Tax Warrior Chronicles

Rules of the 60-Day Rollover Period for Qualified Plans and IRAs

Posted on Thu, Mar 30, 2017

DS_Marketing_069.jpgBy: Kejsi Merkuri and Robert Polans, CPA, MT, PFS, ChFC


Are you planning to roll over your qualified plan or IRA to achieve higher returns, broader investment opportunities, or to reside at a better financial institution? Be careful! There are several things to know before entering the 60-day rollover period to avoid costly tax and penalty situations. 


First, there is no 60-day clock for direct trustee-to-trustee transfers.  Since the plan recipient never touches the money, the IRS is not concerned with improper use of the funds.  This is the safest method for achieving a rollover.


Sometimes, a person has a short-term financial need and the IRA is the only source available for the funds.  Once in a twelve-month period, a person can withdraw funds from an IRA, without taxes and penalties, However, the funds must be put back into the same or another IRA within 60 days of receipt.  This “once per twelve-month limit” applies across all IRAs owned by that individual. 


Once you receive your distribution, the 60-day clock begins counting down. If you fail to meet the 60-day deadline, there are three ways to make a late contribution and avoid additional taxes and penalties; automatic waiver, private letter ruling though the IRS, and a self-certification procedure. The three methods are applicable if the circumstances that prevented the contribution are beyond your control.


Automatic Waiver

Automatic waiver applies when the deadline was missed because the recipient’s financial institution completed the rollover improperly despite receiving the funds within the 60-day rollover deadline. You must have followed the financial institution’s procedures for making IRA rollover deposits and have provided it with adequate instructions.


Private Letter Ruling

A private letter ruling can be submitted along with a $10,000 fee, if you want the IRS to rule on whether you are eligible to make a late rollover. Of the three methods, this is by far the most expensive and time consuming. It can take up to a year for the IRS to respond to the ruling request. An alternative to the private letter ruling is the self-certification process the IRS introduced in Revenue Procedure 2016-47.



Self-certification does not guarantee the IRS will accept the reasons but it is free and fast since it does not require IRS prior approval. Although self-certification is not a waiver from the IRS it can turn a late-rollover situation into a valid rollover (subject to later IRS audit), when the late rollover is caused by one or more of the eleven criteria allowed under Rev. Proc. 2016-47.   This Rev. Proc. includes a model letter to be used for the self-certification. However, it may also be rejected for the following reasons:

  • There was a material misstatement in the self-certification.
  •  The reason you missed the 60-day deadline did not prevent you from completing a timely rollover.
  •  You failed to make the contribution in a timely manner after the reason(s) that prevented the rollover was no longer prevalent.

If your self-certification is rejected upon audit because you do not meet the qualifications, penalties will apply and the distribution will be subject to ordinary income tax and, if you were under age 59 ½, a 10% early-distribution tax. See our previous blog on self-certification.


Some Tips to Help Avoid Penalties and Fees

  • Documentation is vital to prove your intent of rolling over the money within the 60 days. Types of documentation can include signed instructions to your financial advisor or correspondence with your attorney confirming the purpose of the withdrawal.
  •  If you realize you have missed the 60-day deadline and self-certification applies, you must go through the self-certification process and contribute the funds back to the IRA or qualified plan within 30 days.

The Tax Warriors® at Drucker & Scaccetti are always looking out for your best interests. Rolling over funds within this 60-day period of withdrawal is the best way defer taxation and avoid penalties. If you have questions about moving your qualified plan and/or IRA funds, call on us.  We’d be glad to help.



Tags: penalties, trustee, IRA Rollover, IRS, IRA, Qualified plan, private letter ruling, revenue procedure 2016-47, 60-day rollover, waiver, withdrawal

Tax Implications of Selling a Structured Settlement

Posted on Mon, Mar 27, 2017

pexels-photo-259027.jpegBy: Ted Nebiolo and Bruce Benjamin, CPA, MT


College tuition, purchasing a home, starting a business.  These are all life events that may call for a large, upfront cash outlay.  If you are receiving a structured settlement payable as an annuity, it may be an attractive solution to sell it to obtain the cash for the lump-sum payment. If you are considering this route, know the tax implications and the process that determines the real value of your settlement.


