Educational Savings Plans

Hoffman17As a parent with young children, you are faced with many rewards and challenges. One of which may be saving for the high cost of a college education. However, there are two tax-favored options that might be beneficial: a qualified tuition program and a Coverdell education savings account. In addition, you might also want to invest in U.S. savings bonds that allow you to exclude the interest income in the year you pay the higher education expenses. Each of these options has their benefits and limitations, but the sooner you choose to make the investment in your child’s future, the greater the tax savings.

Qualified Tuition Program (QTP). A qualified tuition program (also known as a 529 plan for the section of the Tax Code that governs them) may be a state plan or a private plan. A state plan is a program established and maintained by a state that allows taxpayers to either prepay or contribute to an account for paying a student’s qualified higher education expenses. Similarly, private plans, provided by colleges and groups of colleges allow taxpayers to prepay a student’s qualified education expenses. These 529 plans have, in recent years, become a popular way for parents and other family members to save for a child’s college education. Though contributions to 529 plans are not deductible, there is also no income limit for contributors.

529 plan distributions are tax-free as long as they are used to pay qualified higher education expenses for a designated beneficiary. Qualified expenses include tuition, required fees, books and supplies. For someone who is at least a half-time student, room and board also qualifies as higher education expense.

Coverdell education savings accounts. Coverdell education savings are custodial accounts similar to IRAs. Funds in a Coverdell ESA can be used for K-12 and related expenses, as well as higher education expense. The maximum annual Coverdell ESA contribution is limited to $2,000 per beneficiary, regardless of the number of contributors. Excess contributions are subject to an excise tax.

Entities such as corporations, partnerships, and trusts, as well as individuals can contribute to one or several ESAs. However, contributions by individual taxpayers are subject to phase-out depending on their adjusted gross income. The annual contribution starts to phase out for married couples filing jointly with modified AGI at or above $190,000 and less than $220,000 and at or above $95,000 and less than $110,000 for single individuals.

Contributions are not deductible by the donor and distributions are not included in the beneficiary’s income as long as they are used to pay for qualified education expenses. Earnings accumulate tax-free. Contributions generally must stop when the beneficiary turns age 18, except for individuals with special needs. Parents can maximize benefits, however, by transferring the older siblings’ account balance to a younger brother, sister or first cousin, thereby extending the tax-free growth period.

U.S. Savings Bonds. If you redeem qualified U.S. savings bonds and pay higher education expenses during the same tax year, you may be able to exclude some of the interest from income. Qualified bonds are EE savings bonds issued after 1989, and Series I bonds (first available in 1998). The tax advantages are minimized unless the redemption of the bonds is delayed a number of years, therefore some planning is required.

The exclusion is available only for an individual who is at least 24 years of age before the issue date of the bond, and is the sole owner, or joint owner with a spouse. Therefore, bonds purchased by children or bonds purchased by parents and later transferred to their children, are not eligible for the exclusion. However, bonds purchased by a parent and later used by the parent to pay a dependent child’s expenses are eligible. The exclusion is, however, phased out and eventually eliminated for high-income taxpayers.

Of course, in planning for higher-education costs, parents may also choose to use funds from an individual retirement account or a traditional form of savings. In addition, higher education costs may be supplemented with scholarships, loans and grants. However, having a viable plan as early as possible in a child’s life will make maximum use of a family’s financial resources and may provide some tax benefit. If you would like to explore how these opportunities can work for you and have us fully evaluate your situation, please do not hesitate to call.

For more information regarding this or any other tax planning concern, please visit the Hoffman & Associates website at www.hoffmanestatelaw.com, call us at 404-255-7400 or send us an email.

Year-End Trust Planning

Hoffman17Year-end tax planning for individuals, trusts and businesses provides not only the opportunity to review the activities of the past year, it also generates an invaluable opportunity to leverage tax planning techniques as they relate to new developments.  Many of the tax planning strategies for individual taxpayers are also applicable to trusts.  As with individuals, spreading the recognition of income between tax years may minimize trust taxes. Another tax minimization strategy for a trust is to shift trust income from a high rate trust to a lower rate beneficiary.  We are ready to help you plan efficiently and effectively for 2015 and future years.

