Comprehensive Planning. Lifelong Solutions.

Tax Rates Affected by New Tax Law

By Amanda L. Richter, CPA

The Tax Cuts and Jobs Act (“TCJA”) resulted in major changes to the individual and corporate income tax rates that take effect January 1, 2018.

Rate changes for individuals. Individuals are subject to income tax on “ordinary income,” such as compensation, and most retirement and interest income, at increasing rates that apply to different ranges of income depending on their filing status (single; married filing jointly; married filing separately; and head of household). Currently for the 2017 tax year, those rates are 10%, 15%, 25%, 28%, 33%, 35%, and 39.6%.

Effective January 1, 2018, and continuing through 2025, there will continue to be seven tax brackets for individuals, but their percentage rates will change to: 10%, 12%, 22%, 24%, 32%, 35%, and 37%.

Bottom line. While these changes will lower rates at many income levels, determining the overall impact on any particular individual or family will depend on a variety of other changes made by the TCJA, including increases in the standard deduction, loss of personal and dependency exemptions, a dollar limit on itemized deductions for state and local taxes, and changes to the child tax credit and the taxation of a child’s unearned income, known as the Kiddie Tax.

Capital gain rates. Three tax brackets currently apply to net capital gains, including certain kinds of dividends, of individuals and other noncorporate taxpayers: 0% for net capital gain that would be taxed at the 10% or 15% rate if it were ordinary income; 15% for gain that would be taxed above 15% and below 39.6% if it were ordinary income, or 20% for gain that would be taxed at the 39.6% ordinary income rate.

The TCJA, generally, keeps the existing rates and breakpoints on net capital gains and qualified dividends. For 2018, the 15% breakpoint is: $77,200 for joint returns (half this amount for married taxpayers filing separately), $51,700 for heads of household, and $38,600 for other unmarried individuals. The 20% breakpoint is $479,000 for joint returns (half this amount for married taxpayers filing separately), $452,400 for heads of household, and $425,800 for any other individual (other than an estate or trust).

It is important to note that these new individual income tax rates are effective for your 2018 tax return and will not affect your tax on the return you will soon file for 2017. However, they will almost immediately affect the amount of your wage withholding and the amount, if any, of estimated tax that you may need to pay.

Corporate income tax rate drops. C corporations currently are subject to graduated tax rates of 15% for taxable income up to $50,000, 25% (over $50,000 to $75,000), 34% (over $75,000 to $10,000,000), and 35% (over $10,000,000). Beginning January 1, 2018, the TCJA makes the corporate tax rate a flat 21%. It also eliminates the corporate alternative minimum tax.

I hope this information provides helpful insight on the changes to individual and corporate tax rates. For more details, please see the Hook Law Center Memorandum on our website at Tax Cuts 2017. If you wish to discuss how these changes or any of the other many changes in the TCJA could affect your particular tax situation, please call our office at 757-399-7506.

Kit KatAsk Kit Kat – Pets from Puerto Rico

Hook Law Center:  Kit Kat, what can you tell us about the pets who were left stranded in Puerto Rico after the hurricane?

Kit Kat:  Well, this is a heart-warming story in which a group from Virginia came to the rescue. It was several months in the making. Mirah Horowtiz, a lawyer and animal lover from Arlington, VA, who runs Lucky Dog Animal Rescue, spearheaded the effort. Southwest Airlines is also to be commended, because they donated the entire flight with volunteer pilots and flight attendants free of charge. It took a while for the emergency rescue of people to subside and Southwest’s schedule to clear, but eventually Southwest gave her the date of Jan.20, leaving from Baltimore-Washington International Airport. The Boeing 737 left Baltimore filled with supplies such as pet food, Clorox, wipes, trash bags, and diapers. The return flight was filled with 120 stray cats and stray dogs (satos in Spanish). Hundreds of animals became strays during the hurricane, as their owners sought shelter and did not have time to make arrangements for their pets.