What is a Structured Settlement?

Payments to settle a legal, financial, or insurance arrangement are usually negotiated to be paid in installments over time rather than in a single lump sum.  These are structured settlements typically created through the purchase of one or more annuities.  


How Are Structured Settlements Taxed?

Structured settlements awarded for personal injury or sickness are tax exempt.  The future sale of these structured settlement payment rights for a lump-sum is also not taxable. However, structured settlements that fall outside the scope of physical injury or sickness are not tax exempt.  The sale will also be a taxable event.  


How Do Companies Value Structured Settlements?

The structured settlement secondary market emerged because people wanted a way to sell future payments for a lump sum today.  Selling or “cashing out” a structured settlement for a lump-sum isn’t a dollar-for-dollar proposition. Companies who buy structured settlements use a discount rate to determine the present value of the annuity.   As companies that buy structured settlements use variable actuarial assumptions, one may benefit from approaching multiple companies to protect against low-ball offers.


Is Selling My Structured Settlement Right for Me?

Life’s circumstances sometime force us to liquidate assets of value.  Selling a structured settlement could provide the cash for a specific need, however, possible tax implications need to be addressed.


Before you decide on selling a structured settlement or any annuity, talk to your tax and financial advisors to determine if it is the best solution for your situation.  The Tax Warriors® at Drucker & Scaccetti will be happy to assist you if you are considering the sale of a structured settlement.  Call on us.  We are always prepared to help.

Tags: College, home mortgage, Tax, annuities, business start-up, Cash settlements, Structered settlements

Tax Refund Opportunity for Philadelphia Residents Working Outside PA

Posted on Thu, Mar 23, 2017

20160902_164218.jpgBy: Rosalind W. Sutch, CPA & Chris Catarino, CPA


Taxpayers residing in Philadelphia and working outside of Pennsylvania (full or part-time) may be eligible for a refund of their Philadelphia Wage Tax. This refund opportunity recently became available due to a far-reaching U.S. Supreme Court decision, explained further below. Accordingly, many taxpayers, employers, and non-local tax practitioners are not aware of this opportunity.


Here is a link to four examples of how Philadelphia residents working outside of PA may be affected. While the examples show the effect of one tax year, four tax years remain open for refunds (2013-2016).  There is a high likelihood you are due a refund if you lived in Philadelphia and worked in DE or NY during any of these years.


E-mail us at if you believe you may be due a refund from the City of Philadelphia.  We can review your case, quantify your refund(s), and guide you through the refund process.  Keep in mind, the statute of limitations expires on April 15, 2017, for the 2013 tax year - after this time, the city will not accept 2013 refund claims.



On May 18, 2015, the U.S. Supreme Court issued its opinion in Wynne v. Maryland Comptroller of TreasuryWynne holds that Maryland’s failure to allow its resident taxpayers to claim a credit against the local portion of Maryland’s state and local income tax was an unconstitutional violation of the commerce clause.


This decision has ramifications in Philadelphia, where the City does not allow its residents to claim a credit against its Wage Tax for taxes paid to other states.  We believe the City’s position is incorrect with respect to denying credits for taxes paid to other states and numerous taxpayers stand to benefit from filing refund petitions and joining the group of adversely affected taxpayers that we are assembling to challenge the City.


Further, the city only recently began allowing a credit for taxes paid to localities outside Pennsylvania.  Many taxpayers are not aware they can claim a credit for taxes paid to other localities for tax years prior to 2016 and may benefit from filing refund petitions for these credits as well.

