New York Times
- Transferring Title in a Home to the Children (1/2): Aging homeowners often transfer title in their cherished family home to a child or children long before the parents die. That kind of estate planning, which seeks to protect the home from claims for end-of-life medical expenses or nursing-home costs covered by Medicaid, is permitted, with certain restrictions, by Medicaid regulations. But in most cases, estate-planning experts say, simply deeding a home to children can end up being frustrating for the parents, who lose control over the property, and costly for the children, who could wind up paying significant capital gains taxes when they sell. There is a way, however, for parents to accomplish their estate-planning goals while retaining some control and minimizing the tax the children will ultimately have to pay.
- Six Convicted in Tax Case (12/28): A federal jury convicted six people on Monday in a tax shelter scheme that helped 1,500 people take $120 million in false income tax deductions from 1997 to 2001. Justice Department officials called the tax shelter scheme by Anderson’s Ark & Associates of Hoodsport, Wash., one of the most far-ranging ever prosecuted. The defendants earned tens of millions by charging clients $50,000 to $250,000 to buy tax shelters over the Internet. The scheme involved investments in shell companies, illusory loans from Costa Rican bank accounts and other superficial transactions.
- Some Older Investors May Find Roth IRAs More Attractive (1/3): Many older Americans are relying on withdrawals from their individual retirement accounts to cover living expenses. But some seniors who don’t want or need to dip into the mutual funds and other securities in their IRAs now have a new opportunity to leave bigger IRA nest eggs to their heirs. Under a tax-law change that went into effect on Saturday, more people past age 70½, the age at which people are generally required to begin taking annual distributions from traditional IRAs, have the option to convert their existing IRAs to Roth IRAs. That can be attractive because Roth holders aren’t required to pull money out in their li fetimes and any withdrawals by Roth holders or their heirs are generally tax-free.
- IRA Inheritance (1/2): If you inherit an IRA jointly with someone else, it pays to split up the account.
- It’s Irrational to Save (by Nobel Laureate Edward C. Prescott) (12/29): Regarding tax policy, we have learned that labor supply is not inelastic and does indeed respond to changes in tax rates. This insight, so simple and yet so powerful, has implications for all sorts of tax policies, and one policy that would greatly benefit from an application of this insight would be our Social Security tax system.
- AMT Can Complicate Timing of Tax Breaks From Charitable Gifts (12/29): There is still time to reap big tax savings by making charitable gifts this year. But the timing gets particularly complicated for taxpayers subject to the alternative minimum tax.
- Sales-Tax Deductions Can Be Tricky (by Tom Herman) (12/28): Here is a tip for many big spenders: Make a New Year’s resolution to save evidence of how much you pay in sales taxes so that you don’t need to rely on the IRS tables. Many people, especially those earning more than $200,000, will discover those table amounts are less than generous.
Washington Post
- Not Such a Simple Deduction (1/3): Every year about this time, a chorus of politicians sing out that old song: "Next year we will simplify the federal tax code." And yet also about this time, millions of Americans sit down to analyze, interpret and understand the complexities of filing their annual income tax returns.
- Charities Expect a Late Donation Rush; Law to Take Effect Cutting Deductions for Old Vehicles (12/31): Unlike other businesses closing for the New Year’s Eve holiday, the Melwood Horticultural Training Center, a charity in Upper Marlboro, is bringing in extra staff members to handle hundreds of old cars it expects donors to leave in the parking lot before midnight tonight.
- 401(k) Rule Changes Issued; Regulations Designed to Simplify Operation of Plans (12/29): The government yesterday issued a comprehensive new set of rules to govern the operation of 401(k) and similar retirement savings plans, generally making them easier for employers to run and more attractive to higher-paid workers. The rules announced by the Treasury Department and Internal Revenue Service implement more than a decade’s worth of legislative changes, many meant to address employer complaints that anti-discrimination laws, enacted during the 1980s, made the plans too difficult to administer.
- Bush Expected To Delay Major Tax Overhaul; Social Security, Budget Move to Center Stage (12/28): Wholesale changes to the tax code that just weeks ago were identified as a Bush administration goal by the end of 2005 are being pushed back for at least another year. White House economists, Republican tax aides in Congress and outside economic advisers say key White House officials have determined that they have their hands full with Bush’s pledge to overhaul Social Security and a budget plan that will demand politically painful cuts to non-defense spending. The president will soon name a panel to examine tax policy, but he will leave it to the Treasury Department to monitor the panel’s work. It is widely expected that Treasury Secretary John W. Snow will ultimately recommend incremental changes to the tax code, not replacing it with a new system, such as a single flat income-tax rate or a national sales tax, according to these sources.
