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February 25, 2013
Filed under: Estate Planning,Special Needs Planning — Tags: "Oakland County Special Needs Attorney", "Parents of Children with Special Needs", "Tax Credits", "Tax Deductions", “Bloomfield Hills Special Needs Attorney”, “Caring for a loved one with special needs”, “Macomb County Estate Planning”, “Macomb County Special Need Planner”, “Macomb County Special Needs Attorney”, “Michigan Special Needs Attorney”, “Michigan Special Needs Estate Planning”, “Michigan Special Needs Planning”, “Oakland County Special Needs Lawyer”, “Oakland County Special Needs Planner”, “Special Needs Presentation”, “Wayne County Special Needs Attorney”, “Wayne County Special Needs Planner”, “Witzke Berry Carter and Wander” — Christopher J. Berry @ 6:24 pm
There are many tax deductions and credits available for parents of children with special needs. Parents of children with special needs should familiarize themselves with the deductions and credits and document all expenses related to their children’s medical expenses, development and therapy. Below you will find five useful tax deductions and credits for parents of children with special needs.
1. Medical & Therapy Expenses
For income tax purposes, learning disabilities are a type of medical condition. This may include autism, ADHD, cerebral palsy, and other learning disabilities.
(Related: Study reveals more middle-aged adults care for kids and aging parents)
While these expenses are limited by 7.5 percent of adjusted gross income, the limitation may be exceeded by certain types of out-of-pocket expenses such as:
- Special schooling like tutoring that is specifically intended to address the special needs of the child.
- Regular education when it is intended to treat the child’s special needs.
- Aides that a child may require to benefit from education.
- Exercise programs, if recommended by a medical professional.
- Transportation to and from special schools or therapy sessions.
- Equipment, devices and supplies necessary to treat or alleviate a medical condition, including technology items such as communication devices.
2. Specialized Foods
A gluten-free, casein-free diet can be used as a deduction provided it is medically recommended. Most times, only the additional cost of the specialized foods over and above what would similar items would cost is deductible.
(Related: Summer Camps For Individuals With Special Needs)
3. Legal Expenses
In some instances, legal expenses related to your child’s special needs may be deductible, for example if you hire an attorney to help prove that your child’s medical expenses are legitimate.
Tax Credits
A tax credit applies directly to the amount of tax you owe. The tax credits most helpful to parents of special needs children are the Child and Dependent Care Credit and the Earned Income Credit. In both scenarios, a credit that is typically only available for children may also be used for an older child with special needs.
4. Child and Dependent Care Credit
This credit may be applied when you pay someone to care for your dependent, and it provides a tax credit of up to $3,000 per dependent, to a maximum of $6,000 for all dependents. Child-care, after-school programs and day camp qualify for the credit.
The credit is available for children under the age of 13, but the age limit does not apply to older children with special needs.
(Related: Planning for a Loved One with Special Needs)
5. Earned Income Credit
The Earned Income Credit generally may be applied by families with a low to moderate income and children under the age of 19, or up to age 23 for full-time students. However, for adult children living with their parents, the age limit does not apply.
Careful planning with the assistance of an experienced attorney who is sensitive to special needs issues can ensure you do what is necessary to reduce your tax burden and protect your child’s interests. is an experienced Special Needs Attorney ready to help you and your child with special needs.
Marc H. Wander is a partner of the Bloomfield Hills law firm of Witzke, Berry, Carter &Wander, PLLC. Marc has been licensed to practice law in Michigan since 1992. Marc’s practice is devoted to estate planning and business succession planning. Marc is a member of the Probate and Estate Planning Section of the State Bar of Michigan and is a prior Chairperson of the Oakland County Bar Association Tax Committee. He is a frequent continuing education speaker to insurance agents, financial advisors, CPA’s and financial industry organizations. He has also been heard on WJR Radio. Follow Marc on Twitter @MarcWander
February 15, 2013
Filed under: Asset Protection,Estate Planning,Estate Taxes and Lifetime Gifts,Federal Estate Tax — Tags: "Bloomfield Hills Estate Planning Attorney", "Bloomfield Hills Estate Planning Lawyer", "Exemption Amount", "Macomb County Estate Planning Attorney", "Macomb County Estate Planning Lawyer", "Marriage and Estate Planning", "Michael Witzke", "Michigan Estate Planning Attorney", "Michigan Estate Planning Lawyer", "Oakland County Estate Planning Attorney", "Oakland County Estate Planning Lawyer", "State Death Tax", "State Estate Tax Law", "State Inheritance Tax Law", "Wayne County Estate Planning Attorney", "Wayne County Estate Planning Lawyer", "Witzke Berry Carter & Wander" — Christopher J. Berry @ 2:52 pm
Even with the new federal estate tax law, families in 21 states and the District of Columbia where separate state levies are still very concerned state estate and inheritance taxes.