Tags: Supreme Court, refund, New York, Pennsylvania, Philadelphia Wage Tax, Residents, Wynne v. Maryland Comproller of Treasury, Delaware

Gifts & Inheritances from Abroad – What You Need to Know

Posted on Tue, Mar 21, 2017

POUNDS.jpgBy: Stephanie Otake, CPA


Most of us are familiar with the email scam naming us as the beneficiary to a wealthy foreign relative’s fortune. But, have you ever stopped to think, what if this happened for real and a known foreign relative bequeathed to you a piece of their estate? Gifts and inheritances from abroad can raise several tax compliance issues. Generally, no tax is due; however, there are exceptions.


One exception is if the donor is a “covered expatriate.,” A covered expatriate has relinquished their U.S. citizenship or terminated their long-term permanent resident status on or after June 17, 2008 and meets other tax-related requirements. The person receiving the gift is required to both report and pay gift tax, if any, on the value of the gift regardless of the situs of the gift. There are proposed regulations for this tax but until final regulations are issued there will be no filing requirement or tax due. Stay current on this and other tax updates by reading our blogs.


If the donor is a non-U.S. citizen, and the gift received does not have a U.S. situs, there is typically no tax associated receiving the gift; however, a reporting requirement may still exist. The gift and identifying the donor will determine which form you must file and applicable thresholds. Below is a quick guide to steer you in the right direction. However, international issues can be very complex and each scenario is very different, so seek guidance from your tax advisor to evaluate your situation.


Type of Gift

Tax Form

Due Date


Gift from Foreign Persons, Estates, Corporations and/or Trusts

3520 “Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts”


April 15th


Extension to file personal income tax return is deemed to also extend form 3520

Gift from Covered Expatriate

(obligations to file and pay tax deferred until final regulations for Section 2801 are issued)

708 “U.S. Return of Tax for Gifts and Bequests from Covered Expatriates”

Under proposed regulations due date is on or before the 15th day of the 18th calendar month following the close of the calendar year in which the covered gift or bequest is received


Taxpayers will be given reasonable amount of time to file for covered gifts or bequests received on or after June 17, 2008 once final regulations are published

Gift of Foreign Partnership Interest

8865 Annual “Return of U.S. Persons with Respect to Certain Foreign Partnerships”

April 15th

Extension to file personal income tax return is deemed to also extend form 8865


Gift of Shares in a Passive Foreign Investment Company (PFIC)

8621 “Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund”


April 15th

Extension to file personal income tax return is deemed to also extend form 8621

Gift of Shares in a Foreign Corporation

5471 “Information Return of U.S. Persons with Respect to Certain Foreign Corporations”


April 15th

Extension to file personal income tax return is deemed to also extend form 5471

Gift of a Foreign Financial Account

FinCen Form 114 “Report of Foreign Bank and Financial Accounts” (FBAR)

April 15th

Request for a six- month extension is available to match the extension for individual returns


Interests in Foreign Financial Assets

8938 “Statement of Specified Foreign Financial Assets”


April 15th

Extension to file personal income tax return is deemed to also extend form 8938



Some forms listed may be attached to your personal return. However, even when there is no obligation to file a personal income tax return you may still need to file and report a gift.


Failure to file, even informational returns, can lead to significant penalties. It can also prevent the statute of limitation from starting on that return and any other associated returns.


As the saying goes, “You don’t know what you don’t know,” and this area of the tax code can be extremely complicated. In this blog, we’ve touched only the tip of the iceberg. Interpreting the rules around international taxation is best left to experts.  The experienced and highly skilled tax advisors at Drucker & Scaccetti are always prepared to help you with complicated tax matters. Call on us to assist you, your family or your business with any international tax situation.

