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IRS Updates Guidance on Prior and Future Estates of Same-Sex Couples by Edward N. Cooper, CPA

Posted on March 06, 2017 by Edward Cooper

In January 2017, the Internal Revenue Service (IRS) issued tax guidance relating to the estates of married same-sex couples. More specifically, the guidance relates to gifts, bequests and generation-skipping transfers between same-sex couples when applying the Supreme Court’s landmark Windsor decision that grants lawfully married same-sex gay and lesbian couples equal rights, recognition, benefits and protections under the law.


IRS Notice 2017-15 allows same-sex couples and executors of their estates to recalculate a taxpayer’s remaining applicable exclusion amount and remaining generation-skipping transfer (GST) exemptions when transfers were made between spouses prior to Windsor decision in 2013. More specifically, affected taxpayers may automatically elect to establish that pre-2013 transfers between same-sex spouses did in fact qualify for a marital deduction and are therefore permitted to recover these amounts and qualify for the marital deduction on previously filed tax returns, even when the limitation periods on those returns have expired. However, the ruling specifies that “qualification for the marital deduction or a reverse qualified terminable interest property (QTIP) election would require a QTIP, qualified domestic trust (QDO) or reverse QTIP election” would require taxpayers to formally request relief to make such an election.


The LGBT Business and Families practice with Berkowitz Pollack Brant works individuals and same-sex domestic partnerships and married couples to navigate complex tax issues related to estate planning and tax compliance and planning in a challenging and changing environment. Its professionals work closely with advisors in the firm’s other practice areas, including real estate services, business taxes and employee benefits planning.

About the Author: Edward N. Cooper, CPA, is director-in-charge of Tax Services with Berkowitz Pollack Brant, where he provides business and tax consulting services to real estate entities, multi-national companies and their owners. He can be reached at the CPA firm’s Miami office at (305) 379-7000 or via email at


Don’t Overlook Tax Issues when Planning a Wedding by Joanie B. Stein, CPA

Posted on August 28, 2016 by Joanie Stein

The excitement of planning a wedding should not take a back seat to the important tax and legal issues that newlyweds will face after they say I do. Following are five factors to consider when couples marry.

New Names. Taking a spouse’s last name requires an individual to legally change his or her name with government agencies, including the Social Security Administration, the IRS, the U.S. Postal Service and the Department of Motor Vehicles. With a certified copy of a marriage certificate, individuals can also change their names on their financial accounts and update information with their employers and the benefits-plan administrators. Remember, an individuals’ name and social security number must match on all of their legal and financial documentation.

New Address. If either spouse plans to move, he or she should advise the IRS via Form 8822 and also update this information with the U.S. Postal Service via its online tool at Similarly, a new address should be reported to both partners’ employers, health insurers and all institutions that hold their individual and joint financial accounts.

New Tax Bracket and Filing Status. Getting married may change an individual’s tax filing status and tax bracket, depending on the couple’s combined income and their ability to claim tax credits and deductions. In addition, newlyweds’ tax liabilities may become affected by the marriage tax penalty, which may require additional withholding tax or estimated tax payments during the year. A qualified tax professional is the best resource for figuring out potential tax liabilities and making the determination of whether it is more favorable to file taxes jointly or separately and whether it makes more sense to claim the standard deduction or itemize. Once the decision is made, both spouses may need to report their new marital status to their employers and complete new IRS Form W-4s, Employee’s Withholding Allowance Certificate.

New Insurance. A new marriage is considered a change in circumstances, for which individuals who purchased health insurance through a Marketplace must report a change in income, address and family size to the Marketplace. This is especially important for those taxpayers who receive advance payment of the premium tax credit in 2016. These payments, which lower the out-of-pocket costs taxpayers pay for your health insurance premiums, are made directly to the insurance company on a taxpayer’s behalf to. Reporting changes in circumstances will help to ensure taxpayers get the proper type and amount of financial assistance to which they are entitled.

New Estate Planning Documents. After exchanging vows, couples should review and update their wills and other estate-planning documents to account for their change in marital status. This may include naming a new spouse as beneficiary of retirement plans and life insurance contracts as well as granting him or her power of attorney over financial and medical decisions.

