It’s common to hear attorneys and others refer to trusts, but you may not know exactly what they are or why they are needed. A trust is similar to an entity, such as a corporation or an LLC, in that a trust has a separate identity from either the person that formed it or the people it is intended to benefit. The trust may own property in its own name and may even have a separate tax ID for its dealings with the IRS.
Continue reading “What is a Trust? The Basics of Forming a Maryland Trust”
A popular client question has always been, “How long should I keep my tax returns?” My answer is something many neither expect nor want to hear. Many tax professionals, and even the IRS, suggest discarding tax documents after a certain period of time: 3 years, 6 years, etc. after filed. My answer is usually, “Never.”
Those saying a certain number of years usually base it upon a particular IRS statute of limitations deadline. IRS can audit a return after it’s been filed for 3 years under normal circumstances, for 6 years if there is a “substantial understatement”, and forever if there’s fraud. Therefore, since you’re confident you’re not committing fraud, you should be safe at least after six (6) years, right? No.
An Irrevocable Life Insurance Trust, or ILIT, should be of interest to any person buying life insurance. The ILIT is not just for people with estate tax issues. The ILIT can allow you to control how and when insurance proceeds are distributed to beneficiaries. Rather than going straight to the beneficiary, the insurance company pays the proceeds into a trust that then pays the amounts to the beneficiary as quickly or as slowly as you decide. Such a trust can be particularly beneficial when the potential beneficiary is younger, may have potential marital issues, or has difficultly managing money. Continue reading “Forming An Irrevocable Life Insurance Trust (ILIT)”
Whether on purpose or by mistake, taxpayers sometimes find themselves years behind on filing their tax returns. Sometimes people are lucky and decide on their own to file past due tax returns and move on with their life. Others have the decision made for them when an IRS agent knocks on their door. Regardless, when you are significantly behind on your tax return filings, you should seek professional help to ensure you can minimize penalties and, hopefully, reduce the taxes you need to pay. Continue reading “Didn’t File Tax Returns? The IRS Offers Solutions for Nonfilers”
Small businesses comprise a significant portion of our economy. Unfortunately, most small businesses do not survive into the next generation of owners. The hard work and legacy of the current and prior generations can be wasted without proper planning.
Small business owners often feel they have sufficient time to begin making the transition and will delay the necessary steps until some fateful event forces them into acting. This leaves little or no time to prepare the business and the family for the burdens, both financial and managerial, that can be caused by a sudden and unplanned transfer. Continue reading “Family Business Succession Planning”
Despite common belief, taxes can be discharged sometimes through either a Chapter 7 or Chapter 13 bankruptcy. In fact, bankruptcy is often the best option for many with tax debts. A tax attorney will typically be familiar with both the tax law and non-tax law options available to you and should be able to point you toward the best solution. Continue reading “Taxes and Bankruptcy in Maryland”
Persons holding equity interests in a business can use a buy-sell agreement to ensure the continuity of the business and to solidify their expectations regarding the taxes, rights, and obligations of each party. The buy-sell agreement can dictate the method by which a person’s equity interest will be purchased. Buy-sell agreements can be used by nearly any type of entity, regardless of whether the entity is a corporation, LLC, or partnership.
Continue reading “Buy-Sell Agreements”
A divorce comes with many difficult challenges, but those involved also need to consider the tax consequences of the divorce. Tax issues can result from a number of areas. Of course, the parties will no longer be able to use their married status for their tax returns, but the divorce property settlement itself can cause problems if the tax consequences of the settlement are ignored. Continue reading “Maryland Divorce & Tax Issues”
Unlike most business debts, employees and owners of a Maryland business can have personal liability for the company’s tax debts. Similar to how the IRS pursues responsible persons and owners for payroll taxes, states, including Maryland, also pursue responsible persons and owners for certain state taxes. A person that normally would be protected from business liabilities by a personal liability shield, such as the corporate or LLC entity, will not be able to similarly avoid these tax liabilities.
The state of Maryland will pursue employees, managers, officers, and owners for unpaid taxes. The person does not need to Continue reading “Personal Liability for Maryland Business Taxes”
If you are unable to pay the Internal Revenue Service for taxes you owe, you may be able to qualify for a tax payment plan. The IRS calls such payment plans an Installment Agreement. Your state, including Maryland, also may offer similar tax payment plans.
While most would prefer to obtain an offer in compromise, which reduces the total tax debt, many will not qualify because either their income is too high (by IRS standards) or the taxpayer has too many assets, which includes home equity. Thus, that taxpayer’s only option may only be to request a payment plan. Continue reading “Tax Installment Agreements – Payment Plans”