Income and Capital Gains/ Dividends: The tax brackets for trusts are  more compressed than the tax brackets for individuals.  For example, in 2015, the 39.6% tax bracket for individuals filing jointly begins at $464,850 of taxable income, but for trusts the 39.6% bracket begins at only $12,300 of taxable income.  As a result, shifting trust income to the beneficiary may produce significant tax savings.  One way this can be achieved is by makingdistributions from the trust to the beneficiary.

Net Investment Income Tax: While the 3.8% NII tax threshold for individuals is $250,000 for married filing joint and $200,000 for individuals filing single, the 2015 NII tax threshold for trusts begins at only $12,300 of taxable income.  This can result in a substantial amount of trust income being subject to the additional 3.8% NII tax.  However, trust exposure to the NII tax may be reduced through distribution planning (See the following paragraph).

Beneficiary Distributions & The 65 Day Rule: When distributions are made from the trust to the beneficiary, the trust is allowed a deduction for the distribution of certain classes of income.  The income is then included on the beneficiary’s individual income tax return.  In many cases, the beneficiary’s individual income tax rate is lower than the income tax rate for the trust.  This results in less total income tax on the trust income.

A trust can elect to treat distributions made in the first 65 days of the tax year as a distribution of current year or prior year income.  Therefore, a distribution made byMarch 5, 2016, can be treated as a distribution of 2015 trust income.  This allows some additional time to determine the income for the trust and determine if a distribution should be made to the beneficiary.

The decision on whether to make a distribution, and the amount of the distribution, should be reviewed each year.  The tax related factors can change from year to year and there are also other non-tax factors that should be considered.

For more information regarding this or any other tax planning concern, please visit the Hoffman & Associates website at www.hoffmanestatelaw.com, call us at 404-255-7400 or send us an email.

 

No Kids? An Estate Plan is Still Important

hoffmankimcolorThere are certain times in life where the need for a proper estate plan is so clear, its like the wail of a newborn at 3AM.  How will that child be cared for if something happened to you?

But what if you do not have children?  The answer may not be as clear, but it is no less important.

If you do not specify in a proper Will or Trust to whom and how your want your assets disposed of at your death, the State will do so for you.  Generally, the State will find your closest heirs and divide your assets among them.  Sound ok since that’s where you would send your assets anyway?  Then you should know that intestate (without a will) probate proceedings tend to be much more costly and time consuming than proceedings with a properly drafted Will.  The urgency is even greater when you do not want your brother and his kids to inherit your assets.  To direct otherwise requires an estate plan.

An estate plan is more than just a will though.  A Healthcare Directive and a well-drafted Power of Attorney are key components to a basic estate plan.  A Healthcare Directive names someone to make medical decisions for you in the event you cannot do so, it grants such person authorization to access your medical records under HIPAA, and it may include preferences for end of life care in the event of a terminal condition.  These directives make it much easier on loved ones to properly care for you in the event you can no longer communicate your medical preferences.  Anyone over the age of 18 needs a Healthcare Directive.  A parent no longer has automatic access to the medical records of their children after age 18, but so often an 18 year old is still under the care (financially, and otherwise) of their parent.

The last leg of the stool is a properly drafted General Power of Attorney.  These may be drafted to be “springing”; so that they spring into effect only upon incapacity.  Then, in the event of incapacity, you have previously named a trusted individual to manage your financial and personal affairs.  Should incapacity occur without a Power of Attorney in place, a court may appoint a Guardian or Conservator after an administrative process.

These Powers of Attorney and Healthcare Directives are essential documents, even for those individuals who do not feel a will is necessary because they have no children.  We, of course, still disagree with that notion, and we will be glad to discuss how each of these components of a good estate plan fit your specific needs.

For more information regarding this or any other estate planning concern, please visit the Hoffman & Associates website at www.hoffmanestatelaw.com, call us at 404-255-7400 or send us an email.

