Estate and Income Tax Planning for non-US citizens. Part II – income and estate taxation of non-U.S. residents
Income Tax Planning: In general, non-U.S. residents are taxed only on U.S. sourced income. If the income is considered to be effectively connected with a U.S. trade or business (“effectively connected income” or “ECI”) then that income is taxed at graduated rates on a net income basis. If, instead, the income is “fixed,...
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Estate and Income Tax Planning for non-US citizens. Part I – determining U.S. residency
The very first question to determine during planning is whether a non-citizen individual is considered a U.S. resident for income tax purposes and for estate tax purposes. For income tax purposes, a non-citizen is considered a U.S. resident if the individual meets any one of these tests: (1) green card test or (2)...
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How to monetize an investment real estate property while minimizing taxes
There are many reasons why one would want to withdraw money from an investment real estate. Some of these reasons include: no longer willing to manage the property, no longer needing the income tax benefit, desiring liquidity or desiring diversification in one’s investments. 1. The easiest way of monetizing a real estate property...
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What are the current methods of maximizing one’s social security payments?
Now that the “file and suspend” loophole has been eliminated (effective April 30, 2016), what other strategies remain for maximizing one’s social security payments?1. The main strategy is, of course, to delay the receipt of social security. At full retirement age, a worker is entitled to receive 100% of his Social Security retirement...
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You Can Now Donate Your Lapsing Insurance Policy
Approximately 50% of life insurance policies owned by seniors are allowed to lapse without any benefits being paid out. There are many reasons for this lapse: some can no longer afford the premiums while others feel that they no longer need the proceeds in the event of death.A recent charitable organization called “Insuring...
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The Biggest Focus of Estate Planning is Now Basis (or Why You Should Not Make a Simple Gift of Assets to Your Children).
Basis is the cost of purchasing the asset. For real estate, it is the cost, plus any closing costs and improvements made later. Basis is important, because upon the sale of the property, capital gains liability is calculated based on the difference between the sale price and the basis.Carry Over Basis:...
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A Third of Americans Spend Their Entire Inheritance Within Two Years!
A researcher at Ohio State University found that Americans who receive an inheritance save about half of it and spend, donate or lose the rest. However, almost 30% of Americans who receive the inheritance had negative savings rate within 2 years of receiving the inheritance, meaning that they spent it all.There are strong...
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Leaving Real Estate Property to More Than One Heir May Cause Future Problems
Property partnership may end for a variety of reasons. One common category of circumstances when real estate litigation occurs involves siblings who inherit property from their parents and have different wishes. Multiple problems can arise. One sibling may want to live in the property while the other one wants to rent it out....
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Can You Avoid a 5 Year Penalty for Uncompensated Transfers?
Medicaid imposes a transfer penalty that can last for up to 5 years for all uncompensated transfers made prior to the application for nursing home Medicaid. This provision makes crisis planning for nursing home not efficient. Yet many people are reluctant to transfer their assets ahead of time and impoverish themselves, because, of...
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Can Court Reform a Will When the Attorney Made a Drafting Mistake?
In a recent New York case, a Will provided for disposition of 2/3 of the property (leaving property to decedent’s siblings, nieces and nephews) and was silent about the disposition of the remaining 1/3. In re Isasi-Diaz, NYLJ, Mar. 28, 2014, p. 35 (Sur. Ct., N.Y.Co.) (Mella, S.) The attorney-draftsman provided an affidavit...
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