Family Issues

Many Caregivers provide support and care for elderly parents who are cash poor but house/real estate rich.Caregivers who pay for the care of their parents monthly house and living expenses and medical costs including private nurses should consider treating these payments as loans securing the loan against the parent’s home, in the event the house is sold to pay for nursing home cost , they can recoup the monies they had advanced.

In the case where there are siblings as shared caregivers of one elderly parent, , only one sibling can take the exemption for the parent. An agreement needs to be reached yearly as to which sibling will take the exemption on their return. The sibling taking the exemption will need to file Form 2120, Multiple Support Declaration, and have all of the other siblings sign the form claiming that they will not take the exemption on their own return.

Yes. Taxable alimony payments qualify as compensation for purposes of making an IRA contribution. You are subject to the same IRA contribution limitations as one who is working.

If Congress does not agree by the end of 2012, the estate tax is set to revert to pre-2001 levels. As of this date, estate tax rates for 2013 and beyond are set to increase to a maximum of 55% (up from 35% in 2011 and 2012), and only the first $1 million of one’s estate (down from $5.12 million in 2012 and $5 million in 2011) would be exempt.
In 2011, For an estate or gift(s) with:
Taxable income of $1 but not over $10,000 the tax is $0 plus 18 % over $0
T.I. of $100,000 but not over $150,000 the tax is $23,820 plus 30 % over $100,000
T.I. of $150,000 but not over $250,000 the tax is $38,800 plus 32 % over $150,000
T.I. of $250,000 but not over $500,000 the tax is $70,800 plus 34 % over $250,000
T.I. of $500,000 the tax is $155,800 plus 35 % over $500,000 Any gift tax that you would owe is eliminated or reduced by a tax credit. The credit against taxable gifts for 2011 and 2012 is $1,730,800 effectively exempting $5 million of taxable estates.

Alimony is a legal obligation to provide financial support to one's spouse from the other spouse after marital separation or from the ex-spouse upon divorce.
Alimony must be paid under a decree of divorce or legal separation agreement or decree of support.
Alimony cash payments are deductible if you pay them and reportable as taxable if you receive them.
Noncash property settlements is not alimony.
Divorced and legally separated parties must not live in the same household when payments are made.
Child support payments do not qualify as alimony and are not deductible to the giver and not taxable to the receiver.

Generally, alimony payments are not taxable or deductible if you live in the same household as your divorced or legally separated spouse. But, if you are separated under a written agreement, but not legally separated under a decree of divorce or separate maintenance, then you may claim the deduction. Speak to a local CPA about this in greater detail.

No. There is no minimum payment period. Recapture of alimony amounts may apply where payments decrease by more than $15,000 within the first three years of the divorce.

Yes. Annulment decree payments qualify as deductible alimony payments. They also would be considered taxable income to the recipient. They should be reported as alimony (adjustment or income) on IRS Form 1040 page 1.

If you live in the same house as your ex-spouse and are legally separated or divorced, you cannot deduct your alimony payments, nor is your ex-wife required to report the alimony as income.