Taxes

How the 2018 Tax Laws Affect your Family Matters

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As February comes to an end, many of us have heard or read that there are new tax laws that have been enacted for 2018.  You may be busy preparing your 2017 tax returns and wondering if the new tax laws will affect you this year, next year or at all.  If you have children that you claim as dependents or if you claim your spouse as a dependent on your tax returns, the new tax laws may affect you.  The good news is that if you normally have a tax credit for listing a child as a dependent, the amount of the credit has increased from $1,000.00 to $2,000.00.  If you claim any other person as a dependent who is over the age of seventeen (17) years old, you can take a $500.00 tax credit.

If you are confused as to who the IRS considers to be a “child” for purposes of claiming the child tax credit, the “child” must be your biological child, adopted child, foster child, step child or grandchild.  The “child” could even be your brother, sister, step-brother, step-sister, nephew or niece.  The “child” must also be under the age of seventeen (17) years old and must live with your for more than half of the tax year that you are claiming him or her as your dependent.  Additionally, the IRS requires that the “child” actually be your dependent, meaning he or she cannot provide more than half of his or her own support.

The bad news with this new tax law is that you can no longer take exemptions for claiming dependents on your tax returns.  This law is set to go into effect in 2018, so you will still be able to take exemptions for your dependents when you file your 2017 tax returns.

Another family law area that the 2018 tax law affects is alimony.  Many men and women who have gotten a divorce are obligated to pay their former spouse alimony payments.  An advantage of being the payor spouse was that you were allowed to deduct alimony payments from your tax returns.  The spouse who received the alimony payments was obligated to report the alimony payments as part of his or her gross income, which was taxable.  With the new tax law going into effect on December 31, 2018, the payor spouse will be unable to claim alimony payments as deductions on his or her tax returns.

Additionally, the new law eliminates alimony recapture.  If you are unsure as to what alimony recapture is or if it affects you, alimony recapture is a procedure involving spouses who make alimony payments to their former spouses.  If alimony payments decreased or terminated during the first three (3) years that a payor spouse was obligated to pay alimony, the payor spouse was required to include in his or her income for the third year, any alimony payments he or she previously deducted.

Another change that the new tax law brings is how support payments are allocated.  In prior years, support payments had to be designated as alimony payments only or child support payments only.  The new tax law eliminates this allocation requirement so that support payments are simply “support payments.”

If you would like more information on the new tax laws and how they affect your current family matters, or if you have questions or concerns regarding the new tax laws, contact D’Amico Law, P.C.  We are happy to assist you and answer any questions that you may have.

Estate Planning and the 2018 Tax Laws

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As the saying goes, there are two guarantees in life, taxes and death.  Many people take advantage of estate planning techniques in order to maximize the amount of their estates that will pass to their beneficiaries (recipients) upon their death while also minimizing the tax consequences that comes with death.

A common estate planning technique is to give a gift while you are still alive.  In the legal world, this is known as an inter vivos gift.  This may be unfavorable to some people, since by the notion of giving a gift, you give up your right to ownership of the property or money when you give it to someone else.  However, many people take advantage of this technique.  By giving a gift during your life to a recipient, you can minimize the tax consequences on that asset.

There is a federal gift tax that is in place, which will tax the gift if the gift is over the annual exclusion amount.  For the last several years, this amount was $14,000.  However, the 2018 tax law increases the annual exclusion amount to $15,000.  What does this mean to you?  You can gift an amount of up to $15,000 annually without having to pay a federal gift tax.  You can have any number of recipients, so long as each recipient’s gift does not exceed the $15,000.  For example, you can give Bill, Bob and Ben monetary gifts of up to $15,000 each, without being subject to the gift tax.  That is $45,000 of your current estate that gets passed to your intended recipients without being subject to a federal gift tax.  What is also beneficial is that your recipient generally does not have to pay federal income taxes on the gift received.

The annual federal gift tax exclusion of $15,000 is for single tax filers.  For tax filers who are married and file jointly, the annual federal gift tax exclusion is $30,000.  This means that the annual gift you and your spouse may gift a recipient is up to $30,000.  Another advantage of giving gifts is that you can give numerous monetary gifts to the same recipient.  For example, if you give a gift to Bob in 2016 up to the annual exclusion amount, you can still give Bob another gift of up to the annual exclusion amount in 2017.

D’Amico Law, P.C. offers estate planning services.  If you are interested in learning more about how the new 2018 law affects your estate or if you would like assistance with estate planning, contact our office at 610-444-4555 or info@damicolawpc.com.

Family Law Mediation – An Excellent Alternative to Divorce and Custody Litigation

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One common misconception regarding divorce and custody matters is that the issues have to be litigated in court.  Did you know that even though you may be dealing with a divorce or custody issue, you do not even need to set foot in a courtroom? One way to avoid timely and expensive litigation is to participate in mediation.

Mediation is a voluntary process that occurs outside of the court system and can be a successful alternative in divorce and custody matters.  It is a confidential informal process where two parties discuss their issues with each other in front of a third-party neutral (the mediator).  Mediation encourages parties to address the underlying interests of the family in order to resolve their issues rather than using the court system to litigate issues between the parties.  The parties attempt to collaborate and come to an agreement on their own. The mediator’s role is to actively listen to both parties and attempt to clarify the issues, aiding in communication and better understanding between the parties.  If the parties are able to come to an agreement, the mediator prepares the agreement. While a mediator may also be an attorney, the mediator is not acting as an attorney while in mediation. A benefit of having a mediator who is also an experienced family law attorney, is that the mediator can advise the parties on the applicable law which assists the parties in making decisions on their own and not seeking a court to make decisions that effects their lives.

The process encourages the parties to be future-oriented regarding resolution of issues.  The parties are urged to communicate and understand one another which promotes a more peaceful relationship moving forward, and, in cases involving child custody, typically results in a better co-parenting relationship that ultimately benefits the children.

Most parties find mediation a great way to retain control of their personal matters.  Remember, if a judge or master is required to decide your matter, then you are asking a third-party (who more likely than not) has never met you or your children to determine what is best for you and your family.

D’Amico Law, PC offers a wide variety of services, including divorce and custody mediation. The attorneys at D’Amico Law, PC are experience family law attorneys and certified mediators who handle both private and court-appointed family mediation matters. The Mediators at D’Amico Law, PC can walk you through every step of your divorce and custody matter without setting foot in Court.  If you are interested in mediating your divorce and custody issues, please call 610-444-4555 or email us at info@damicolawpc.com to learn more about our mediation services.