 

Estate Planning with Retirement Accounts

CassandraOne estate planning nuance is “beneficiary designation assets.”  These are assets that are distributed at death to the person named on a beneficiary designation form, and do not follow the direction of the will.  These assets may be life insurance, joint or pay-on-death bank accounts, joint or pay-on-death investment accounts and retirement accounts.  During the initial meeting, it is important to discuss the client’s assets and these accounts in particular.  If family dynamic has changed, be it from a divorce, death in the family or simply the fact that once small children are now adults, these beneficiary designations may need to be updated.  These assets pass outside of probate.  Essentially when the account holder dies, upon confirmation of death, the entity which holds the account simply distributes the assets to the named beneficiary.

Retirement accounts (IRAs, 401k plans and the like) are special, however, because they typically allow beneficiaries to prolong withdrawal if properly handled.  If the plan allows, beneficiaries may elect to use their own life expectancy in calculating the minimum amount of money which must be distributed each year (this is also called “minimum required distributions”).  This is beneficial because it allows a beneficiary to prolong to amount of time the money is in the retirement account, allowing additional potentially tax free growth.

While many individuals choose to leave their retirement accounts to an individual beneficiary, i.e. their spouse or children, there may be good reason to leave such assets in trust.  Trusts offer many benefits, including asset protection, especially with the recent Supreme Court decision in Clark v. Rameker, 134 S. Ct. 2242 (2014), in which the Court found that a non-spouse beneficiary’s inherited IRA was not exempt from the beneficiary’s creditors in his bankruptcy estate.

In order to fully take advantage of both the protection a trust offers and the beneficiary’s life expectancy, the trust must be carefully drafted.  Such trusts are referred to as “see-through” trusts because the language directs the retirement plan to look through the trust at the beneficiary individually to determine life expectancy.  If the trust runs afoul of the rules, however, the consequences are harsh.  The trust and its beneficiary’s life expectancy are disregarded and the “5-year rule” applies, requiring a full distribution of the retirement plan assets within 5 year.

This is one of the many reasons it is important to have an attorney who is familiar with these rules to assist you with carefully drafting your estate plan.  We would be happy to work with you and your family to craft an estate plan which achieves your goals.

For more information regarding this or any other estate planning concern, please visit the Hoffman & Associates website at www.hoffmanestatelaw.com, call us at 404-255-7400 or send us an email.

2015 YEAR-END TAX PLANNING

Hoffman8Year-end tax planning for individuals, trusts and businesses provides not only the opportunity to review the activities of the past year, it also generates an invaluable opportunity to leverage tax planning techniques as they relate to new developments.  As in past years, individuals and businesses need to question the status quo, explore new strategies, and evaluate potential plans – most of which is done best before the current tax year closes.  This letter explores some of the traditional year-end planning techniques and how events in 2016 may impact this planning.  We are ready to help you plan efficiently and effectively for 2015 and future years.

Traditional Year-End Planning Techniques

While new and pending developments play a critical role in year-end tax planning, traditional year-end planning techniques should not be overlooked.  These techniques principally hinge upon the goal of smoothing out taxable income between the year about to close and the next year as best as can be predicated.  In turn, such planning relies on strategies to accelerate or deferred income and expenses as required.  Some of the most common techniques include:

Income Acceleration into 2015 (for deferral to 2016, delay the following actions):

  • Selling outstanding installment contracts
  • Receive bonuses before January
  • Sell appreciated assets
  • Redeem U.S. Savings Bonds
  • Declare special dividend
  • Complete Roth conversions
  • Accelerate debt forgiveness income
  • Maximize retirement distributions
  • Accelerate billing and collections
  • Avoid mandatory like-kind exchange treatment
  • Take corporate liquidation distributions in 2015

Deductions/Credit Acceleration into 2015 (for deferral to 2016, take contrary actions as appropriate):

  • Bunch itemized deductions into 2015/Standard deduction into 2016
  • Don’t delay bill payments until 2016
  • Elect Expanding/accelerated depreciation
  • Pay last state estimated tax installment in 2015
  • Dont delay economic performance
  • Watch AGI limitations on deductions/credits
  • Watch net investment interest restrictions
  • Match passive activity income and losses

You should discuss with your accountant if you are contemplating any of these actions.

