by Garrett Spangler on April 16, 2012
Following the death of a loved one there is certainly going to be a period of grieving where time is spent with close family and friends. When the dust settles from the funeral however, the next question people usually ask themselves is, “What do I do now with the deceased’s estate?”
A few of the first steps that should be taken to handle an estate include:
(1) Secure the residence of the decedent and anyone or anything that may have been reliant upon the decedent. This includes any people who are dependents as well as pets that are left behind.
(2) Arrange to receive copies of the death certificate and gather other paperwork for important items like bank accounts, investment accounts, real estate holdings, and other assets. Don’ forget to locate the original copy of the decedent’s Will and place a freeze on any accounts to avoid automatic or improper payments from being made.
(3) Once the estate is generally secure, contact an attorney to assist you with the estate administration process. Many attorneys are willing to provide as much or as little assistance as you might like with an estate and its always nice to have a helping hand to confirm what needs to be done and guide you through the steps of administration to avoid errors.
(4) Go to your county’s Register of Wills to obtain letters officially naming you as the personal representative for the estate. Formally notify beneficiaries and potential heirs at law of the passing of the decedent and your appointment as the executor of the estate.
(5) Work through the administration process to organize, pay tax on and eventually distribute assets according to the Will or applicable intestacy statute.
Note that every estate is a little different because no two estates will contain the same assets. Depending upon the nature of the assets and any issues that may arise during the administration process, it is quite common for an estate to take 1-2 years to be completed.
Finally, remember not to distribute anything until you are certain all debts have been addressed and a reserve has been set aside to cover any remaining estate related expenses. As the personal representative you may be personally liable for making distributions before all issues are addressed.
by Garrett Spangler on March 22, 2012
It’s that tax time of year again and by now you may have already submitted your 2011 tax return or will do so soon. The IRS is in full swing reviewing returns and issuing refunds, increasing its efforts to encourage filing electronically and returning many refunds via direct deposit. To go along with these efficiencies however, the IRS has also stepped up its effort to mark and scrutinize potentially fraudulent returns, mostly due to identity theft.
I’m sure you are already aware of the dangers of identity theft and try to make a conscience effort to avoid giving out personal information except when necessary. Due to the nature of today’s world though, this often proves difficult as more institutions and businesses gather and use personal information, including social security numbers, to keep track of their students, patients, clients, and customers. As a result, many criminals who may have previously turned elsewhere for their spoils are now using tax fraud to steal tax refunds.
To help protect yourself from identity theft tax fraud, some of the usual identify theft prevention suggestions carryover. These include limiting when and where you offer personally identifying information, not keeping your social security card in your wallet, using strong passwords, shredding sensitive documents, and password protecting things like your laptop and cell phone. A few other things you can do to protect yourself from identity theft tax fraud are to file taxes early and if self-employed, make sure you get an EIN (Employer Identification Number) from the IRS.
Criminals know that most people file close to the deadline so they try to get their fraudulent returns in first. That way it’s your legitimate return called into question rather than the fraudulent one. If you have a small business, your tax information is probably included on your own personal return, but you should still get a tax identification number. It’s free and easily done on the IRS website (www.irs.gov). This can avoid widely disseminating invoices with your social security number to customers who, let’s be honest here, as much as you might appreciate them, you don’t know very well.
by Erica Intzekostas on February 20, 2012
The FCC recently announced new rules that are making it more difficult for telemarketers to use autodialers and prerecorded messages (known as “robocalls”). Now companies must receive prior written consent from the individual it wants to call — even if the company has an established business relationship with that person.
This is a huge change because it effectively eliminates one of the biggest exceptions to the restrictions on robocalling: the “established business relationship” exception. Until now, this exception has basically allows companies to circumvent many of the telemarketing restrictions and call customers with which they have an “established business relationship.” With the new rules, those customers cannot be robocalled unless they give their prior written consent.
Additionally, telemarketers will have to provide a simple way for customers to revoke their consent. Any customer opting out must then be added to the company’s internal do not call list.