The flight back to the United States was such a happy one! The entire crew was so dedicated to their mission. Flight attendant Janice Goravica volunteered to assist on the flight with the specific intention of looking for a new dog. Her previous pet, a black lab named Duke, died 4 years ago. Only now did she feel ready to bond with a new pet. She chose another black lab named Coscu. Once they landed, there was a crowd waiting to meet the furry group. Most were adopted on the spot. If you are interested in adopting one of the pets from Puerto Rico who still need homes, you can go to the Lucky Dog website. As Sonia Collazo, a lady from Puerto Rico who came to Virginia 10 years ago said, ‘You cannot forget the dogs. When you forget the dogs, you forget what a good life means.’

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Distribution of This Newsletter

Hook Law Center encourages you to share this newsletter with anyone who is interested in issues pertaining to the elderly, the disabled and their advocates. The information in this newsletter may be copied and distributed, without charge and without permission, but with appropriate citation to Hook Law Center, P.C. If you are interested in a free subscription to the Hook Law Center News, then please telephone us at 757-399-7506, e-mail us at mail@hooklawcenter.com or fax us at 757-397-1267.

Posted on Friday, January 26th, 2018. Filed under Newsletter.

The Problems Associated with Joint Bank Accounts

By Shannon Laymon-Pecoraro, CELA

It is not uncommon for clients to come into the office with bank and brokerage accounts held jointly with another. The common explanation received for such titling is to enable the joint account holder to handler the individual’s personal affairs. One of the most important things an estate planning or elder law attorney can do for a client is to explain the importance of asset titling, and its effects. Incorrect titling can completely disrupt an estate plan.

Most often, joint accounts are held with a right of survivorship. In Virginia, the institutions must provide the account owner with the option to designate the account as joint without a right of survivorship. In my five-year career, I have yet to see any joint account held without a right of survivorship, despite the fact that I am most often told that the additional account holder was added merely for convenience purposes, such as assisting with bill payments during life and accessibility to immediate funds to cover funeral expenses upon death. The problem, however, is that a laypersons understanding of this designation is muddied by the advice of non-lawyers.

A joint account held with a right of survivorship will pass to the other account holder(s) upon the death of another. This means that the account will not pass in accordance with a Will or Trust that was created by the deceased account holder. The account holder will have no legal obligation to carry out your testamentary wishes, and the estate or the estate beneficiaries will be left to prove the account was not really intended to provide the other account holder with an ownership interest, but for convenience purposes.

This problem most often arises when one child is named as a joint account holder to help a parent pay their bills in their later years. Although this child often has a power of attorney, rather than just add the child as an authorized user by putting the power of attorney to record at the financial institution the child is actually added to the account. Clients have explained to me that when they tried to record the power of attorney that the employee of the financial institution informed them to just add the individual to the account because it was easier. The problem is that the same employee never explained the designation between “with” or “without” survivorship, or that there was an option. As a result, those clients didn’t realize that one child could inherit the funds of the account to the detriment of the other children. While some children may feel they have a moral obligation to allocate funds as expressed in a Will or Trust, others will not.

This is also an important issue in blended marriages. Spouses commonly own joint assets. In blended families, there is always a concern that the surviving spouse will create an estate plan to the detriment of the other spouse’s intended beneficiaries. If the surviving spouse inherits 100% of a joint account, the surviving spouse’s estate plan controls. If the first spouse to die wanted to leave something to their child, whether at their death or at the death of the second to die, they would be unable to have any ability to do so from a jointly-held asset.

Because of the issues associated, we often recommend that people avoid creating joint accounts unless they truly intend for that one individual to inherit the entire account upon their death. While this may be contrary to the advice of non-lawyers, clients often understand why this recommendation is made after a detailed discussion.

Kit KatAsk Kit Kat – Frozen Alligators

Hook Law Center:  Kit Kat, what happened to the alligators who got trapped in water that usually doesn’t freeze in Snowmageddon, the big snowstorm on January 4th and 5th?

Kit Kat:  Well, that is an interesting question. Actually, the alligators fared quite well. Take, for example, the alligators that live in Shallotte River Swamp Park in southeastern North Carolina. This is about the furthest point north that alligators can live. According to George Howard, the park’s general manager, he started to notice what he thought were cypress knees—woody projections from tree roots—poking through the waters of the swamp. On closer examination, he realized they were tips of alligators’ heads sticking out of the water, so they could continue to breathe. He comments, ‘They have been around for millions of years. They are one of the only species in existence that is virtually unchanged. And they continue to be good at just surviving. This is just another example of how tough they are.’ He’s got a recording, so he can show others what happened. They may look dead, but they’re not. He even pulled one out of the water to prove his point.