Georgia Tax Credits

The State of Georgia has several credits that can be used to offset Georgia income taxes.  One of these is the Education Expense Tax Credit.  This tax credit is for contributions made to Georgia Student Scholarship Organizations.  These organizations provide scholarships for students to attend primary and secondary private schools.  Each year the State sets aside a specific amount of money which is available to taxpayers who are pre- approved to participate in the program.  A married taxpayer filing a joint return can claim up to $2,500, and a single taxpayer up to $1,000.  The benefit to an S corporation shareholder, LLC member or partner of a partnership can even be greater – up to $10,000, limited to 6% of the related income.  Since there is only a finite amount available, the 2016 fund will be utilized early in 2016.  It is  important to apply early in order to take advantage of this program.  Many of the Student Scholarship Organizations are currently accepting “pre-registration” for the 2016 credits.  This credit is a win/win since the contribution is deductible on your federal income tax return, and a dollar for dollar tax credit is allowed as an offset to your Georgia income tax.

The film industry is entitled to a special Film Tax Credit for film production in Georgia.  The Georgia law allows for these credits to be transferred to other taxpayers.  As a result, unused credits are sold by the film companies at a discount and you can purchase the credits to satisfy your Georgia income tax liability.  Additionally, you get a full itemized deduction for the gross amount of the credit but you must report the discount as a capital gain.

Qualified Land Conservation Contributions

Another tax planning opportunity exists for a charitable contribution deduction for the donation of a land conservation easement to a government unit or charity for conservation purposes.  The amount of the charitable deduction is the difference between the appraised value of the land before and after the conservation easement.  The deduction is limited to 50% of the donor’s adjusted gross income with a 15 year carryover of any unused deduction.  These rules were made permanent for all years beginning after December 31, 2014, by the Conservation Easement Incentive Act of 2015.  You do not need to contribute your own land in order to benefit from the conservation easement charitable deduction – the benefit is also available by investing in syndicated conservation easement partnerships.  If interested in learning more, please contact our office for additional information.

Georgia also has a state tax credit under the Georgia Conservation Tax Credit Program.  A state income tax credit is allowed for property donated for conservation purposes by approved qualified donors up to the lesser of $250, 000 or 25% of the value of the donation for individuals.  Any unused credit can be carried over for 10 years.  Qualified landowners are also allowed to sell the income tax credit to other taxpayers, subject to certain regulatory restrictions.

Year-End Individual Planning

Assessing current income or expenses, gains and losses, to map out a year-end buy, sell or hold strategy makes particular sense as markets, and the economy in general, continue to make adjustments.

Income and Capital Gains/Dividends

Spikes in your income, whether capital gains or other income, may push capital gains into either the top 39.6 percent bracket (for short-term gains), or the 20 percent capital gains bracket (for long-term capital gains).  Spreading the recognition of certain income between 2015 and 2016 may minimize the total tax paid for the 2015 and 2016 tax years.  And those individuals finding themselves in the 15 or 10 percent tax brackets should consider recognizing any long-term capital gain available to the extent that, with other anticipated income, will not exceed the top of the 15 percent bracket ($74,900 for joint filers and $37,450 for singles in 2015).

Net Investment Income Tax (“NII”)

Since creation of the 3.8% NII tax, individuals have learned that NII encompasses more than capital gains and dividends.  NII includes income from a business in which the taxpayer is a passive participant.  Rental income may also be considered NII unless earned by a real estate professional.  The NII threshold amount is equal to: $250,000 in the case of joint returns or a surviving spouse; $125,000 in the case of a married taxpayer filing a separate return, and $200,000 in any other case.  These threshold amounts are not indexed for inflation.

Planning Opportunity

Along with reviewing traditional techniques, individuals should examine carefully the potential impact of the NII tax, capital gains and dividends, alternative minimum tax (AMT), Additional Medicare Tax, “kiddie tax”, and more.  For some taxpayers, year-end strategies to keep income below certain thresholds may be valuable, such as the thresholds for the NII tax, the Additional Medicare Tax, the Pease limitation on exemptions and itemized deductions, and others.  Of course, the nuances of every individual’s situation must be taken into account. For example, not all capital gains are treated the same, or taxed the same.  The maximum tax rate on qualified capital gains and dividends increases from 15 to 20 percent for taxpayers whose incomes exceed the thresholds set for the 39.6 percent rate ($464,850 for joint filers and $413,200 for singles in 2015).  The maximum tax rate on qualified taxable gains and dividends for all other taxpayers remains at 15 percent; except that a zero-percent rate applies to taxpayers with income below the top of the 15 percent tax bracket.  The maximum tax rates for collectibles and unrecaptured Code Sec. 1250 gain are 28 and 25 percent, respectively.