These new rules do not affect non-marketing calls, such as calls about past due balances or important information such as alerting customers to security breaches.
by Garrett Spangler on February 8, 2012
It’s tax season, but if you forget for a moment you can count on the people in costumes trying to flag you down on your work commute, or the deluge of TV ads promising affordable tax preparation and fast refunds to remind you. Of course if you have decided to prepare your own tax return, its likely you will have some questions as you work through it.
There are a number of tax related resources available to you and every year it seems that improvements to software and websites where you can ask experts questions make preparation easier and easier. (I admit I’m biased, but I highly recommend you Ask the Taxgirl if you don’t find an answer elsewhere.) The IRS has also made considerable strides in recent years to help taxpayers find the answers they are looking for and they’ve even developed an app for that.
This year the IRS has added additional functionality to their IRS2Go app including direct access to the latest IRS tax news, the ability to request your tax records, and even links to videos on the IRS YouTube channel which have proven quite a popular addition to the somewhat boring FAQs you can find on irs.gov. Other features return from previous years including the ability to track the status of your tax refund and a handy list of contacts from which you can simply click to call the proper phone number to contact IRS representatives directly with your tax questions.
Overall the IRS2Go app remains fairly simple and straightforward which is actually a huge compliment considering the complexities associated with many sections of the tax code. Check out the Apple App Store to get it on your iPhone or the Android Marketplace for your Android device.
by Garrett Spangler on January 26, 2012
It’s tax time and you should be receiving your tax related documents for the last year. As a tax attorney who also teaches tax at a local college, people often ask me whether they should do their own income tax returns or not. While I often encourage people to consider doing them (and the goal of my federal income tax class is to make students feel comfortable preparing their own 1040s) there are a few considerations to make before you rush out to purchase this year’s new software or drop some of your hard earned cash on a preparer.
1) How complicated are your taxes and do you feel comfortable using software?
If you are considering preparing your own tax return, determine what type of a taxpayer you are. On one end of the spectrum, if you happen to be a recent college grad who has little assets and work as a W-2 wage earner I say go for it. Preparation software makes it surprisingly easy to put together your own tax return these days and a simple taxpayer like this is one of the least likely to be subject to audit.
If you are a business owner with various investments, work out of your home and seek to maximize your itemized deductions however, I’d probably suggest you get some help. Of course every situation is different and if you seldom use a computer you might need a little help regardless, and if your business just happens to be tax preparation, well then you probably don’t need my suggestions now do you?
2) Can you make the time commitment?
A consideration that is often overlooked is the amount of time required to prepare a tax return. Income tax returns can easily take dozens of hours to prepare and the time will continue to rise the more complex your tax situation and the less familiar you are with tax preparation. If you have the time and would like to save a couple bucks it may make sense to venture into the tax preparation world yourself and get a more thorough understanding of your overall tax picture. If you don’t think you are going to be able to find the time to complete the return accurately however, you should find a CPA to assist you because you could miss certain deductions or set yourself up for a tax problem.
3) Are you willing to pay the cost of professional preparation?
Despite some fees that are advertised to be lower, most taxpayers can expect to spend a minimum of $200 to have their return prepared. It isn’t unusual for the amount to jump up to $1,000 - $2,000 as complexities are added so be sure you understand the costs you are likely to incur. In addition, not all tax preparers are created equal. On a budget and for simple returns, a seasonal tax services like H&R Block, Liberty Tax Service or Jackson Hewitt can be a good option.
Overall however, I don’t think temporary preparation centers are a good value because an experienced CPA, for only a moderately higher fee, will often be happy to develop a relationship with you, may be able to make suggestions to reduce your tax bill, and will be able to help you work with the IRS to resolve any problem. Plus, in the event you have a tax question outside of the few months that the temporary stores are open, you can always call your local CPA.
Of course, if you don’t have much extra time, are inexperienced preparing tax returns, and find that you have a reasonably complicated situation, I would suggest you can’t afford not to have a paid preparer of some type.
4) Are you still unsure whether you should prepare your own taxes?