While the fear factor of the federal estate tax is gone for the majority of those whom are wealthy, state estate and inheritance taxes are still a source of worry.
(Read more: Study reveals more middle-aged adults care for kids and aging parents)
State estate and inheritance taxes have been in constant flux over the last decade, and even more confusing, in some states, the level at which the tax kicks in has been changing (rising and falling).
Thanks to the fiscal cliff tax teal (the American Taxpayer Relief Act), the federal estate tax exemption of a generous $5 million per person, indexed for inflation, is now permanent. In 2013, up to $5.25 million of an individual’s estate will be exempt from federal estate tax, with a 40% tax rate applied to any excess over the exemption amount.
(Read more: Marriage and estate planning: How it affects you)
Contrastingly, states with estate taxes typically exempt $1 million or less per estate from their tax and impose a top rate of 16%. New York, for example, sets its exemption at $1 million. So the estate of a person dying in New York with $5.25 million would owe no federal tax, but would owe New York $420,800.
Six states levy only an inheritance tax, with the rate based on the relationship of the heir to the deceased and the taxes kicking in, in some instances, on the first dollar of bequest. Only Maryland and New Jersey impose both. Maryland imposes an estate tax of up to 16% above a $1 billion exemption, and a 10% inheritance tax on every dollar left to a niece. nephew, friend or partner, but no inheritance tax on money left to children, grandchildren, parents or siblings. Any estate tax owed is reduced by the inheritance tax paid. As in the federal system, bequests to a spouse are tax-free.
A trend is emerging to eliminate state estate taxes, or at least lessening the tax bite by increasing the amount exempt from the tax. Ohio no longer has an estate tax. Delaware falls of the list effectively July 1, 2013 when its current temporary estate tax expires. Indiana’s inheritance tax is repealed effective Jan. 1, 2022. Tennessee’s inheritance tax is repealed effective Jan. 1, 2016.
In Indiana, there is a gradual phase-out of the tax, starting with a 10% credit effective Jan. 1, 2013, and in Tennessee the amount exempt from the state inheritance tax is rising each year, from $1.25 million this year, to $2 million in 2014 and $5 million in 2015.
Maine’s exemption doubles to $2 million this year, while Rhode Island’s exemption goes up to $910,725 this year, up from $859,350 in 2012 as it’s indexed for inflation.
Connecticut is the only state going in the other direction. In 2011, it lowered the amount it exempts from its tax from $3.5 million to $2 million per estate. And Illinois is the most recent state to implement an estate tax — it resurrected an estate tax in 2011 with a $2 million exemption — now $4 million.
(Read more: 8 Life Stages of Estate Planning: Part 1)
North Carolina is the next state to watch our for. Recently elected Rep. Governor Pat McCrory made abolishing the state estate tax one of his campaign promises:
“North Carolina is now the only state in the Southeast with the death tax. This tax unfairly punishes those who would inherit their loved one’s possessions or business, forcing some families to sell off a small business or family farm just to pay the tax. As governor, [I] will fight to eliminate the death tax for North Carolinians.”
A technical provision of the federal estate tax law includes a deduction for state tax paid — instead of the pre-2001 state death tax credit, which permit states to share in the estate tax revenue the feds collected. For states hoping for a return to revenue sharing, research analyst at tax publisher CCH, James Walschlager, believes it’s possible that they will consider adding stand-alone taxes.
