Friday, April 1, 2016

April 15 a Good Reminder to Avoid the Estate Tax Trap

By Robert Deschene, Esq

During tax season, I’m reminded of Ben Franklin’s old saw:  nothing is certain in life but death and taxes.  As we approach the dreaded April 15, many of us are focused on our income tax returns.  Still, many people also wonder or worry about whether, upon their deaths, “estate tax” will be due.

What is the Estate Tax?

When we hear the words “estate tax,” we might think they can’t possibly apply to us, but only to very wealthy people, like Warren Buffett.  Not necessarily.  The government imposes a tax on the transfer of your wealth at death.  Estate tax is the amount that your estate will owe the government, and is calculated by the value of all the property you owned at your death.

Right now, the federal government’s estate tax does not apply unless you own at least 5.45 million at death.   Relatively few of us have to worry about this.

Massachusetts’ Separate Estate Tax

The bad news is that Massachusetts is one of the states which impose its own separate estate tax, which is imposed if you die owning $1 million or more.  The graduated tax rate can run as high as 16%, which can be a significant sum that you will not be leaving to your family.  Massachusetts seniors with taxable estates often migrate to Florida, not only for the warmer weather, but because Florida has no state estate tax.

Who Pays? – Your “Taxable Estate”

Some people ignore the issue of estate tax because they don’t think of themselves as a “millionaire”.  But remember that this tax is imposed on your “taxable estate,” which includes your home and/or vacation home, death benefits payable on any life insurance policies you own (i.e., not the cash surrender value), and any balances paid out of your retirement accounts (e.g., IRAs, 401ks) when you die.   If you total up these assets, or project their future value, you may easily exceed the $1 million threshold for paying estate tax, even though we don’t feel like millionaires.  So do the math.

Ways to Reduce your Taxable Estate

Monday, March 28, 2016

Many Retirees Face April 1st Deadline to Take Required Retirement Plan Distributions

WASHINGTON — The Internal Revenue Service today reminded taxpayers who turned 70½ during 2015 that in most cases they must start receiving required minimum distributions (RMDs) from Individual Retirement Accounts (IRAs) and workplace retirement plans by Friday, April 1, 2016.

The April 1 deadline applies to owners of traditional (including SEP and SIMPLE) IRAs but not Roth IRAs. Normally, it also applies to participants in various workplace retirement plans, including 401(k), 403(b) and 457(b) plans.

The April 1 deadline only applies to the required distribution for the first year. For all subsequent years, the RMD must be made by Dec. 31. So, a taxpayer who turned 70½ in 2015 (born after June 30, 1944 and before July 1, 1945) and receives the first required distribution (for 2015) on April 1, 2016, for example, must still receive the second RMD by Dec. 31, 2016.

Affected taxpayers who turned 70½ during 2015 must figure the RMD for the first year using the life expectancy as of their birthday in 2015 and their account balance on Dec. 31, 2014. The trustee reports the year-end account value to the IRA owner on Form 5498 in Box 5. Worksheets and life expectancy tables for making this computation can be found in the appendices to Publication 590-B.

Most taxpayers use Table III  (Uniform Lifetime) to figure their RMD. For a taxpayer who reached age 70½ in 2015 and turned 71 before the end of the year, for example, the first required distribution would be based on a distribution period of 26.5 years. A separate table, Table II, applies to a taxpayer married to a spouse who is more than 10 years younger and is the taxpayer’s only beneficiary. Both tables can be found in the appendices to Publication 590-B.

Monday, March 21, 2016

Join NFS @ Mr. Dooley's Olde Irish Pub Run

Mr. Dooley's Olde Irish Pub 5k/10k Run
Olde Irish Pub Run Facebook Page
Saturday, March 26th, 2016
9:00 am start


  • WRENTHAM -- The 4th annual Olde Irish Pub Run will be held on Saturday, March 26th, at 9 a.m. from Mr. Dooley's Olde Irish Country Pub, 303 Shears St., Wrentham.
    The USATF-certified course loops around scenic country roads, and participants can choose a flat single loop (5K) or double loop (10K).
    Prizes will be awarded to the top three male and female finishers in various age categories. The first 100 participants who register by March 16 will receive free T-shirts. The post-race buffet will be provided by Mr. Dooley’s Olde Irish Country Pub.
    The registration fee is $35 or $40 the day of the race. Sign up online HERE. Proceeds benefit King Philip Regional High School Track & Cross Country. Sponsored by NFS - Northeast Financial Strategies Inc, Marathon Sports, NRG LabMr. Dooley's Olde Irish Pub.

Tuesday, March 1, 2016

New Social Security Rules Coming in May 2016

By Robert Deschene, Esq.

Security CardPeople approaching retirement age rely in part on Social Security (SS) to maximize their retirement income, but they also face a labyrinth of confusing laws and regulations.

The dilemma: at what age is it best for you (or your spouse) to start collecting so you get the most retirement dollars? There are no easy answers to that question, and the questions just got more difficult.

New Budget Bill – Surprise!