New Legislation and Tax Extenders for Individuals

Equally important is not to overlook new tax legislation. So far in 2015, only a handful of tax bills have been passed by Congress and signed into law by President Obama.  Two new laws affect public safety officers.  A trade bill also makes a change to the child tax credit for taxpayers who elect to exclude from gross income for a tax year any amount of foreign earned income or foreign housing costs.  Congress also renewed the Health Care Tax Credit for qualified individuals.

Congress has not (as of the date of this letter) renewed the so-called tax extenders.  Many individuals have used the extenders, such as the state and local sales tax deduction, higher education tuition and fees deduction, Code Sec. 25C residential energy credit, IRA distributions directly to charities, and many more to maximize tax savings.  As in the past years, it’s a waiting game.  For year-end planning purposes, it is generally anticipated that Congress will renew these popular tax breaks, making them available for 2015.  It is unclear if Congress will also extend them into 2016.  Our office will keep you posted of developments.

Estate and Gift Taxes

The maximum federal unified estate and gift tax rate is 40 percent with an inflation-adjusted $5,000,000 exclusion (up to $5.43M for gifts made and estates of decedents dying during 2015 and $5.45M for 2016).  The annual use-it-or-lose-it gift tax exclusion allows taxpayers to gift up to an inflation-adjusted $14,000 to any individual ($28,000 for married individuals who “split” gifts) tax free and without counting the amount of the gift toward the lifetime $5,000,000 exclusion (adjusted for inflation) and, with proper planning, double for married couples who share the exclusion.

Affordable Care Act (“ACA”)

Unless exempt, the ACA requires that all individuals carry minimum essential coverage or make a shared responsibility payment.  Individuals with health insurance coverage should ascertain that their coverage satisfies the ACA’s minimum essential coverage requirements.  Individuals without minimum essential coverage may be liable for a shared responsibility payment unless exempt.  Individuals who obtain health insurance coverage through the ACA Marketplace may be eligible for the Code Sec. 36B premium assistance tax credit.

Planning For Retirement

Year-end is a good time to review if your retirement savings plans and tax strategies compliment each other.  Individuals can contribute up to $5,500 to an IRA or Roth IRA for 2015.  If they qualify, individuals can also make an additional so-called “catch-up contribution” of an additional $1,000.  This treatment is targeted to individuals age 50 and older.  Keep in mind that the maximum amount that can be contributed to a Roth IRA begins to decrease once a taxpayer’s adjusted gross income crosses a certain threshold.  For example, married couples filing jointly will begin to see their contribution start to phase out when their AGI is $183,000.  Once their AGI reaches $193,000 or more, they can no longer contribute to a Roth IRA.  For single filers the corresponding income thresholds for 2015 are $116,000 and $131,000.  Please note that individuals have until April 18, 2016, to make an IRA contribution for 2015.

Traditional IRAs and Roth IRAs are very different savings vehicles.  A traditional IRA or Roth IRA set up years ago may not be the best savings vehicle today or for the immediate future if employment and other personal circumstances have changed.  Some individuals may be contemplating rolling over a workplace retirement plan into an IRA.  Very complex rules apply in these situations and rollovers should be carefully planned.  The same is true in converting a traditional IRA to a Roth IRA.  Every individual has unique goals for retirement savings and no one plan fits all.

Retirement – Higher Deduction Options

Business owners seeking to make significant pension contributions should consider a Cash Balance Plan for their company.  In the right situation, an owner/employee can contribute up to 100% of their annual compensation limited to $210,000 for 2015.  However, skilled assistance is required to set up this type of plan and the plan requires annual administration not required for many defined contribution plans (401K, SEP, etc.).  For a 2015 deduction, the plan must be established by December 31, 2015, even though the actual contribution can be deferred until the due date of the tax return with extensions.