About the Author: Joanie B. Stein, CPA, is a senior manager with Berkowitz Pollack Brant’s Tax Services practice, where she helps individuals and businesses implement sound tax-planning strategies. She can be reached at the CPA firm’s Miami office at (305) 379-7000 or at

Learn How Your Children Can Lower Your Tax Bill by Joanie B. Stein, CPA

Posted on August 09, 2016 by Joanie Stein

Raising children can be expensive.  However, the IRS provides families with some financial relief through several tax benefits that help parents reduce the amount of taxes they owe each year.


Dependent Deductions.  Parents may reduce their annual income by claiming a dependent deduction of up to $4,050 in 2016 for each child under the age of 19, or 24 if the child is a full-time student.  The amount of the deduction decreases as parents’ adjusted gross income increases above $311,300 for married couples filing jointly, $285,350 for head-of-household taxpayers or $259,400 for single filers. The exemption phases out completely when adjusted gross income reaches $433,800 for married couples filing jointly, $407,850 for head-of household taxpayers or $381,900 for single filers.


Child Tax Credit. Parents may reduce their federal tax bills by $1,000 annually for every child under the age of 17 who lives with them for at least one-half of the year. The credit, which is limited by the amount of income tax and alternative minimum tax (AMT) owed, phases out completely for taxpayers whose income exceed $110,000 for married couples, $55,000 for couples filing separately and $75,000 for all other taxpayers.


Adoption Credit. Taxpayers who adopted a child in 2016 may offset some of the related expenses they incurred by claiming this credit of up to $13,400 per child.  The adoption credit phases out for taxpayers whose income exceeds certain thresholds.


Child and Dependent Care Credit. Families that pay for someone else to care for their dependent children under the age of 13 while the parents work or look for work may claim a credit for a percentage of the expenses paid to the caregiver. For 2016, the total expenses used to calculate the credit may be up to $3,000 for one dependent or up to $6,000 for two or more qualifying dependents. The allowable percentage of the credit depends on the taxpayer’s adjusted gross income.


Higher Education Credits.  The American Opportunity Credit and the Lifetime Learning Credit provides parents with the ability to offset some of the costs they pay for their children’s’ college and non-degree expenses.  Families may claim only one of the credits, both of which are subject to modified adjusted gross income thresholds.


Student Loan Interest. Qualifying families may deduct up to $2,500 in interest paid on student loans during the tax year.  The deduction is reduced when taxpayers’ modified adjusted gross income exceeds $65,000 for single heads of household or $130,000 for married filing jointly.  The deduction phases out completely at $160,000 for married taxpayers filing jointly and $80,000 for single filers.


Self-Employed Health Insurance. Parents with their own businesses who paid for health insurance for children under age 27, may deduct the premiums they paid during the year.


It is important that families pay attention to the income thresholds for which these deductions and credits apply. In some instances, it may be prudent for high-net-worth families to consider filing separate tax returns for children, rather than claiming them as dependents. At the very least, a family should meet with a tax accountant to compare the benefits of each.


About the Author: Joanie B. Stein, CPA, is a senior manager with Berkowitz Pollack Brant’s Tax Services practice, where she helps individuals and businesses implement sound tax-planning strategies. She can be reached at the CPA firm’s Miami office at (305) 379-7000 or at


What Individuals and Employers Need to Know about Same-Sex Marriage Ruling by Edward N. Cooper, CPA

Posted on August 06, 2015 by Edward Cooper

The recent Supreme Court ruling legalizing same-sex marriage brings with it far-reaching economic implications to lesbian, gay, bisexual and transgender (LGBT) couples and the businesses that employ them.

In the wake of the Court’s decision, all 50 states and the District of Columbia must now recognize same-sex marriages and provide to same-sex couples the same rights and privileges they provide to marriages between opposite-sex couples. This presents a sea of new opportunities and challenges for same-sex couples blending their lives and finances as well as the businesses that employ them.