The phenomenon of brumation refers to the slowing of metabolic functions in reptiles. It’s the cold-blooded animal’s closest approximation to hibernation, though it is not really hibernation at all. Their bodily functions just slow down to the point that they’re not even digesting food. However, once the weather warms, they’re right back to normal. He plans to film that, too. When the weather is cold, but not icy, alligators spend their time at the bottom of the swamp or burrowing in the mud. The ice forced them to come to the surface to continue to get air.

Other examples of brumating animals are iguanas and turtles. While the north and mid-south endured Snowmageddon, Florida experienced temperatures in the 40s. That was low enough to cause iguanas to fall from their preferred tree habitat and land on patios and pool decks. However, they weren’t dead. Once the weather warmed, they were back in action scurrying around like they normally do. So, too, with turtles, who went into a low metabolic state to survive the cold snap.

Nature does have a marvelous way of helping all of its creatures adapt to the change of seasons! It so interesting to watch and be part of this grand universe! (Cleve R. Wootson Jr., “These alligators spent days trapped in swamp ice—and survived,” The Washington Post, (Animalia section), January 9, 2018)

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Distribution of This Newsletter

Hook Law Center encourages you to share this newsletter with anyone who is interested in issues pertaining to the elderly, the disabled and their advocates. The information in this newsletter may be copied and distributed, without charge and without permission, but with appropriate citation to Hook Law Center, P.C. If you are interested in a free subscription to the Hook Law Center News, then please telephone us at 757-399-7506, e-mail us at mail@hooklawcenter.com or fax us at 757-397-1267.

Posted on Friday, January 19th, 2018. Filed under Newsletter.

With Tax Time Fast Approaching

By Sarah Schmidt, Esq.

How Long Should You Keep Your Records?

With tax time fast approaching, what a better time to clean out those file cabinets. But how long should you keep your documents? Below are some recommendations and general guidelines.

  1. Taxes 

    Typically, you should keep your federal income tax returns and supporting documentation for at least seven years. Review this link to see what the Internal Revenue Service recommends. The IRS has several different periods of limitation. Most significantly, if you have ever failed to file a tax return or have ever filed a fraudulent return, you should keep records indefinitely. The best practice is to keep your records for the longest period of limitation recommended by the IRS. But also be sure to check with individual insurance companies or creditors where applicable.You should keep your Virginia tax returns and supporting documentation for the same length of time, at least seven years. The Virginia Department of Taxation recommends keeping your records for three years from either the due date of the return or the date the return was filed (whichever is later) unless the Internal Revenue Service suggests otherwise.

    Therefore, keep all of your tax records for the same length of time at least seven years if not longer.

  2. Contracts 

    How long you should keep a contract and supporting documentation varies. At a minimum, you should keep a contract for the length of time that you (or the other party) could file a lawsuit.  This length of time is determined by the terms of your contract and the laws in your state. While the terms of your contract may control this length of time, each state law provides a statute of limitations as well. A statute of limitations is a law that bars a party from filing a claim after a specified period of time. In Virginia, the statute of limitations for a contract also depends on the type of contract. In general, the statute of limitations for a written contract is five years and for an oral contract, it is three years. See Va. Code § 8.01-246 for exceptions.

  3. Credit Card and Bank Statements 

    Review this link for a recommendation from the FDIC as to how long to keep credit card statements and bank statements.

  4. Investment Accounts 

    Consider keeping investment account statements for the life of your investment, plus seven years for tax purposes.

  5. Documents From A Decedent’s Estate 

    A great number of our clients serve as a personal representative (either an executor or administrator) of a loved one’s estate. And serving in that capacity requires a great deal of record keeping.  How long should you keep those records? The answer to that question depends on the type of records. For example, if they are tax records, see recommendation from the IRS.In addition to considering what type of document it is, a personal representative of an estate should also keep all accounting records, supporting documentation, and related correspondence for at least ten years (or longer if the specific document so requires). While a breach of fiduciary duty claim is typically subject to a much short statute of limitations, a final accounting may be subject to a suit to surcharge and falsify for up to ten years by some individuals.  See Va. Code § 8.01-245.