Life Events

Marriage, the birth or adoption of a child, the purchase of a new residence, a change in filing status, retirement, and many more life events impact year-end tax planning. Of course, timing is a factor.  In some cases, a life event may be planned; in others, events occur unexpectedly.  The possibility of significant changes and/or significant or unusual items of income or loss should be part of a year-end tax strategy.  Additionally, taxpayers need to take a look into the future, into 2016, and predict, if possible, any events that could trigger significant income or losses, as well as a change in filing status.

Year-End Trust Planning

Many of the tax planning strategies for individual taxpayers are also applicable to trusts.  As with individuals, spreading the recognition of income between tax years may minimize trust taxes. Another tax minimization strategy for a trust is to shift trust income from a high rate trust to a lower rate beneficiary.

Income and Capital Gains/Dividends

The tax brackets for trusts are  more compressed than the tax brackets for individuals.  For example, in 2015, the 39.6% tax bracket for individuals filing jointly begins at $464,850 of taxable income, but for trusts the 39.6% bracket begins at only $12,300 of taxable income.  As a result, shifting trust income to the beneficiary may produce significant tax savings.  One way this can be achieved is by making distributions from the trust to the beneficiary.

Net Investment Income Tax

While the 3.8% NII tax threshold for individuals is $250,000 for married filing joint and $200,000 for individuals filing single, the 2015 NII tax threshold for trusts begins at only $12,300 of taxable income.  This can result in a substantial amount of trust income being subject to the additional 3.8% NII tax.  However, trust exposure to the NII tax may be reduced through distribution planning (See the following paragraph).

Beneficiary Distributions & The 65 Day Rule

When distributions are made from the trust to the beneficiary, the trust is allowed a deduction for the distribution of certain classes of income.  The income is then included on the beneficiary’s individual income tax return.  In many cases, the beneficiary’s individual income tax rate is lower than the income tax rate for the trust.  This results in less total income tax on the trust income.

A trust can elect to treat distributions made in the first 65 days of the tax year as a distribution of current year or prior year income.  Therefore, a distribution made by March 5, 2016, can be treated as a distribution of 2015 trust income.  This allows some additional time to determine the income for the trust and determine if a distribution should be made to the beneficiary.

The decision on whether to make a distribution, and the amount of the distribution, should be reviewed each year.  The tax related factors can change from year to year and there are also other non-tax factors that should be considered.

Year-End Business Planning

As in past years, business tax planning is uncertain because of the expiration of many popular but temporary tax breaks that have been part of an “extenders” package of legislation.  Also added to the mix is the far-reaching ACA.  Other changes to the tax laws in 2015 made by new regulations and other IRS guidance should also be considered in assessing year-end strategies.

Code Sec. 179 Expanding

Code Sec. 179 property includes new or used tangible property that is depreciable under Code Sec. 1245 and  is purchased to use in an active trade or business.  Under enhanced expensing, for 2014 and prior years, businesses could write off (“expense”) up to $500,000 in qualifying expenditures.  This $500,000 cap was not reduced unless total expenditures exceed $2,000,000.  Until the enhanced provisions are extended, businesses can write off up to $25,000 of qualifying expenditures.  This cap is reduced if total expenditures exceed $200,000.

Bonus Depreciation

Congress provided for 50% bonus depreciation through 2014 (through 2015 for certain transportation and other property).  Legislation introduced in Congress in 2015 would extend bonus depreciation through 2016 or, alternatively, make bonus depreciation permanent.

“Repair” Regulations

A potentially beneficial provision in final, so-called “repair” regulations is the de minimis safe harbor.  The safe harbor enables taxpayers to routinely deduct certain items whose cost is below the specified threshold.  The de minimis safe harbor is an annual election, not an accounting method, so it can be made and changed from year to year.  The current threshold is set at: $5,000 for taxpayers with an applicable financial statement (taxpayers with an AS should have a written policy in place by the beginning of the year that specifies the amount deductible under the safe harbor); and $500 for taxpayers without an AS.

Domestic Production Activities Reduction

One incentive that is definitely available for 2015 is the Code Sec. 199 domestic production activities deduction.  This deduction is over 10 years old, but the number of taxpayers claiming the potentially valuable deduction is smaller than the other incentives.  In 2015, the IRS issued guidance that fleshes out the types of activities that may qualify for the deduction.  The types of activities are many and varied.  Our office can review your business activities and help you ascertain if the deduction may be worthwhile.