Ah yes, this is often where taxpayers find themselves even after taking an inventory of where they think they stand on the complexity scale in the tax world and how comfortable they feel taking the tax code into their own hands. On the plus side, you are certainly not alone. If you want to take the plunge and try it yourself but just can’t be confident in your abilities to do a good job, try both!
That’s right, while it may sound a little odd, nothing could set you up for better success than paying to have your taxes prepared by a professional but also trying out the software on your own. You will be able to get a feel for both how well you were able to navigate the preparation software as well as see how you compare to your professionally preparer. Then you will be able to make a more informed decision next year.
by Garrett Spangler on January 11, 2012
Spouses who have been the victim of their significant other’s tax problems should be a little more hopeful now that the IRS has made changes to the relief options. It’s not a moment too soon for those facing such issues as the IRS continues increased enforcement efforts during this economic downturn.
Last week the IRS issued newly proposed guidelines to make sure deserving innocent spouses may more easily be granted relief from tax liabilities that were out of their control. Specifically, the notice focuses on taking into account issues of spousal abuse and financial control when reviewing innocent spouse claims. This is an excellent addition because spouses who suffer from abuse in a relationship or simply enjoy no financial control over their assets often have little input on their tax returns, even if they sign them.
When you sign and submit a tax return with a spouse, you agree that you are jointly and severally liable for the income tax associated with the given tax year. This includes any issues associated with what income is reported, or is not reported, as well as other mistakes that are made whether purposeful or accidental. This presumption of liability must be overcome for the IRS to grant innocent spouse relief and common issues like assets held in joint or the spouse’s name were enough to trump claims that they, in fact, still lacked control.
Of course the best way to avoid tax liability is to be an active participant in preparation and review of your tax return. If that is not possible, at least the IRS is finally willing to consider some new contributing or mitigating factors. In the event that you are facing some tax issues however, I would still recommend that you contact a tax professional for help and guidance through the process.
by Chris Erb on November 9, 2011
I don’t know about you, but don’t answer my home phone any more, and I certainly don’t answer it during election time. Why not? Calls which I want are extremely rare, given that most of the people I know either send me an e-mail or call my cell phone, and the few times I actually pick up it’s some sort of survey or poorly disguised sales pitch. In fact, it it wasn’t for 911 we probably wouldn’t have a landline at all.
Now, a bill has been introduced in Congress which would allow automated calls to mobile phones as well. The Mobile Informational Call Act of 2011 (H.R. 3035) would allow companies to call cell phones for purposes other than “telephone solicitations,” a.k.a. sales calls without obtaining the cell phone holder’s consent. Not surprisingly, consumer groups have been screaming bloody murder, particularly given that many consumers must pay for the cost of incoming calls, and some are organizing online petitions opposing the bill.
Not surprisingly, the bill has a fair number of supporters, including debt collection agencies and a “leading global provider of cloud-based, multi-channel proactive customer communications” a.k.a. a provider of internet-based autodialing services. Supporters claim that the dearth of landlines in the United States has prevented consumers from receiving critical information by phone, citing flight cancellations and calls regarding possible credit card fraud as examples.
Either way, I’m preparing for the possibility that I’ll be ignoring my cell phone when it rings as well.
by Garrett Spangler on September 22, 2011
Yes, thats right, breaking free from jail is now in fact legal….sort of. While actually breaking out of a penitentiary, prison or that medieval castle’s dungeon in which you’ve been toiling away may be met with local law enforcement or cries to release the hounds, “jailbreaking” your new high tech device will leave you with considerably less to worry about.
When the iPhone went on sale in 2007, several options for removing the apple imposed restrictions quickly appeared online. The process of removing such restrictions, allowing one to load applications not sold or approved by Apple, became known as a “jailbreak” and now is widely used to describe the same process for other tech products. While manufacturers wish to control what can and cannot be done with their devices for a variety of reasons, Apple has notoriously been a leader in providing rewarding but tightly controlled user-experiences.
Due to legislation which was newly enacted last year, the US Copyright Office no longer considers reprogramming an electronic device a violation of federal copyright law. Of course there are still consequences to jailbreaking your devices, like voiding warranties or violating license agreements, and you will have to go through the jailbreak process again each time an update is released. These issues are probably minor though if you are adventurous enough to consider jailbreaking your device in the first place.