This should provide you with basic guidelines from various sources to help you trim your file cabinets. Opinions, however, vary as to the exact dates for retaining records and the specific situation of every case. There are also many important documents that should be kept indefinitely.  This article is not intended to substitute legal advice and when in doubt, always contact an attorney. If you have any questions or concerns, please feel free to call the Hook Law Center, P.C. and we will be happy to assist you.

Kit KatAsk Kit Kat – Piper, Collie Extraordinaire

Hook Law Center:  Kit Kat, what can you tell us about Piper, the border collie, who worked at the airport in Traverse City, Michigan, clearing the airfield of birds, geese, foxes, and groundhogs?

Kit Kat:  Well, this is such a heartfelt story. Piper was a devoted helper and pet to the Traverse City airport operations manager, Brian Edwards. His short life of 9 years was a very productive one. Besides being a devoted  pet, he worked the last 3 years of his life as the airport’s K-9 wildlife control officer. He was extremely good at it, too. During his tenure, he had chased away approximately 8,367 birds from the runways, as well as an assortment of other critters who posed threats to air safety.

He became somewhat of an internet star when pictures of him in eye goggles and his work vest hit social media. He was a very good-looking dog with black and white markings. His telegenic face captured in a photo won him a US Coast Guard-sponsored contest. Edwards adopted him at age 2, and they became inseparable. However, he was so much more than his looks. He usually worked 40 hours per week. Edwards had to train him to do the job, and he learned quickly. He first started by doing what he called ‘passive training,’ –just letting him hang out at the airport getting used to the noise. Then, he acclimated him to wearing goggles—all necessary skills for airport work.

Edwards did not publicize Piper’s illness (prostate cancer) which was diagnosed in January 2016. Piper really didn’t suffer from the condition until December 2017. Then he was having extreme difficulty urinating. He had his bladder drained a few times, but on January 3, the cancer overtook him. Edwards draped Piper’s body with a US flag from the Coast Guard air station at the airport and posted that picture to Piper’s Instagram account with the caption—‘Airport K-9 Piper is off-duty.’ Piper will indeed be missed by many. (Karin Bruillard, “RIP Piper, a heroic dog who kept airport runways safe,” The Washington Post, (Animalia section), January 5, 2018)

Upcoming Seminars

Distribution of This Newsletter

Hook Law Center encourages you to share this newsletter with anyone who is interested in issues pertaining to the elderly, the disabled and their advocates. The information in this newsletter may be copied and distributed, without charge and without permission, but with appropriate citation to Hook Law Center, P.C. If you are interested in a free subscription to the Hook Law Center News, then please telephone us at 757-399-7506, e-mail us at mail@hooklawcenter.com or fax us at 757-397-1267.

Posted on Friday, January 12th, 2018. Filed under Newsletter.

Avoiding Common Investment Mistakes

By Bobby Buhr

The professionals at Hook Law Center are frequently asked to assist our clients with estate, long-term care, and investment planning. Unfortunately, we often find that our clients have made significant mistakes in their investment planning. These mistakes jeopardize our clients’ ability to provide for their support and to leave inheritances to their children. In some cases, these clients may run out of money needed for their support because of the investment mistakes.

For example, we recently met with a couple in their 80s to discuss their long-term care planning. The wife was in the early stages of Parkinson’s disease. Their combined annual income was about $30,000. They owned their home and about $400,000 of investments. On the advice of their “commission-based” investment advisor, about 80% of their investments were in illiquid real estate investment trusts (REITs). This elderly couple was taking too much risk by concentrating their investments in one asset class, and they may suffer a significant loss when they sell the REITs to pay for the wife’s care. Other elderly clients have invested too large a percentage of their investments in deferred variable annuities with significant withdrawal penalties.

