Archive for July, 2016


July 26th, 2016 No comments

How sad it is to hear from a client that a loved one passed away and there was no estate plan in place. Grieving over the loss of a loved one is difficult enough without having to face the challenges of not having an estate plan in place.

Too many tomorrows create too many problems today. Implementing an estate plan should be a top priority and not postponed until a later date. This is one of those real life examples where it would have only taken a few minutes to contact an estate attorney to begin the process of creating an estate plan. Instead, the estate planning attorney is now being contacted to help clean up a potential mess where needed funds could be tied up in the courts for months. It reminds us of the old Fram oil filter commercial – “You can pay me now, or pay me later.” (It is much cheaper to change an oil filter for a few dollars than to rebuild a car engine for thousands of dollars.) By all means, pay the estate planning attorney today!

If you do not have an estate plan, your plan is several years old, if you have relocated to a different state, your medical health has significantly changed, or family members have passed away or new ones have entered the family, it may be an opportune time to call that estate planning attorney and request a consultation.

What is an estate plan? We will let the estate planning attorney address that with you. However, you may wish to become familiar with such terms as a will, a revocable and irrevocable trust, a living will or advance health directive, and a durable power of attorney. In addition, it is most important to review the beneficiaries listed on all retirement accounts and investment accounts. Despite what your expressed wishes are in your will as to your beneficiaries, some types of accounts are governed by the named beneficiaries in these types of accounts. So although your will says that your only child should receive your full inheritance, if your sole retirement account designates another beneficiary (such as a divorced ex-spouse), your daughter may not see a dime of your inheritance.

If you want to discuss your business or personal tax planning, tax preparation and other financial concerns with an experienced tax professional, we invite you to call 610-594-2601 today to make an appointment at our Exton PA CPA office to discuss your situation. You can also schedule a consultation at Click Here.

Copyright © 2016 Keystone Financial Solutions, P.C.  All rights reserved.  BE SURE TO READ THE DISCLAIMER PAGE: Content in this blog is for educational purposes only and should not be considered as the rendering of tax, legal or investment advice. The publisher of this blog makes no representations as to the accuracy or completeness of any information herein, will not be liable for any errors or omissions, and shall not assume liability for any losses, injuries, or damages from the display or use of this information.


July 19th, 2016 No comments

Listen to the pitch, and then lose your shirt! Taxpayers are always looking for a means to reduce taxes and to use the Tax Code to their advantage. There is ABSOLUTELY nothing wrong with doing so. Unfortunately, many a taxpayer listens to the salesman’s pitch and does not consult with their tax advisor before implementing the strategy. After all, the sales pitch says that the promoter has an IRS private letter ruling (PLR) that these types of transactions are accepted by the IRS. Unfortunately, the PLR Read more…



July 12th, 2016 No comments

The Tax Court case of Terrell, T.C. Memo. 2016-85, May 2, 2016 is an interesting case because not only does it address how much tuition a taxpayer can claim as an education credit, but also illustrates how useless the Form 1098-T is that is issued by most colleges and universities.

Looking at Form 1098-T, box 1 shows “Payments received for qualified tuition and related expenses.” Unfortunately, many schools of learning leave this box blank. Box 2 is usually completed by these schools and that box shows “Amounts billed for qualified tuition and related expenses.”

Since individual taxpayers are cash basis taxpayers, they are allowed tax deductions based on amounts paid, not amounts billed. Thus leaving box 1 blank does not tell the taxpayer what he paid to the learning institution as a qualified tuition or related expense.

In this case, the university filed with the IRS and sent to the taxpayer Form 1098-T, Tuition Statement. The form had no entry in box 1 for tuition payments received. Box 2 had $1,180 for amounts billed for qualified tuition and related expenses. Box 2 represented the $1,230 that was billed to the taxpayer on January 10, 2011, plus mandatory fees of $50, minus a tuition credit of $100.

On her 2011 return, Merrill claimed the American opportunity Credit of $2,500. The IRS disallowed the credit in its entirety, stating: Read more…



July 5th, 2016 No comments

If you own a Health Savings Account (HSA), you likely contribute to the plan each year and then withdraw funds from the plan to pay for medical expenses. The benefit to you as an employee is that your contributions to the HSA are made from pre-tax dollars, thus reducing the amount of income taxes, FICA, Medicare taxes you pay. This is a great way to reduce the amount of taxes you pay.

But, is this a sound strategy for you and your family? Are you aware that you may be able to do much more with your HSA contributions? Read more…

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