Congress just enacted and the President signed into law a bipartisan budget bill designed, in part, to avoid another government shut-down.   Effective May 1, 2016, the new law makes major changes to the rules about when and how retirees can claim their SS benefits, and eliminates several planning strategies previously available to them to get more benefit dollars.

The Basics Stay the Same

Some basic rules stay the same.  In general, you can begin collecting SS as early as age 62, but your monthly payment will be much lower than if you delayed collecting until your “full retirement age,” which is between ages 66 and 67 (depending on the year you were born).   Once you start collecting then, your monthly payment amount is locked in, and will never increase (except for annual cost-of-living increases).   But if you further delayed collecting past your full retirement age, and wait until age 70 to collect, your monthly payment increases about 8% a year.

File-and Suspend, or “Having Your Cake and Eating It Too” is Kaput

One lucrative planning strategy no longer available after May was called “file-and-suspend.”  Say Tom and Jane both reached their full retirement age of 66, Tom intends to keep working until at least age 70, but Jane wants to retire now.  Each could start collecting on their own SS, Tom at $1500/month and Jane at $600/month, or $2,100/month.  Instead, Tom would file immediately to collect on his SS, but then “suspend” his right to collect.  Why?

Monday, February 15, 2016

Phone Scams Continue to be a Serious Threat, Remain on IRS “Dirty Dozen” List of Tax Scams for the 2016 Filing Season

WASHINGTON — Aggressive and threatening phone calls by criminals impersonating IRS agents remain a major threat to taxpayers, headlining the annual "Dirty Dozen" list of tax scams for the 2016 filing season, the Internal Revenue Service announced today.

The IRS has seen a surge of these phone scams as scam artists threaten police arrest, deportation, license revocation and other things. The IRS reminds taxpayers to guard against all sorts of con games that arise during any filing season.

"Taxpayers across the nation face a deluge of these aggressive phone scams. Don't be fooled by callers pretending to be from the IRS in an attempt to steal your money," said IRS Commissioner John Koskinen. “We continue to say if you are surprised to be hearing from us, then you're not hearing from us.”

"There are many variations. The caller may threaten you with arrest or court action to trick you into making a payment,” Koskinen added. “Some schemes may say you're entitled to a huge refund. These all add up to trouble. Some simple tips can help protect you."

The Dirty Dozen is compiled annually by the IRS and lists a variety of common scams taxpayers may encounter any time during the year. Many of these con games peak during filing season as people prepare their tax returns or hire someone to do so.

This January, the Treasury Inspector General for Tax Administration (TIGTA) announced they have received reports of roughly 896,000 contacts since October 2013 and have become aware of over 5,000 victims who have collectively paid over $26.5 million as a result of the scam.

"The IRS continues working to warn taxpayers about phone scams and other schemes," Koskinen said. "We especially want to thank the law-enforcement community, tax professionals, consumer advocates, the states, other government agencies and particularly the Treasury Inspector General for Tax Administration for helping us in this battle against these persistent phone scams."

Protect Yourself


Scammers make unsolicited calls claiming to be IRS officials. They demand that the victim pay a bogus tax bill. They con the victim into sending cash, usually through a prepaid debit card or wire transfer. They may also leave “urgent” callback requests through phone “robo-calls,” or via a phishing email.

Sunday, February 14, 2016

Insure Your Love



We insure a lot of things in our lives: our cars, our homes, our valuable. But what about something less tangible, such as your love for family? Can you insure that?




Insure Your Love Today. Contact our office to review your plan today. Happy Valentine's Day from NFS.





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Friday, February 12, 2016

Choosing the Correct Filing Status

It’s important to use the right filing status when you file your tax return. The status you choose can affect the amount of tax you owe for the year. It may even determine if you must file a tax return. Keep in mind that your marital status on Dec. 31 is your status for the whole year. Sometimes more than one filing status may apply to you. If that happens, choose the one that allows you to pay the least amount of tax.

Here’s a list of the five filing statuses:
  1. Single. This status normally applies if you aren’t married. It applies if you are divorced or legally separated under state law.
  2. Married Filing Jointly. If you’re married, you and your spouse can file a joint tax return. If your spouse died in 2015, you can often file a joint return for that year.
  3. Married Filing Separately. A married couple can choose to file two separate tax returns. This may benefit you if it results in less tax owed than if you file a joint tax return. You may want to prepare your taxes both ways before you choose. You can also use it if you want to be responsible only for your own tax.
  4. Head of Household. In most cases, this status applies if you are not married, but there are some special rules. For example, you must have paid more than half the cost of keeping up a home for yourself and a qualifying person. Don’t choose this status by mistake. Be sure to check all the rules.
  5. Qualifying Widow(er) with Dependent Child. This status may apply to you if your spouse died during 2013 or 2014 and you have a dependent child. Other conditions also apply.

The “Filing” tab on IRS.gov can help with many of your federal income tax filing needs. Use the Interactive Tax Assistant tool to help you choose the right filing status. For more on this topic see Publication 501, Exemptions, Standard Deduction, and Filing Information. Go to IRS.gov/forms
to view, download or print the tax products you need.

For further assistance in deciding which filing status you qualify for, please contact our office.



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