Now remember, this is not an endorsement to go out and start jailbreaking like there’s no tomorrow. Just confirmation that freeing your device from the restrictions placed upon it by the manufacturer isn’t going to land you in the slammer for copyright violations.
by Chris Erb on August 22, 2011
In a recent opinion the ULD, a data privacy organization in the German state of Schleswig-Holstein, has declared (link in German) the use of Facebook’s “Like” buttons on German websites to be in violation of the German data privacy act, and has threatened website operators who continue to use “Like” buttons with penalties if the buttons are not removed by September 2011. According to the ULD, the use of the “Like” button transfers both user content and tracking data to the US company Facebook without the express consent of the user as required by German law.
For the moment this decision impacts website owners in Schleswig-Holstein more than anyone else, who face fines if they continue to violate the law. It also, however, serves as a reminder of a much larger and perhaps more concerning issue - social media and the related exchange of data has long raised issues under European privacy law, a problem which is only exacerbated by the increased interconnectedness of websites with social networks. Although investigation and enforcement of EU privacy laws and data transfers to the US has been fairly lax, the laws are fairly comprehensive and regulate the treatment of EU citizen data by US-based websites as well.
Given the increasing concern of even US users (and Congress) as to the ultimate destination of personally identifiable information, this shot across the bow from lightly-populated Schleswig-Holstein could be a harbinger of increased enforcement ahead.
Hat tip to Dr. J.C. Seevogel (@InTheLaw).
by Garrett Spangler on August 12, 2011
At the center of the recent debt ceiling debate in Congress were spending cuts and taxes. Democrats were looking for reductions in spending as well as increases in tax revenues to help pay down the country’s increasingly large debt. Republicans were seeking deeper spending cuts and no changes to the current tax rates. And neither party was particularly fond of cuts to entitlements because they are unpopular with older Americans and those are the people who vote. With the country on the precipice of default, an agreement was reached to increase the debt ceiling with reductions in government spending, no tax increases and no cuts to entitlements.
No matter what political party you tend to agree with, one thing is evidently clear, tax dollars just don’t go as far as they used to. This sounds a lot like a lesson from grandpa, but it becomes clear we are on a dangerous financial course when you take a closer look at what that means.
According to information available at the Government Accountability Office, by 2020, without significant changes, 89% of the tax revenue collected by the federal government annually will go to pay for Social Security (28.4%), interest on debt payments (24%), Medicare (21.3%), and Medicaid (15.3%). That means that only the remaining 11% of tax revenue collected will be available to pay for everything else, including education, infrastructure, and even national security.
Wow, just wow.
Putting that into perspective, 11% of the 2010 federal tax revenue of $2.16 trillion would be around $235 billion. Of course that sounds like a lot to you and I, but the spending for the wars in Iraq and Afghanistan ($170 billion) plus what we spent here on homeland security ($44 billion) in 2010 totals $214 billion. That leaves just $11 billion to cover things like the $667 billion in military spending (excluding the wars and security efforts mentioned above), and spending by the Departments of Agriculture ($129 billion), Labor ($173 billion) or Transportation ($78 billion). That doesn’t cut it and this list doesn’t even include things like national parks, the FBI, food safety, environmental protection, education, and the list goes on.
Without intervention, by 2040 the federal government will only be able to pay the interest on the debt and most of Social Security. Everything else would require additional borrowing if we continue to chart the same course. Tax revenues should go toward the provision of government services and saving for a rainy day like recessions and times of economic stress instead of squandered on interest payments. That’s not how I operate my finances and thats not how the country should either.
It’s gut check time America, in case you haven’t noticed, everyone is for small government and low taxes and for the government to continue to provide the services they are accustomed to, but there is one little problem called “math”, and the numbers simply don’t add up. Higher taxes, less spending, and reduced entitlements is the only way out. Let’s get our act together before we are essentially handing over a quarter of what we earn each month to China, Japan, and the EU, the only way out is to get real and pay ourselves first.
