, the IRS will take steps to recover that debt. This could be through IRS levies, allowing them to seize your assets, taking money from your accounts or through a Notice of Federal Tax Lien (NFTL). By law, the IRS must inform you before any collection efforts are made, and after filing an NFTL.

What Is A CDP Hearing?

After the IRS makes it known to you that they intend to initiate steps to recover what you owe, you can request a hearing to discuss your case. At the hearing, you get to find out whether there were any procedural issues on the IRS’s side or propose alternative methods of collection. So, a CDP hearing is a last-ditch effort to avoid the penalties altogether or offer payment alternatives that would be easier on you. It’s important to note, though, that most CDP hearings discuss alternative collection methods. So your chances of getting away without making payments are slim.

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What Is The IRS 20-Factor Test?

Kazim Qasim

In these days of the gig economy, more business owners are leveraging the affordability and convenience of hiring freelancers (independent contractors) instead of regular employees. It makes sense. There are some tremendous benefits to hiring independent contractors (ICs), including not having to pay for insurance and payroll taxes. Another huge benefit to hiring ICs is that business owners can’t always predict busy times and down times. When seasonal shifts in business necessitate extra help, the business owner can bring on more staff without making any long-term commitments. As business slows down, the owner can simply let the ICs know their help isn’t needed anymore at this time. It seems like a dream come true from an employer standpoint.

However, there are strict IRS rules regarding classification of ICs. If you mistakenly or intentionally classify a worker as an IC when they should be classified as employee, you and/or your business would be held financially liable to the IRS and to the worker. The IRS isn’t setting you up just so they can catch you out. They have established a 20-Factor Test for employers to determine if a worker is classified as an IC or an employee.

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What Is The Gig Economy? Tax Professionals Like Gigs

GIG ECONOMY And Taxes

The Gig Economy is a labor market characterized by the prevalence of short-term contracts or freelance work as opposed to permanent jobs. The gig economy gets its name from each piece of work being an individual “gig”. It has also been called the “sharing economy” mostly in reference to platforms such as Airbnb and the “collaborative economy”. These jobs are pay as you go jobs which have been around for quite some time. It has become a very appealing way to make a living for those who want flexible hours or the independence of being self-employed. In a gig economy, temporary, flexible jobs are commonplace and companies tend toward hiring independent contractors instead of full-time employees. The gig economy is growing fast due to demands of employees for more flexibility.

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Self-Employed Independent Contractor Or Employee?

IRS LOGO

It is critical that business owners correctly determine whether the individuals providing services are employees or independent contractors.

Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors.

Select The Scenario That Applies To You:
  • I am an independent contractor or in business for myself
    If you are a business owner or contractor who provides services to other businesses, then you are generally considered self-employed. For more information on your tax obligations if you are self-employed (an independent contractor), see our Self-Employed Tax Center.
  • I hire or contract with individuals to provide services to my business
    If you are a business owner hiring or contracting with other individuals to provide services, you must determine whether the individuals providing services are employees or independent contractors. Follow the rest of this page to find out more about this topic and what your responsibilities are. Read More

Gig Worker Compliance Challenges Including AB 5

Annette Nellen On Gig Economy

On 10/1/19, the Franchise Tax Board (FTB) held a meeting, chaired by State Controller Betty Yee, focused on compliance for gig workers. You can see by the agenda that many topics were covered including background data on understanding the gig economy which for the meeting meant those finding income opportunities from web platforms such as Uber, Postmates, TaskRabbit or hundreds of other similar sites.

I was honored to participate on a panel on Challenges and Opportunities for Tax Compliance in a Gig Economy. A few points I offered:

  • The issue of worker classification is decades old and a big issue that Congress left unaddressed since at least 1978 with “Section 530” of the Revenue Act of 1978. This provision results in some workers being contractors for purposes of the employer’s employment taxes, but employees for other purposes including for the worker’s tax obligations. It is unfortunate that the multitude of classification schemes among federal and state laws has been allowed to continue for so long. I was hoping that the emergence of the platform work arrangement might finally be a time to look at this broken system, but apparently not yet. Instead we are getting more variations (such as California’s AB 5 making many workers employees where other states enacted laws in 2018 clarifying that the platform workers were contractors).  The hearing didn’t delve into the possibility of the need for a third category of work arrangement as this was focused on compliance rather than policy changes via legislation.
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