  1. To avoid investment errors, Hook Law Center recommends that our clients: Put their investment and estate planning goals in writing. Although a professional advisor can assist the client with this responsibility, the client should not delegate this task to the professional. In making investment decisions, the client should not deviate from the client’s stated goals and objectives; however, the client should annually review and revise these goals as necessary.
  2. Obtain investment advice from “fee-based” advisors rather than from “commission-based” advisors. Commissions create conflicts of interest because a commission-based advisor is compensated for making money from the client rather than for the client. Hook Law Center thinks that commissions were the reason that the elderly couple discussed above was advised to invest 80% of their funds in REITs.
  3. Do not rely on their emotions. It will lead them to sell at market lows and invest at market highs.
  4. Save. Save. Save.
  5. Do not speculate. When clients play the market or day-trade, they are gambling on their ability to beat the pros. They will lose.
  6. Do not invest primarily for “tax reasons.” Tax shelters are frequently poor investments.
  7. Do not consider the client’s home as an investment. Think of it as a place where the client and the client’s family live.
  8. Reduce investment risks and increase returns by allocating investments among different asset classes, like large cap stocks, small cap stocks, REITs, foreign stocks, and bonds.
  9. Monitor investment performance on a quarterly basis and re-balance their investment allocation annually.
  10. Increase investment returns by controlling investment expenses and taxes. To accomplish these objectives, Hook Law Center recommends that our clients consider using index mutual funds or exchange traded funds. For larger accounts, Hook Law Center recommends separate account managers.

Hook Law Center thinks that a competent fee-based investment advisor can assist our clients in accomplishing their estate, long-term care, and investment goals. To better assist our clients with such investments and advice we have recently added Amanda L. Richter to our professional team. Amanda graduated from Old Dominion University in 2007 with a business administration degree, with a concentration in accounting. She specializes in taxation of individuals, estates and trusts, small business and not-for-profit organizations. Prior to joining the Firm, Amanda was a Partner at a medium-size accounting firm in Hampton Roads where she worked on a wide range of individual, fiduciary, partnership and corporate tax returns as well as audit engagements. She is a member of the American Institute of Certified Public Accountants and the Virginia Society of Certified Public Accountants.

Kit KatAsk Kit Kat – Cat Team 7

Hook Law Center:  Kit Kat, what can you tell us about Cat Team 7?

Kit Kat:  Well, I am happy to report that there is a cat rescue team operating out of the Norfolk Naval Station which is known as Cat Team 7. Last year (2017), the team rescued about 70 cats and kittens. Some of these were feral. None of the cats can be re-released on to the base because of a Department of Defense policy. After they are spayed and neutered, Cat Team 7 then transfers them to animal shelters or volunteers who foster them until they can be adopted. The feral felines have found placements with farmers. Farmers find them to be great at pest control, and at a much lower cost.

The felines sneak on to the base along the shoreline. They then hang out at a running track and picnic tables on base. Despite signs saying not to feed them, visitors tend do so anyway. With their numbers multiplying, they had become a threat to protected migratory birds. Cat Team 7, thus, is a win for everyone.

If you would like to assist Cat Team 7, Caitlyn McIntosh, team coordinator, recommends either donating money or supplies, such as litter, food, and carriers. Or you could adopt one of these lovely creatures. For donations, contact the team at catteam7norfolk@gmail.com. To view cats which can be adopted, go to tinyurl.com/yawqy4s2 or www.facebook.com/catteam7/. There’s a whole lot of neat kitties waiting to love you! (Courtney Mabeus, “Cat rescue team at Navy base placed 70 in ’17,” The Virginian-Pilot, 12-28-17, p. 1 and 7)

Upcoming Seminars

Distribution of This Newsletter

Hook Law Center encourages you to share this newsletter with anyone who is interested in issues pertaining to the elderly, the disabled and their advocates. The information in this newsletter may be copied and distributed, without charge and without permission, but with appropriate citation to Hook Law Center, P.C. If you are interested in a free subscription to the Hook Law Center News, then please telephone us at 757-399-7506, e-mail us at mail@hooklawcenter.com or fax us at 757-397-1267.

Posted on Tuesday, January 9th, 2018. Filed under Newsletter.

