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Ten Income Tax Tips for 2012

The entire cost of maintenance in a nursing home or home for the aged, including meals and lodging, is a medical expense if an individual is there because of a physical condition and the availability of care is a principal reason...

 
PRLog - Feb. 21, 2012 - DE PERE, Wis. -- 1.  The entire cost of maintenance in a nursing home or home for the aged, including meals and lodging, is a medical expense if an individual is there because of a physical condition and the availability of care is a principal reason for the individual's residence.

2.  Premiums paid for a qualified long-term care insurance policy are a medical expense, but the deductible amount of the premium is limited by the age of the individual at the close of the tax year.  The inflation-adjusted maximum deductible amount for 2012 is (IRS Rev. Proc. 2011-52):

   Age 40 or less, $350;
   More than age 40 but not more than age 50, $660;
   More than age 50 but not more than 60, $1,310;
   More than age 60 but not more than 70, $3,500; and
   More than age 70, $4,370.

3.  Interest payments attributable to purchase of a qualified residence (home mortgage interest) are deductible in the year paid.

4.  No deduction will be allowed for contributions to cash, checks or other monetary gifts, regardless of the amount, unless the donor maintains either (1) a bank record, including a cancelled check, a bank or credit union statement, or a credit card statement; or (2) a receipt, letter, or other written communication from the doner, indicating the donee's name and the contribution date and amount (IRS Code § 170(f)(17); IRS Pub. 526).

5.  For property contributions for which a deduction of more than $500 is claimed, the taxpayer must include with its return for the tax year of the contribution a written description of the donated property and any other required information as the IRS may prescribe by regulation.  If the documentation requirement is not met, the deduction will be denied unless the failure is due to reasonable cause and not to willful neglect.  To determine the $500 threshold, all similar items of property donated to one or more donees are treated as a single item of property (IRS Code § 170(f)(11)).  Noncash contributions over $500 must be described in Section A of Form 8283, Noncash Charitable Contributions, which is attached to the taxpayer's return.  A noncash contribution that exceeds $5,000 must also be appraised and described in Section B of Form 8283 (IRS Reg. § 1.170A-13(c)).

6.  Generally, items of income, deduction, or credit that are treated as belonging to a trust grantor or another person are not reported by the trust on Form 1041 (IRS Reg. § 1.671-4).  Instead, these items are reflected on the income tax return of the grantor (the other person who is taxable on the trust income).

7.  If a grantor creates a trust and reserves a right to revoke it, the income of the trust is treated as the grantor's income (IRS Code § 676; IRS Reg. §§ 1.676(a)-1, 1.676(b)-1).

8.  The grantor is taxed on trust income if the grantor's spouse retains administrative powers enabling the grantor to obtain, by dealings with the trust, financial benefits that would not be available in an arm's-length-transaction (IRS Code § 675; IRS Reg. § 1.675-1).

9.  The grantor is taxed on trust income that is or may be accumulated for or distributed to the grantor or the grantor's spouse, or used to pay life insurance premiums on either the grantor's or the spouse's life (except for policies irrevocably payable to charities) (IRS Code § 677; IRS Reg. §§ 1.677(a)-1 and 1.677(b)-1).

10.  A grantor is taxed on trust income if the grantor or the grantor's spouse retains the power to control the beneficial enjoyment of trust property or income (IRS Code § 674; IRS Reg. § 1.674(a)-1).

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Krause Financial Services specializes in helping families qualify for Medicaid benefits through the use of Medicaid Compliant Annuities, and Veterans Aid & Attendance benefits through the use of various life and annuity insurance products.

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Contact Email:
***@medicaidannuity.com Email Verified
Source:Dale M. Krause
Phone:(866) 605-7437
Zip:54115
City/Town:De Pere - Wisconsin - United States
Industry:Finance
Tags:taxation, irs, taxes
Shortcut:prlog.org/11804560
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