Tags: deadline, Gift Tax, inheritance tax, FinCEN 114, international tax planning philadelphia, foreign, FOrm 8865, Form 8621, abroad, report, Form 8938, FOrm 5471, expatriate

What Trump’s 2005 Tax Return Tells Us, and What It Doesn’t…

Posted on Fri, Mar 17, 2017

TrumpTaxMaddow.pngBy: Rosalind W. Sutch, CPA, MT


On Tuesday night, March 14, 2017, David Cay Johnson was featured on Rachel Maddow’s MSNBC show sharing the first two pages of Donald & Melania Trump’s 2005 Federal Form 1040.  Many watched in hopeful anticipation that all their quandaries about Trump and his financial matters would be answered.  Those who tuned in were sorely disappointed.


Donald Trump refused to release his tax returns as a presidential candidate citing he was under current and continuous audit by the IRS.  He later indicated he would break from the tradition of publishing his tax return as a sitting POTUS.  If you are so inclined, you can thumb through the returns released by past presidents and presidential candidates here.


Many want to see President Trump’s returns because he is President of the United States, wealthy and boasts about his business deals and prowess, and there is that little thing about saying he won’t publish his returns!  The desire by some to hold Mr. Trump accountable for allegedly not paying his fair share, not being charitable enough, or finding his business dealings unscrupulous, is powerful.  However, the first two pages of Form 1040 will not tell you enough to draw many concrete conclusions about a person’s financial affairs. In fact, the useful information gleaned from a complete tax return in most cases is limited.  Even the nerdiest of tax nerds (ahem, we call ourselves The Tax Warriors for goodness sake) will tell you that most individual tax returns, especially complex ones, will not provide answers to the questions swirling around the Trump presidency.


The more complex an individual’s financial world becomes, the more likely they will use separate entities or trusts to hold their investments and business interests.  This is done for many reasons including regulatory requirements, sound accounting practices, liability protection and, perish the thought, privacy.  This separate reporting results in a few lines appearing on an individual’s return for each enterprise or investment with all the details buried in an entity or trust return.   


So, with the caveat that the information is very limited, what do these two pages from Donald & Melania Trump’s 2005 Federal Form 1040 tell us, and what do they not tell us?


What the Trump return tells us:

What the Trump return doesn't tell us:


Wages totaled just under $1 million.  Either DJT or MT had at least two W2s.

Who paid the wages, and how the wages were split between DJT and MT?


There was excess social security withholding which indicates multiple employers for the same taxpayer.

Taxable interest earned was approximately $9.5 million.


Was the interest generated from corporate bonds, private loans or         related parties?


Without a Schedule B it is impossible to know what generated the interest income.

Taxable dividends were just over $300k, with approximately $6k of those dividends categorized as "qualified."

What investments generated                 these dividends?


Dividends paid by REITS, MLPS, employee stock options and tax exempt companies do not qualify as "qualified" dividends.  Some foreign dividends qualify and some do not.

There was approximately $70.5 million of self-employed income reported on Schedule C and Schedule E.

What services or entities generated       this income?


We assume consulting, real estate management, construction and development fees, royalties and other pass through income from active partnerships are included.

Total capital gains of approximately $32 million were reported.

What is the breakdown between short and long term gains and what generated these gains (stocks, bonds, real estate)?  Were any of the gains related to carried interests?


Based on our rough calculations we estimate approximately $4 million was short term capital gains and $28 million was long term capital gains.

Royalties, pass through and rental income totaled approximately $67 million.

Which entities produced income and which produced losses?  Were there any passive activity losses which       were disallowed?


A $200 million loss on one entity could offset $267 million income on another.  Without Schedule E and its supporting statements, it's impossible to dig any deeper.  There could be losses DJT incurred but didn’t deduct because of the complexity of passive loss rules. However, he likely qualified as a real estate professional but was still not considered active in all his business ventures.

A loss of $103 million was reported as Other Income.

Was the entire loss an NOL or was it offset by some other income?  What year was the NOL generated and what is the amount of the AMT NOL?


Many assume this NOL relates to the NOL we saw on the leaked state tax returns from 1995, however it is impossible to know for sure what year this particular NOL was generated.  The 1995 NOL could have been utilized in prior years.