Vehicle Depreciation Limits

The IRS released the inflation-adjusted limitations on depreciation deductions for business-use passenger automobiles, light trucks, and vans first placed in service during calendar year 2015.  The IRS also increased the 2014 first-year limitations by $8,000 to reflect passage of the Tax Increase Prevention Act of 2014, which retroactively extended bonus depreciation for 2014 late last year. It is uncertain whether anticipated 2015 extenders legislation will make the same retroactive adjustment for 2015.

Other Business Extenders

Many other beneficial tax provisions for businesses are up for consideration in extenders legislation for 2015 and beyond.  These include the research tax credit; small business stock; S corp built-in gains; New Markets Tax Credit; Work Opportunity Tax Credit; employer wage credit for activated military reservists; Subpart F provisions; enhanced deduction for contributions of food inventory, empowerment zones; Indian employee credit; low-income credits for subsidized new buildings and military housing; treatment of regulated investment companies (RIBS); and basis reduction of S corporation stock after donations of property.

Small Business Health Care Tax Credit

Small employers with no more than 25 full-time equivalent employees may qualify for a special tax credit to help offset the cost of health insurance for their employees.  The employer must pay average annual wages of no more than $50,000 per employee (indexed for inflation) and maintain a qualifying health care insurance arrangement.

Filing/Reporting Changes

Due to changes in the tax laws and other events, some deadlines will be changing starting in 2016; with others starting for 2016 returns filed in 2017.  As a result, planning at year-end 2015 might start factoring in some of these deadlines when setting out schedules and strategies at the start of 2016.  Notably, under the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, partnerships will be subject to an earlier March 15 deadline and C corporations generally will move to an April 15th deadline starting for 2016 tax year returns.  Extensions-to-file are also adjusted.  The FBAR deadline for reporting a financial interest or signature authority over a foreign financial account also will move, from June 30 to April 15.

Individual Returns

A Washington, D.C. holiday, Emancipation Day, will shift the filing and payment deadline for 2015 individual returns from April 15, 2016 to April 18, 2016.

Estate Tax Uniform Basis Reporting

The IRS delayed new uniform basis reporting requirements for estate tax property until February 29, 2016.  The delay was provided to give the IRS time to issue guidance to executors, beneficiaries, and others on how to comply with the new reporting requirements.

Year-end tax planning can appear to be a daunting task, but our office is ready to work with you.  Please contact our office.  Together, we can create a customized tax strategy tailored to you.

Georgia Education Expense Tax Credit – 2016 Pre-Registration

Mary 1

GEORGIA EDUCATION EXPENSE TAX CREDIT

APPLY NOW FOR 2016 PRE-REGISTRATION

This tax credit is for contributions made to Georgia Student Scholarship Organizations.  These organizations provide scholarships for students to attend primary and secondary private schools.  The contribution is deductible on your individual federal income tax return as a charitable contribution, and a dollar for dollar tax credit is allowed to offset your Georgia income tax.

Maximum Tax Credit Allowed
Individual Taxpayer – Single:  $1,000
Individual Taxpayer – Married filing joint:  $2,500
S corporation shareholders, LLC members and partners in partnerships: $10,000, limited to 6% of pass through taxable income
Approval Process
Taxpayers must apply for pre-approval in order to participate in this program.  Once the annual credit cap is met, no additional applications are approved.

The annual cap for the 2015 credits was reached on January 1, 2015.  It is expected that the 2016 cap on the credits will be reached on January 1, 2016.  Therefore, it is important to apply early in order to take advantage of this program.  Many of the Student Scholarship Organizations are currently accepting “pre-registration” for the 2016 credits.

Please call our office at 404-255-7400 for additional information regarding this program.