Tax and Financial Benefits to Same-Sex Couples

Bringing the rights of LGBT couples in line with those granted to heterosexual couples simplifies a range of tax and financial-planning opportunities, including healthcare, retirement and death benefits. For example, married LGBT couples in all states may now claim spousal benefits for health insurance coverage and Social Security survivor benefits. Similarly, LGBT couples may name their spouses as next of kin and beneficiaries of individual retirement accounts and pass other property onto surviving spouses free of estate taxes. The same exemption will apply to same-sex spouses who may now make unlimited gifts to each other without incurring tax liabilities.

Also on the tax front, since the Court’s 2013 landmark decision in U.S. v. Windsor, same-sex couples married in jurisdictions that sanctioned their marriages have been recognized as legally married on the federal level and, therefore, permitted to file joint federal tax returns. However, because their unions were not recognized in every state, many couples were forced to file separate, individual returns on the state level, often resulting in additional costs of time and money in preparation. With state recognition of same-sex marriage, these couples may now file both federal and state tax returns jointly, when it makes financial sense, regardless of the state in which they were married or currently reside. Moreover, legal recognition of LGBT marriages on the state level means similar recognition of divorce among same-sex couples, which could include requirements of spousal alimony and child support.

With these provisions, LGBT couples should take the time to meet with legal and financial counsel to assess the financial dynamics that their unions will create. In most instances, it will mean that couples will need to review and update wills, estate plans, retirement accounts and insurance policies to take advantage of the benefits now afforded to them and prepare for the resulting tax implications. For example, legal recognition of these marriages may result in increased income and, subsequently, increased taxes, for which advanced planning will help couples minimize tax liabilities. Similarly, the issue of pre-nuptial agreements should become a consideration to protect both parties in case of divorce.

Considerations for Employers

Up until this point, businesses have been navigating through a maze of conflicting federal and state guidelines concerning benefits for LGBT couples. Some employers offered to same-sex couples who could not legally marry “domestic partnership” benefits, which they often extended to opposite couples who lived together. The question now will be whether or not these employers will continue to offer domestic partnership programs or eliminate those benefits all together and instead require same-sex couples to legally wed to enjoy spousal benefits. With LGBT couples’ legal right to marry, employers will have no other choice but to extend spousal benefits to same-sex couples or risk exposure to discrimination lawsuits. Similarly, if employers continue to offer domestic partnership benefits, they will need to consider extending them to all employees or open themselves up to claims of reverse discrimination.

While the June 2015 Supreme Court decision did not specifically address employee benefits it did redefine marriage and domestic partnerships among same-sex couples. As a result, employers will need to begin recognizing and providing benefits to homosexual and heterosexual employees in the same manner.

The LGBT Business and Families practice of Berkowitz Pollack Brant works individuals and same-sex domestic partnerships and married couples to navigate complex tax issues related to financial planning, tax compliance and planning and business ownership in a challenging and changing environment.

About the Author: Edward N. Cooper, CPA, is a director of Tax Services with Berkowitz Pollack Brant where he provides business and tax consulting services to real estate entities, multi-national companies, investment funds and high-net-worth individuals. He can be reached can be reached in the CPA firm’s Ft. Lauderdale office at (954) 712-7000 or via email at


Deadline Looms for Retirement Plans to Comply with Same-Sex Marriage by Edward N. Cooper, CPA

Posted on December 19, 2014 by Edward Cooper

Qualified retirement plans have until Dec. 31, 2014, to recognize the legal marriage of same-sex couples covered under those plans and comply with the Supreme Court’s decision to strike down section 3 of the Defense of Marriage Act.


According to the IRS, same-sex couples who are legally married under state or foreign law shall be treated as married for federal tax purposes, even when these couples reside in states that do not recognize same-sex marriages.


The advisors and accountants with Berkowitz Pollack Brant work closely with employers and retirement plan sponsors to comply with a range of tax and Employee Retirement Income Security Act (ERISA) regulations.


About the Author: Edward N. Cooper, CPA, is a director in Berkowitz Pollack Brant’s Tax Services and LGBT Businesses and Families practices. He can be reached in the CPA firm’s Miami office at (305) 379-7000 or via e-mail

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