There was no alimony deducted.

Does DJT make any payments to ex-spouses?


Alimony paid to an ex-spouse must meet the following requirements to be deductible:  The payment must be in cash; The divorce decree or legal instrument outlining the payments does not designate the payment as not alimony; There is no liability to make any payment after the death of the recipient spouse; and the payment isn’t treated as child support.


Total deductible itemized deductions were just over $17 million.  Gross itemized deductions were approximately $18.5 million before the 3% AGI floor.

How much itemized deductions were for state and local income taxes, mortgage interest, charity, etc.?


We assume most of the itemized deductions related to state and local income taxes given the high tax rates of NYC residents, however the possible breakdowns between categories are infinite.

DJT paid approximately $31.2 million in alternative minimum tax (AMT).

What caused the large AMT liability?


As noted above, we assume most of DJT's itemized deductions related to state and local income taxes, which are not deductible for AMT.  Also, it is likely that the AMT NOL is much lower than the regular tax NOL due to depreciation differences.

There was no underpayment of estimated tax penalty reported.

How much tax was due on DJT's         2004 return?


We estimate the maximum tax reported on DJT's 2004 return was $12- 12.5 million by backing into the 2005 estimated tax safe harbor which the lack of reported penalty implies was met.

DJT paid at least $23,940 of foreign tax to foreign governments on foreign earned income.

Does DJT have ties to foreign governments?


Many individuals pay foreign taxes on dividends and other investment income.  This is well within the realm of reasonable given what was assume are DJT's diverse investment holdings.

DJT filed his return on or around October 15, 2006


Why didn’t DJT's tax advisors do a better job of estimating his 2005 tax liabilities?  Though to be fair they were within approximately 6% of actual tax due with their calculated extension payment.  Someone needs a Tax Warrior…


The penalty and interest calculated at the bottom of page 2 match our calculation of the late payment of tax penalty and interest based on the reported balance due through October 15, 2006.

The return was stamped "Client Copy"

Who released the return?


DJT likely routinely provides copies of his returns to banks relating to financing for his business projects.  While he could have "leaked" the returns himself, there is no way to know for sure.

Tags: president, Wealthy, investments, form 1040, IRS audit, income tax returns, Trump, Russia, Putin, Donald and Melania, David Cay Johnson

The Basics of Becoming a Business Partner

Posted on Thu, Mar 16, 2017

pexels-photo (3).jpgBy: Irina Moyseyenko, CPA, MT and Kim Racer Robinson, EA


You’ve been offered an opportunity to invest in a partnership; or perhaps you’ve been  promoted to partner at your law, accounting or architectural firm.  After spreading the good news to everyone, you come to grips with the great unknowns. What does it mean to be a partner? How will my financial life change? Below, we review a few things to consider before signing on the dotted line.


Know the Financial Shape of the Entity

If you buy into a business partnership, you become an owner.  As a potential owner, you should know what the business owns, how much it owes, and how it generates cash flow.  Review the partnership’s books and records, especially the financial information, to determine its financial health.  Review the sources of income and significant expenses, the cash flow from the business, and the partnership’s liabilities.  Consider asking for the previous three (3) years of financial information to help you determine financial growth, decline, and/or stability.


Review the Agreement

Every partnership should have a partnership agreement detailing the terms of partnership ownership.  The partnership agreement should designate a trusted person who will make everyday decisions on behalf of the business. However, the agreement is mainly used when there is a disagreement or an extraordinary event, such as death or termination of a partner.  Think of the partnership agreement as your guide when something goes wrong.  Read the entire document; focus on the sections that address termination of a partner, death of a partner, dissolution of the partnership, and your responsibilities if the partnership cannot pay its liabilities.