Above is an interactive map that shows the state by state estate and inheritance taxes in the United States.
Read more: http://www.forbes.com/sites/ashleaebeling/2013/01/28/where-not-to-die-in-2013/
Mr. Witzke practices in the areas of estate and gift tax planning, financial planning, retirement planning, LGBT civil rights, charitable giving, elder law, and small business planning. He focuses on helping clients grow, protect, and transfer wealth efficiently. Mr. Witzke is a past president and board member of the Financial Planning Association of Michigan, a member of the board of directors for Leadership Oakland, and a member of the planned giving advisory committees of Wayne State University and the Community House in Birmingham. Follow Mr. Witzke on Twitter @gr8estatelawyer.
Filed under: Elder Law — Tags: "Bloomfield Hills Estate Planning Attorney", "Bloomfield Hills Estate Planning Lawyer", "Caring for Aging Parents and Kids", "Macomb County Estate Planning Attorney", "Macomb County Estate Planning Lawyer", "Marriage and Estate Planning", "Michael Witzke", "Michigan Estate Planning Attorney", "Michigan Estate Planning Lawyer", "Middle-Aged Caregivers", "Oakland County Estate Planning Attorney", "Oakland County Estate Planning Lawyer", "Wayne County Estate Planning Attorney", "Wayne County Estate Planning Lawyer", "Witzke Berry Carter & Wander", 'Sandwich Generation" — Christopher J. Berry @ 1:50 pm
A new survey has revealed that the financial burdens on middle-aged caregivers are increasing.
Close to 15% of U.S. adults in their 40s and 50s provided financial support to both an aging parent and a child in 2012, revealed in a survey of 2,511 adults from the Pew Social Demographic Trend Project. This was a 12% increase from 2005. Almost half of those currently raising or financially supporting a child have a parent 65 or older still living, who may need support at some point.
(Read more: Who Owns Your Facebook Pages When You Die?)
Interestingly, they survey finds that a great emphasis is on supporting grown children. About 48% of adults 40-59 provided financial support to grown children in 2012, up from 42% in 2005.
These increases are evident of the economic challenge our nation faces, says Kim Parker, a co-author of the report.
(Read more: The New Age Of Estate Planning
“Grown children are struggling to find jobs and establish themselves in the economy.”
But there is a silver lining, Parker says, an associate director with the Pew Social and Demographic Trends Project.
“The middle-aged adults who are supporting their grown children financially report that they have stronger emotional ties with those children.”
Grown children are spending more time with their parents, proving valuable in the furthered development of their relationships. Members of this sandwich generation report a closeness with their children that they did not have with their parents.
“Generations relying on each other may create stronger ties.”
Even with these growing burdens, middle-aged caregivers are equally as happy as other adults, the survey indicates. About 31% claim they are extremely happy with their lives, compared with 28% of other adults. The downside: 31% of those in the sandwich generation say they always feel rushed, compared with 23% of other adults.
Stephanie Coontz, director of research and public education of the Council on Contemporary Families, a non-profit organization based at the University of Miami, says stress can be a factor in the deterioration of relationships. But she says many families report that they are closer.
“We have developed much higher standards of family relationships and much higher expectations of family cooperation,” adds Coontz, who was not involved in Pew’s report.
“I wouldn’t call that a silver lining, but I would call it an umbrella.”
(Read more: Living Together and Property Agreements)
While it is evident that middle-aged caregivers have a greater financial strain, it appears they are the benefactor of stronger emotional connections and relationships as a result.
Read more: http://www.usatoday.com/story/news/nation/2013/01/30/sandwich-generation-stress/1873031/
Mr. Witzke practices in the areas of estate and gift tax planning, financial planning, retirement planning, LGBT civil rights, charitable giving, elder law, and small business planning. He focuses on helping clients grow, protect, and transfer wealth efficiently. Mr. Witzke is a past president and board member of the Financial Planning Association of Michigan, a member of the board of directors for Leadership Oakland, and a member of the planned giving advisory committees of Wayne State University and the Community House in Birmingham. Follow Mr. Witzke on Twitter @gr8estatelawyer.
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