Tax Cuts and Jobs Act of 2017

By Andrew H. Hook, CELA, CFP

The Tax Cuts and Jobs Act of 2017 (“TCJA”) was enacted into law on December 22, 2017. The TCJA represents the most significant overhaul of the Internal Revenue Code in more than 30 years.  Many proponents of the bill believe that the overall concept of cutting the corporate tax rate and simplifying many of the complex provisions of the internal revenue code will stimulate economic growth and thus overall prosperity.  Those opposing the bill believe that the potential tax increase on the middle class will cause economic decline.  The exact impact remains to be seen but some of the more interesting provisions of the bill are summarized below.

Individual Taxes & Rates

New Income tax rates & brackets:

  • For tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, seven tax rates apply for individuals: 10%, 12%, 22%, 24%, 32%, 35%, and 37%.
  • The TCJA also provides four tax rates for estates and trusts: 10%, 24%, 35%, and 37%.

Standard deduction increased:

  • For tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, the standard deduction is increased to $24,000 for married individuals filing a joint return, $18,000 for head-of-household filers, and $12,000 for all other taxpayers, adjusted for inflation in tax years beginning after 2018.

AMT retained, with higher exemption amounts:

  • For tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, the TCJA increases the Alternative Minimum Tax Exemption (“AMT exemption”) and phases out amounts for individuals.
  • Beginning in 2018, the AMT exemption amounts are:
    • $109,400 for married individuals filing jointly or surviving spouses;
    • $70,300 for single or head of household filers; and
    • $54,700 for married individuals filing separately (i.e., 50 percent of the amount for married individuals filing jointly).
  • The AMT exemption amounts will phase out for taxpayers at $500,000 for single individuals and $1 Million for married couples.

Personal Deductions, Exclusions & Credits

State and Local Tax Deduction: For tax years beginning after Dec. 31, 2017 and before January 1, 2026, an individual taxpayer may claim an itemized deduction of up to $10,000 ($5,000 for a married taxpayer filing a separate return) for the aggregate of (i) State and local property taxes; and (ii) State and local income paid or accrued in the tax year. To avoid this limitation, an individual may not claim an itemized deduction in 2017 on a pre-payment of income tax for a future tax year.

Personal Exemptions:

  • For 2017, the personal exemption amount is $4,050.
  • The TCJA provides that, for tax years beginning after Dec. 31, 2017, and before Jan. 1, 2026, the exemption amount is zero.

Mortgage and home equity indebtedness interest deduction:

  • For tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, the deduction for interest on home mortgage indebtedness is temporarily limited to interest on acquisition debt. The deduction for acquisition mortgage interest is limited to underlying indebtedness of up to $750,000 ($375,000 for married taxpayers filing separately). The new lower limit doesn’t apply to any acquisition indebtedness incurred before Dec. 15, 2017.
  • The deduction for interest on acquisition mortgage indebtedness applies to debt incurred in acquiring, constructing, or substantially improving a qualified residence and which is secured by the residence.
  • A qualified residence for this purpose includes the taxpayer’s principal residence and one other residence such as a vacation home that is not rented out at any time during the tax year or that is used by the taxpayer for a minimum number of days. A qualified residence can be a house, condominium, cooperative, mobile home, house trailer, or boat.
  • Additionally, beginning Jan. 1, 2018, taxpayers may not claim a deduction for existing and new interest on home equity debt.

Medical expense deduction:

  • For tax years beginning after Dec. 31, 2016 and ending before Jan. 1, 2019, the threshold on medical expense deductions is reduced to 7.5% for all taxpayers.

Alimony deduction by payer and inclusion by payee suspended: For any divorce or separation agreement executed after Dec. 31, 2018, or executed before that date but modified thereafter (if such modification expressly provides that the new amendments apply), alimony and separate maintenance payments are not deductible by the spouse making the payment and are not included in the income of the payee spouse. Income used for the payment of alimony is taxed at the rates applicable to the spouse making the payment.

Charitable Deduction: The TCJA increases the contribution-base percentage limit for tax years beginning after Dec. 31, 2017, and before Jan. 1, 2026, for deductions of cash contributions by individuals to 50% charities from 50% to 60% (the “60% limit”). Other TCJA provisions reduce charitable giving incentives.