Types of Partners

Partnerships can have different type of partners, such as those who receive a fixed amount of income every year, or those who share in the overall profits (and losses) of the business.  If you share in the overall profits, know how much will be allocated to you.  The allocation of partnership profits may differ from the allocation of partnership losses. The type of partner you are to become should be spelled out in the agreement.


Taxes and Liabilities of Being an Owner

Your personal financial and tax situation may change.  As a partner, you are taxed on your share of partnership income.  The partnership may distribute earnings (but not necessarily cash) to you, but you are liable for the tax.  Taxes are not withheld as if you were an employee. You may need to make quarterly estimated tax payments for your federal and state tax liabilities.  In addition, you may need to file tax returns in every state the partnership operates (whether you personally worked there or not).  This may trigger additional state estimated tax payments.  Ask if the partnership files composite state tax returns or withholds nonresident state taxes for any states in which it operates. And, then, talk to your tax advisor. This stuff gets complicated quickly.


Consider if the partnership agreement limits each partner’s liability if lawsuits occur against the partnership.  Consider obtaining a personal umbrella insurance policy as well as re-titling certain personal assets for additional protection.


Financing Your Buy-In

Depending on your personal financial situation, you may borrow money from a bank to purchase your partnership interest.  The partnership may allow you to contribute capital over time or reduce your future cash distributions to pay for your interest. Again, review the partnership agreement to determine the options available to you. A discussion with your financial advisors may also uncover some other options for financing your buy-in.


Have a Team of Experts at the Ready

As noted above, consider engaging an independent attorney to review the partnership agreement and a trusted tax advisor to review the provisions dealing with finances and tax.  You may not be permitted to change the partnership agreement or the terms of the purchase, but at least you will be prepared and aware of possible shortcomings of the agreement.


We Are Here to Help

The Tax Warriors® at Drucker & Scaccetti have experience working with individuals to review their options and help them understand their obligations as a new partner.  Our highly skilled advisors can help you assemble a team to assess if you are buying into a financially stable partnership while protecting your assets and limit your liabilities. Call on us when considering entering a partnership.  We are always prepared to assist.

Tags: Real Estate Ownership, Real Estate Development, general partner, law firms, limited partnership, business, partnership, professional services, Architectural Firm

Winter Storm Buys Time for Businesses to Request Extensions

Posted on Wed, Mar 15, 2017

BREAKINGNEWS.pngToday, the IRS granted many businesses affected by this week’s severe winter storm additional time to request a six-month extension to file their 2016 federal income tax returns. Yesterday’s snow and ice storm “Stella” wreaked havoc on the northern part of the east coast, and victims and tax professionals affected can breathe a little easier with the business filing deadline.


Business taxpayers who cannot file their tax return by today’s due date (March 15, 2017) can request an automatic extension by filing Form 7004 by March 20, 2017.  Form 7004 provides a six-month extension for returns filed by partnerships and S corporations.


Eligible taxpayers taking advantage of this relief should write “Winter Storm Stella” on their Form 7004 extension request (if filing Form 7004 by paper).  The IRS will continue to monitor conditions and provide additional relief if circumstances warrant.


If you have questions about filing a timely extension for your partnership or S corporation, please contact us at Drucker & Scaccetti.  We are always prepared to help.

Tags: IRS, federal income tax return, Winter Storm, Storm victims, Storm Stella, Snow

March Madness – Let’s Skip Right to the “Elite Eight”

Posted on Mon, Mar 13, 2017

Elite-Eight-300x154.jpgBy: Eric R. Elmore


Yesterday, the NCAA announced the top 64 men’s basketball teams who will compete for the national championship. March Madness has officially begun! For the next two weeks, we will watch and cheer for our favorite programs to eventually cut the nets and hoist the trophy. Likewise, we’ve also selected our top blogs of 2016—some that can help you with your upcoming tax filings—and you don’t have to wait two weeks to see our winners!  Below are our “Elite Eight” blog posts of 2016. You may find the slam dunk you need to save tax dollars in 2017; or, at the very least, be amused and informed!


