Bond Beebe Principal, Brian Wynne, was recently quoted in a Business Insider article about common life changes and how they affect your tax bill. Click Here for the full article.
It is now official that inherited IRAs are not considered “retirement funds” within the meaning of federal bankruptcy law and therefore are not exempt from a bankruptcy estate. This ruling was handed down by the Supreme Court in the case of Clark, et ux v. Rameker on June 12, 2014.
Typically, retirement funds (IRAs and Roth IRAs) are exempt from a bankruptcy estate and therefore shielded from creditors in bankruptcy. This was done to help debtors to provide for their retirement, even after bankruptcy. However, the Supreme Court ruled that inherited IRAs do not qualify as retirement funds.
A Tax Court ruling in January 2014 (Bobrow; TC Memo 2014-21) changed long-standing IRS rules defining when and how often you can rollover money tax-free from one IRA to another.
A “rollover” is defined here as withdrawing money from an IRA and then re-depositing it in the same or a different IRA within 60 days of the original withdrawal. These are considered tax-free transactions and are generally used to change the investment custodian or manager. They are occasionally used as a short term loan. You are allowed to do this once in a 12 month period.
In an effort to provide taxpayers with more service options, the IRS has announced the start of a new web-based based payment system called IRS Direct Pay. Individual taxpayers filing 1040 return series can use IRS Direct Pay 24 hours a day, 7 days a week to pay any balance due on their tax returns or make estimated payments without incurring any additional fees or having to pre-register.
Some of the key features provided by IRS Direct Pay include:
While the current system is limited only to payments for 1040 returns, the IRS has plans to expand the service and offer additional options for users and will most likely add additional payment types in the future. Other future expansions include payment confirmations via e-mail and a login option that would allow users quick access or return visits.
For more information, check out the IRS’ News Release and FAQ for more information.
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On May 15, Governor O’Malley signed into law a bill that will gradually increase Maryland’s estate tax exemption to eventually match the federal exemption, which is indexed for inflation. With these increases, next year Maryland’s exemption will be $1.5 million and will continue to increase until 2019, when it is set to recouple with the federal exemption, which in that year is projected to be $5.9 million.
Full details are available in our previous post on the topic. This is indeed good news for Maryland residents and similar conversation on the estate tax exemption is underway across the border in DC.