Delaney and Delaney Legal Blog

submitted by Brian J. Delaney, Esq.

In light of the new tax plan that went into effect on January 1, many Americans are expecting a larger tax refund when they file next year. They shouldn't plan on it and here's why: The IRS just released revised tax withholding schedules last week and it's possible people will be underpaying their taxes.  

Every year, a typical family may spend well over $5,000 on insurance premiums (not including health insurance): Life insurance, car insurance, homeowners insurance, umbrella coverage, smart phone insurance, etc.  What's the point of paying these premiums year after year?  These policies protect you and your family from a potentially large financial loss even if the risk of an incident happening is extremely small.  

For example, the annual premium on a 20 year $1M term life insurance policy for a 35 year old male might be $1,000.  In the unlikely event of death during the 20 year period, the insurance company will pay the named beneficiaries a death benefit of $1,000,000.  Will the insured complain he wasted $20,000 if he doesn't die during the 20 year period?  He shouldn't because the premiums paid provided him peace of mind that his family would be financially secure if were to pass away unexpectedly.

With a major tax bill pending, now is the right time to see what you can do to reduce your income tax bill before year's end.  Here are some ideas:

Defer to the Second Half

In football, when a team wins the opening coin toss, they can elect to receive the ball to start the game or wait until the start of the second half.  Patriots' fans know that if he wins the coin toss, Coach Bill Belichick will always defer possession to the second half.  Why?  He sees a bigger benefit to having the extra possession later on in the game as opposed to the opening drive.

If you are self-employed and are owed money, is it better to receive income now or a little later?  Most people prefer to get paid now, but if the tax rates are lower in 2018, it may be advantageous to wait a couple of weeks.

The proposed Trump tax plan makes some significant changes to the Internal Revenue Code.  Although being promoted as major middle-class tax relief, some seniors may actually face a massive tax increase.  Under the proposed plan, taxpayers can no longer itemize medical expenses on Schedule A.  The current tax code allows a taxpayer to take an itemized deduction for medical expenses that exceed 10% (or 7.5% if born before 1952) of their adjusted gross income.

submitted by Brian J. Delaney, Esq. 

Timing is everything, especially when it comes to long-term care/asset protection planning.  Enter the dreaded "Five Year Look Back."  It is one of the first things a prospective client asks me about.  When applying for long-term care MassHealth benefits, the applicant must disclose all transfers for less than fair market consideration made in the previous 60 month (or 5 year) period.  If MassHealth treats the transfers as disqualifying, then the applicant will be denied benefits for a period of ineligibility known as the penalty period.   The penalty period is calculated by dividing the gift amount by the transfer divisor, which is the average cost of a nursing home in Massachusetts.  For example, a $50,000 gift divided by $354 (2017 transfer divisor) would generate a penalty period of 141 days.  Who pays the nursing home for those 141 days? Often, the family member will need to "cure" the gift to pay for the long-term care costs.

submitted by Brian J. Delaney, Esq.

It looks like Congress will be extending the payroll tax cut through the end of 2012.  Many people assume it is a good thing, but don’t understand how it affects their tax returns.  This payroll tax cut actually went into effect in January in 2011.  Will you see a bigger tax refund?  For most people, the answer is no.   In fact, some people will be paying more in tax this year as opposed to last year!  I prepare tax returns for many of my clients and I have quickly realized that a number of them will end up paying more than last year.  Why? Read on…

submitted by Brian J. Delaney, Esq.

I have represented many first-time home buyers.  These clients are typically very enthusiastic about purchasing their first home.  I have also helped many clients (as young as 18 years old and as old as 99 years old) with estate planning.  As you can imagine, these clients are polar opposites from my first-time home buyer clients.  I have never had a client say to me, “I’m so excited to sit down and talk about what happens to my property or my kids if I unexpectedly die or become incapacitated!”  It takes some clients months, if not years, to gather the courage to sit down and talk about estate planning. 

submitted by Brian J. Delaney, Esq.

Due to last minute tax changes by Congress, the IRS has announced that some tax returns will not be processed until February 14.  If you itemize your deductions on Schedule A (mortgage interest, taxes paid, charitable contributions, etc), claim the higher education tuition and fees deduction, or claim the educator expense deduction, you will not be able to e-file until the 14th.  For our clients, we will finalize returns but hold off e-filing until we get the green light from the IRS.

submitted by Brian J. Delaney, Esq.

We are pleased to announce the launch of our new website, www.delaneylawoffice.com!  Between the detailed website content and frequent blog entries, we hope to keep our clients up to date on developments in real estate, estate planning, tax law, and elder law. 

We are also teaming up with a company called LegalVault to offer a secure online document storage system for our clients.  LegalVault offers some exciting features.  Clients are able to upload important legal documents to their account and can access the documents from any computer with internet access.  In addition, clients are provided with a wallet card containing an access code for healthcare providers to access their important healthcare documents such as a healthcare proxy, living will, or even a list of allergies and medications. 

 If there is any topic you want us to discuss in our blog, please do not hesitate to contact us.