#1 Seed:

The 2016 presidential election will go down in history as perhaps the most unpredictable. With every week, a new revelation took us on a roller coaster ride in the polls.  We saw plenty of firsts, like witnessing a major party’s candidate running for the highest office while under tax audit and not releasing tax returns.  In our March 2016 blog, “Releasing Tax Returns Under Audit: Is Trump Right or Wrong” we discussed how we would have advised Mr. Trump if he were our client.


#2 Seed:

Philadelphia style was introduced to the world in 1996 when local rapper Will Smith began his acting career in the highly successful sitcom, The Fresh Prince of Bel-Air.  In April 2016, The Tax Warriors® paid homage to this TV icon with our own video, “The Freshest Tax Firm in Philly.” We had a lot of fun filming it and the response was pure Philadelphia, like water ice, whiz wit, or a hoagie.


#3 Seed:

Not to be outdone by The Donald holding out, the Clinton’s released 15 years of tax returns. Tax advisors everywhere thought they overpaid, and we were no exception.  Our colleagues all seemed to focus on a few areas, but we found a few more.  After all, we are The Tax Warriors! In our August 2016 blog post, “What We Found in the Clintons’ Tax Return,” we outlined where Bill and Hillary could have saved some cash on taxes.


#4 Seed:

Perhaps the most entertaining part of the 2016 presidential campaign were the debates.  From the primary debates, right through to the last of the Clinton/Trump debates, heads were knocking against each other like a Flyers/Rangers game.  One area Clinton and Trump agreed on was the elimination of the carried interest loophole from the tax code. In our October 2016 post, “Carried Interest and Why the Candidates Want to Get Rid of It,” we explained the reasons for the rare agreement of the two political nemeses.


#5 Seed:

In February 2016, we addressed a question repeatedly posed by our clients about tax documents and their shelf life.  We chose National Clean Out Your Computer Day to share “Which Tax Documents Should I Keep, and For How Long?” We answered this questions for both businesses and individuals.


#6 Seed:

In August 2016, the IRS issued a Revenue Procedure that provided a new self-certification option to help certain recipients of IRA and qualified retirement plan distributions. Specifically, it waives the 60-day mandatory rollover deadline in certain situations. We blogged on the details of the waiver in our post “IRS Provides New Self-Certification Procedure for Waiver of 60-Day Rollover Requirement.


#7 Seed:

Behind on your Pennsylvania taxes?  Well, Gov. Tom Wolf signed a bill in to law in July 2016 that gives a 60-day amnesty. Though our blog announcing the law scored high enough to be our 7th seed, it lacked details as the lawmakers had not yet devised them.  A later blog from January 2017, “2017 Pennsylvania Tax Amnesty Program Details Released” contains the details of the program.


#8 Seed

The final selection to our “Tax Brackets” (pun intended) is ironically apropos. Saving for our children to go to college and witness March Madness first-hand can be a tax-free endeavor, thanks to 529 plans. However, some reporting requirements can easily trip you up and cause some agita. In September 2016, we shared how to avoid such pitfalls in the blog, “529 Plans – A Precautionary Tale.


We know our top seeded blogs will not lead to lucrative office pools, nor will they be covered each night on the 11 o’clock news or ESPN.  But, we know they are helpful to those who view Tax As A Business Strategy® and are seeking ways to sustain and grow their wealth.  Though exciting, The Tax Warriors don’t like last-minute, buzzer-beating shots when it comes to tax planning. Instead, we prefer disciplined, solid game plans to take families to the next level of financial planning.


Call on us if you need to get your game in order for the upcoming filing deadline.  It’s not too late to take the madness out of your tax planning.