 

footprints for the future 5k

Hoffman & Associates Sponsors the Second Annual Footprints for the Future 5K Race in Sandy Springs

SANDY SPRINGS, Ga.Nov. 17, 2015PRLog — On Saturday November 14, several Hoffman & Associates staff members along with their families and friends, took to the streets for the second annual 5K race in support of the Sandy Springs Education Force (SSEF).  The mission of the SSEF is to inspire and support all Sandy Springs public school students to graduate and pursue productive lives beyond high school by providing education and enrichment programs.  This year, the Footprints for the Future 5K race and fun run nearly doubled in size with 200 registered runners and over 30 sponsors. “Overall the race was a great success and we’re very pleased with the outcome and support.” commented Joe Nagel, attorney for Hoffman & Associates and co-chair of the event.

About Hoffman & Associates:
Hoffman & Associates specializes in estate planning for wealthy families, business and tax law for closely-held businesses, and tax compliance. Expertise in these areas comes from a dedicated staff of both attorneys and CPAs delivering personalized service and sound legal guidance.  Established in 1991, Hoffman & Associates prides itself in having a standalone tax practice and attorneys licensed in Georgia, Florida, North Carolina and Tennessee.

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Carolina Gomez

Doug McAlpine Elected as President of the Georgia Chapter of the AAA-CPA

douglas mcalpineSANDY SPRINGS, Ga.Nov. 12, 2015PRLog — Doug McAlpine, Of Counsel for Hoffman & Associates, was recently elected as President of the Georgia Chapter of the AAA-CPA.  He will serve as president of the organization for a two-year term.  Founded in 1964, the AAA-CPA’s purpose is to protect the rights of those dually qualified to practice as both attorneys and certified public accountants as they see fit, be it law, accounting or both. Today this organization not only continues to protect these rights but offers an array of products and services to help members succeed in their practice such as networking and referral opportunities; national, chapter and regional meetings; and continuing education credit.

Doug joined Hoffman & Associates in 2013 bringing over thirty years of experience in the areas of income tax planning and compliance, probate, small business formation and estate planning with a special interest in estate planning for blended families.  Doug is licensed as both an attorney and certified public accountant in the state of Georgia.  Currently Doug is a member of the Georgia Bar Association, the Atlanta Bar Association and the Georgia Society of CPAs.  He is admitted to practice before all courts in Georgia, the United States District Court for the Northern District of Georgia, the United States Courts of Appeals for the Sixth, Ninth and Eleventh circuits.  Before joining H&A, Doug was a founding partner of Sanders & McAlpine for over twenty years.  He received his Bachelor of Business Administration for the University of Michigan in 1973 and his Juris Doctor from Emory University in 1976. Doug worked four years in public accounting with Touche Ross & Co. before starting his own law practice in 1981.

About Hoffman & Associates:

Hoffman & Associates specializes in estate planning for wealthy families, business and tax law for closely-held businesses, and tax compliance.  Expertise in these areas comes from a dedicated staff of both attorneys and CPAs delivering personalized service and sound legal guidance.  Established in 1991, Hoffman & Associates prides itself in having a standalone tax practice and attorneys licensed in Georgia, Florida, North Carolina and Tennessee.

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Hoffman & Associates Announces its Newest Associate

CassandraAtlanta, GA, Oct 15, 2015 – Hoffman & Associates is proud to announce its newest associate, Cassandra Ceron.  Cassandra joined the firm in May 2015 and specializes in the areas of wills, trusts, estate administration and probate, and guardianship/conservatorship of incapacitated adults. Cassandra’s past experience in family and domestic  law enables her to assist blended families in navigating their estate plan. Cassandra graduated cum laude, and with pro bono distinction, from Georgia State University College of Law and has an undergraduate business degree, cum laude, from Kennesaw State University.

Cassandra is a member of both the Estate Planning & Probate and Family Law Sections of the Atlanta Bar Association and the Young Lawyers Division and the Family Law Section of the  Georgia Bar Association. Cassandra lives in Marietta with her husband and two young children.

About Hoffman & Associates

Hoffman & Associates specializes in estate planning for wealthy families, business and tax law for closely-held businesses, and tax compliance.  Expertise in these areas comes from a dedicated staff of both attorneys and CPAs delivering personalized service and sound legal guidance.  Established in 1991, Hoffman & Associates prides itself in having a standalone tax practice and attorneys licensed in Georgia, Florida, North Carolina and Tennessee.

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