Miscellaneous itemized deductions suspended: For tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, the deduction for miscellaneous itemized deductions that are subject to the 2% floor is suspended. Therefore, the following expenses may not be deducted:

  • unreimbursed employee business expenses(including expenses for travel, lodging, meals, entertainment, continuing education, subscriptions to professional journals, union or professional dues, professional uniforms, job hunting, and business use of an employee’s home);
  • Investment expenses (including investment advisory fees, subscriptions to investment advisory publications, certain attorneys’ fees, and safety deposit box rental); and
  • tax determination expenses (including tax return preparation fees)

Limitation on itemized deductions suspended: Under prior law, an individual whose adjusted gross income exceeds an applicable threshold amount (for example in 2017, $266,700 for single taxpayers and $313,800 for joint filers) must reduce the total of his itemized deductions. For tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, this reduction of itemized deductions is suspended.

Affordable Care Act

Individual Mandate: For months beginning after Dec. 31, 2018, the amount of the individual shared responsibility payment is reduced to zero.

  • The net result of these changes is that no shared responsibility payment will be required after 2018, nor will there be any penalty imposed for failing to maintain minimum essential coverage.
  • This revision will likely reduce the number of healthy people seeking coverage beginning in 2019, therefore increasing premiums.

Net Investment Tax and Additional Medicare Tax: The TCJA leaves intact the 3.8% net investment income tax and the 0.9% additional Medicare tax, both enacted by the Affordable Care Act.

Estate & Gift Tax Retained with Increased Exemption

Estate & Gift Taxes:

  • For estates of decedents dying and gifts made after Dec. 31, 2017 and before Jan. 1, 2026, the TCJA doubles the base estate and gift tax exemption amount from $5 million to $10 million. The $10 million amount is indexed for inflation occurring after 2011 and is expected to be approximately $11.2 million in 2018 ($22.4 million per married couple).
  • In addition to the increase in the basic exclusion amount, the TCJA modifies the computation of gift tax payable and estate tax payable in cases where gifts have been made in prior years. With respect to the computation of gift tax payable, the tax rates in effect at the time of the decedent’s death are to be used rather than the rates that were in effect at the time the gifts were made

These are just a few of the changes made in the newest tax bill.  For more detail, please see the Hook Law Center Memorandum on our website at Tax Cuts 2017.

Kit KatAsk Kit Kat – Golden Retrievers Lead

Hook Law Center:  Kit Kat, what can you tell us about golden retrievers and how that breed of dog may lead researchers to new information about all dogs?

Kit Kat:  Well, this is an interesting situation. Since 2012, there has been a longitudinal study of more than 3,000 golden retrievers from across the United States to learn more about the causes of cancer. Golden retrievers were chosen because cancer prevalence is slightly higher in the breed. Also, since they are the third most popular breed, it was easier to find subjects to participate. The study which is called the Golden Retriever Lifetime Study is a $32 million research project undertaken by Colorado State University and the Morris Animal Foundation. All the dogs in the study were enrolled before age 2, and they will be followed for the rest of their lives. Researchers hope to learn whether golden retrievers really are more prone to cancer, or whether there is more cancer in the breed just because there are more of them.

It is the first and largest longitudinal study of pets. Goldens lead their lives among humans, doing many of the same activities they do. According to Rodney Page, a veterinary oncologist at Colorado State, “They basically reflect a lot of the same exposures and activities that we have.” For example, preliminary data from the study reveals that 1 in 5 goldens sleep with their owners, 40 percent swim at least once a week, and 22 percent drink or eat from a plastic bowl. Researchers hope there may be implications for humans and the treatment of their cancers. After all, goldens who do have cancer at present, are treated with the same drugs that humans are. Stay tuned as we learn more about goldens, cancer, and what treatments are the most effective. (Karin Bruillard, “How 3,000 very good golden retrievers could help all dogs live longer,” The Washington Post, December 14, 2017)

Upcoming Seminars

Distribution of This Newsletter

Hook Law Center encourages you to share this newsletter with anyone who is interested in issues pertaining to the elderly, the disabled and their advocates. The information in this newsletter may be copied and distributed, without charge and without permission, but with appropriate citation to Hook Law Center, P.C. If you are interested in a free subscription to the Hook Law Center News, then please telephone us at 757-399-7506, e-mail us at mail@hooklawcenter.com or fax us at 757-397-1267.

Posted on Tuesday, January 2nd, 2018. Filed under Newsletter.
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