Tags: Clinton, College, Trump, March Madness, NCAA, Basketball, Tournament, Best Blogs, 2016 taxes, 2017, Villanova Wildcats, Top Seeds

Law Makes Dying Less Expensive for NJ Residents

Posted on Thu, Mar 09, 2017

New-Jersey.jpgBy: Nastassja Markham Coletta, JD, LLM


New Jersey has long been considered one of the worst states to die in because of its dual death taxes. New Jersey is one of only two states that levies both an inheritance tax and an estate tax. With the enactment of the P.L. 2016, c.57 and subsequent phased repeal of its estate tax, New Jersey is trying to rebrand itself and stop wealthy families and individuals from retiring in more tax-friendly states.


The new law increases New Jersey’s estate tax exemption from $675,000 to $2 million for 2017 and eliminates the estate tax as of January 1, 2018.


While the estate tax is being phased out, New Jersey’s inheritance tax remains unchanged. There are significant differences between the two taxes. First, the estate tax applies to residents where the inheritance tax applies to certain residents and nonresidents. Second, the inheritance tax has an exemption of only $500 and taxes the transfer of an estate to certain beneficiaries. The rate of tax is based on the individual’s relationship to the decedent. The estate tax rate, on the other hand, is based on the size of the taxable estate regardless of the beneficiary. Third, while both taxes exempt transfers to spouses and qualifying charities, the Inheritance Tax also exempts transfers to children and other lineal descendants, like grandchildren.


The new law also provides a benefit to New Jersey resident retirees. Over the next four years, the gross income exclusion for retirement or pension income will increase to $100,000 for qualifying married couples and $75,000 for qualifying individuals. The current exclusion is $20,000 for qualifying married couples and $15,000 for qualifying individuals.


While those potentially subject to New Jersey’s death taxes will applaud the changes under the new law, they must also take action. This significant change in New Jersey’s death taxes should prompt those with New Jersey wills to review their estate plans. Planning techniques used in the old regime will operate differently under the new law and may have serious consequences for the beneficiaries of the estate. The Tax Warriors® can help you review your prior estate plan and recommend changes to plan for New Jersey’s new taxing regime.

Tags: estate tax, inheritance tax, Death, State Taxes, New Jersey, Taxes, retirement

Good News for Small Businesses Under ObamaCare

Posted on Wed, Mar 08, 2017

affordable_care_act-resized-600.jpgBy: Michael Donahue, CPA, MT, CFP


The Affordable Care Act (“the ACA”) has been operational for some time now.  During its life, the ACA has been subjected to praise and criticism in addition to numerous legislative calls for repeal.


At its core, the ACA requires individuals to obtain health insurance, claim an exemption or pay a penalty.  Additionally, applicable large employers (employers employing at least 50 employees) are required to provide affordable health insurance with minimal essential benefits to its employees.  The pillar of the ACA has been the healthcare exchange which provides health insurance to individuals with premium subsidy support from the federal government.


Recently, there has been some good news for the ACA.  This news is the result of provisions in the 21st Century Cures Act signed by President Obama on December 31, 2016.  Now employers employing less than 50 employees are permitted to provide qualified health care reimbursement arrangements for its employees.  These arrangements allow the employer to reimburse its employees for their personal cost of health insurance.  This reimbursement is tax deductible to the employer and tax free to the employee. 


These are the requirements for this qualified arrangement:


  • The employer must not otherwise offer a group health plan
  • There are some exclusions permitted, but all fulltime employees at least 25 years of age are required to be offered the plan
  • Only the employer can contribute to the plan
  • The annual limit is $4,950/single and $10,000/family
  • The employee must provide the employer proof that he or she obtained minimum essential coverage from a health care exchange or other third-party provider
  • The employer has annual notice requirements to the employee


This new legislation can go a long way in allowing smaller employers to aid its employees.  As the ACA continues its journey through further legislative challenges, keep this new tool in mind as a unique and timely employee benefit.

Tags: health care, ACA, small business, Tax deduction, reimbursement, health insurance, employees, Affordable Care Act, Obamacare, Obama