Family Tax Planning

Upon successful completion of this course, participants will be able to:

Chapter 1

• Determine how filing status affects taxpayers’ filing requirements, standard deductions, and correct tax by identifying the requirements of filing a joint return or as head of household and how to avoid being penalized
• Recognize the continuing importance and requirement of dependency and “qualified child” status for purposes of head of household filing status and joint custody.
• Determine deductible and nondeductible divorce expenditures, specify the effects of making separate estimated tax payments or joint declarations of estimated tax, and identify the effects of marital agreements and community income.
• State the effect of living together on filing statuses and dependency citing differences with the married tax rate and other tax rates and cite the argument for attributable income.

Chapter 2

• Identify the tax treatment of earned and unearned income for children, especially child expenses and investment income.
• Recognize the tests for the §21 dependent care credit and identify qualifications for §129 dependent care assistance.

Chapter 3

• Determine the differences between qualifying §162 deductible and nonqualifying education and specify education expense credits under §25A listing covered costs and fees.
• Identify the benefits and requirements of §530 education savings accounts and specify the deductible portion of student loan interest payments.
• Cite the tax and savings benefits of §529 of qualified tuition programs, §117 tax-free scholarship payments, and §135 educational savings bonds.
• Identify educational incentives and financial aid available to students and parents.

Chapter 4

• Identify deductible§213 medical costs for spouses and dependents listing dependency requirements; determine the deductibility costs for meals and lodging and specify the benefits and qualifications of HSAs.
• Specify variables that impact the deductibility of §170 charitable contributions identifying limitations and substantiation requirements.
• Determine what constitutes casualty and theft, and specify between business and personal casualties under §165.

Chapter 5

• Recognize the relationship between home sales and capital gains rates.
• Determine the key elements of the §121 home sale exclusion and its application, and specify the safe harbor proration provisions associated with the home sale exclusion.
• Identify the exception to §217 moving expense disallowance and its requirements.

Chapter 6

• Identify categories of mortgages and characteristics of secured debt that influence the deductibility of interest and specify special situations that affect qualified home mortgage interest.
• Recognize the general rule for the tax treatment of points specifying exceptions and identify when a taxpayer will receive a Mortgage Interest Statement – Form 1098.
• Differentiate home mortgage interest from personal debt and determine what is qualified grandfather debt.

Chapter 7

• Identify forms of marital property stating their likely division in marital property settlements and recognize the benefits of marital agreements in avoiding potential divorce problems.
• Determine the requirements of §1041 stating how it changed the result of U.S. v. Davis regarding interspousal transfers; specify the factors that influence whether a property transfer is “incident to divorce”; and identify the tax treatment of transferring property subject to a debt.
• Specify the dangers of interspousal purchases including deferred tax liability, determine the effects of purchasing an interest in real property held for investment, and identify related party issues on later sale.
• Determine the tax consequences of selected asset divisions incident to divorce.

Chapter 8

• Determine the tax treatment of “alimony” based on the date of the divorce decree.
• Specify the types of §71 “divorce or separation instruments” for existing pre-2019 documents, how having an invalid or corrected decree impacts such an instrument, and what can qualify as a payment or be designated not alimony.
• Define the continuing informational reporting of alimony for pre-2019 decrees based and the collateral effects of the TCJA changes
• Specify the tax treatment of child support recognizing events that determine whether a contingency is clearly child-related and identify qualified medical child support orders to make the most of health care coverage plans.

Chapter 9

• Identify financial goals and investment purposes and recognize the importance and relationship of money management and wealth building.
• Determine the tax consequences of title holding methods specifying ways to hold title to assets and citing the tax benefits and drawbacks of corporations, qualified retirement plans, and trusts.
• Recognize the income needed at retirement and identify the purpose of savings listing strategies to save.

Chapter 10

• Identify the goals of money management listing types of income in order to preserve cash more effectively.
• Determine how to budget income into cash and convert income into assets by purchasing investments.
• Recognize tax-advantaged investments and determine the economic impact of accelerating deductions and postponing tax liability.

Chapter 11

• Determine how splitting income among a family group minimizes overall taxes using major income-splitting formats, and recognize the use of an unincorporated business to obtain deductible business expenses.
• Identify the benefits and requirements of using a C or an S corporation specifying the taxation of these entities including their ability to split income, and determine §704(e) family partnership savings.
• Recognize a custodianship’s ability to split income with minors and identify the use of §135 educational bonds.

Chapter 12

• Determine the compensation base for nonqualified and qualified deferred plans and recognize the protections given by PBGC insurance.
• Identify the requirements of basic forms of qualified pension plans and their contribution and benefit limits.
• Determine the requirements of defined contribution and defined benefit retirement plans, specify the impact of requiring employee contributions; and state the requirements for plan terminations.
• Identify Keogh plans for self-employed persons and the impact of controlled businesses.
• Specify the requirements of IRAs, SEPs, and SIMPLEs, and tax-free Roth IRAs.

Chapter 13

• Identify popular ways to receive distributions from a retirement plan or an IRA, specify types of annuities and their effect on how and when participants receive payments, and cite the special tax treatment given NUA.
• Cite the key components of rollovers that can be used to reinvest cash or other assets without including the amount in income.
• Specify the tax consequences of taking premature distributions assisting clients in avoiding the 10% penalty and recognize charitable distributions from plans.

Chapter 14

• Identify ways to manage an incompetent person’s estate specifying their uses and benefits.
• Recognize the basic eldercare benefits of Medicare and the possible use of a Medicaid trust and specify how to obtain disability benefits coverage.

Chapter 15

• Specify types of wills citing their basic provisions and recall ways to hold title and their income and estate tax ramifications.
• Identify the advantages of a properly drafted will, determine the distribution flow of simple wills, and specify the pros and cons of probate proceedings.

Chapter 16

• Recognize the applicable exclusion amounts for various years of death and specify what constitutes “stepped-up basis” for estate tax purposes.
• Identify the benefits and drawbacks of the primary dispositive plans, specify the various types of estate trusts and recall the former advantages and disadvantages of the private annuity.