The Planner - March 2009

Here's a little known fact: When President Abraham Lincoln passed away on April 15, 1865 he left his family at the mercy of the state laws of inheritance and succession-because he died without a will. It is hard to imagine how Lincoln could have neglected this one thing; after all, he was a statesman and a lawyer.

If you or someone you know has been putting off your planning longer than you like to think, it may be reassuring to know you are no more a procrastinator than Lincoln. However, you may want to be a little more like our other presidents in that regard.

We stand ready to serve you!

Sincerely,

Ronald G. Greening

The Greening Law Firm, P.C.

Things to Remember at Tax Time

April 15th is approaching and it is time to begin crossing T's and dotting I's in preparation for paying taxes. As tax time draws near, you want to make sure you file all the proper forms and take all deductions you're entitled to. Following are some things to keep in mind as you prepare your tax form.

Gifts. Did you give away any money this year? The gift tax can be very confusing. If you gave away more than $12,000 to any one person in 2008, you will have to file a Form 709, the gift tax return. This does not necessarily mean you will owe taxes on the money, however. Click here for more information.

Medical Expenses. Many types of medical expenses are tax deductible, from hospital stays to hearing aids. To claim the deduction, your medical expenses have to be more than 7.5 percent of your adjusted gross income. This includes all out-of-pocket costs for prescriptions (including deductibles and co-pays) and Medicare Part B and Part C and Part D premiums. (Medicare Part B premiums are usually deducted out of your Social Security benefits, so be sure to check your 1099 for the amount.) You can only deduct medical expenses you paid during the year, regardless of when the services were provided, and medical expenses are not deductible if they are reimbursable by insurance. Click here for more information.

Parental Deduction. If you are caring for your mother or father, you may be able to claim your parent as a dependent on your income taxes. This would allow you to get an exemption ($3,500 in 2008) for him or her. Click here for more information.

Long-Term Care Insurance Premiums. Premiums for "qualified" long-term care policies are treated as an unreimbursed medical expense. Long-term care insurance premiums are deductible for the taxpayer, his or her spouse and other dependents. Click here for more information.

Social Security Benefits. Although Social Security benefits are generally not taxable, people with substantial income in addition to their Social Security may pay taxes on their benefits. If you file a federal tax return as an individual and your "combined income," including one half of your Social Security benefits and nontaxable interest income is between $25,000 and $34,000, 50 percent of your Social Security benefits will be considered taxable. If your combined income is above $34,000, 85 percent of your Social Security benefits is subject to income tax. Click here for more information.

Real Estate Taxes. If you don't have enough deductions to itemize, you can still increase the amount of your standard deduction by the amount of your real estate taxes up to $500 ($1,000 if filing jointly).

Home Sale Exclusion. Married couples can exclude from income up to $500,000 in profit on the sale of a home ($250,000 for single individuals). If a surviving spouse sells the home, he or she can still claim the exclusion as long as the house was sold after 2007 and no more than two years after the spouse's death. Click here for more information.

Elderly or Disabled Tax Credit. Some low-income elderly or disabled individuals are entitled to a special tax credit. To be eligible, you must meet income limits. For more information, click here.

The IRS's Tax Counseling for the Elderly (TCE) Program offers free tax help to taxpayers who are 60 and older. For more information, click here. The IRS also publishes a Tax Guide For Seniors.

Practice Limited to Estate Planning, Estate Administration, Probate, and Elder Law

506 West 15th Street, Austin, Texas 78701, 476.0888
1601 Williams Drive Georgetown, Texas 78628, 931.0888

The hiring of an attorney is an important decision. The items discussed in this newsletter are of a general nature and not intended to provide legal advice. Please consult with a qualified estate planning/elder law attorney to determine the best options for your personal circumstances.

In accordance with IRS Circular 230, the content of this newsletter is not to be relied upon for the preparation of a tax return or to avoid tax penalties imposed by the Internal Revenue Code. If you desire a formal opinion on a particular tax matter for the purpose of filing a return or avoiding the imposition of any penalties, please contact us to discuss the further Treasury requirements that must be met and whether it is possible to meet those requirements under the circumstances, as well as the anticipated time and fees involved.

To comply with the U.S. Treasury regulations, we must inform you that (i) any U.S. federal tax advice contained in this newsletter was not intended or written to be used, and cannot be used, by any person for the purpose of avoiding U.S. federal tax penalties that may be imposed on such person and (ii) each taxpayer should seek advice from their tax advisor based on the taxpayer's particular circumstances.