Naming a Beneficiary to Your Retirement Plan

Nonspouse beneficiaries have new options

If you are the beneficiary of a decedent's qualified retirement plan, and you are not the spouse of the decedent, you now have additional options for distributions. In the past, only a spouse beneficiary was permitted to roll the account into an IRA. Now, beginning in 2007, if you are the beneficiary, you may roll the distribution into an IRA that has been established to receive the qualified plan.

Under this new option, you will be subject to the rules for distributions that apply to inherited IRAs, as opposed to the more strict rules that apply to distributions from qualified plans. Many qualified plans require beneficiaries to take the entire amount from the plan within five years of the date of death. The rules that apply to inherited IRAs allow the beneficiary to take distributions over his or her life expectancy, thus spreading the tax liability over several more years. If the decedent was over age 70'/2, the distribution rules are a bit different. Here you have the option of taking the distributions from the inherited IRA over your life expectancy, or the remaining life expectancy of the owner, assuming he or she was still living.
 

Tax Tips Small Business

Deducting the Business Use of Your Home

Don't overlook your home office

If you use a portion of your home for business, you may be able to take a home office deduction whether you are self-employed or an employee. Expenses that you may be able to deduct for business use of the home may include the business portion of real estate taxes, mortgage interest, rent, utilities, insurance, depreciation, painting, and repairs. Read more...

Small Business Quick Tip

If your business owns a vehicle that is available for an employee's personal and business use, the vehicle is nevertheless considered used 100 percent for business on the business tax return. The personal-use percentage is included on the employee's W-2 as an additional compensation.
Saturday, 19th May 2012
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Tax Tips Personal

Summer Day Care

What expenses qualify for the childcare credit?

Parents who have children under the age of 13 are allowed a tax credit for childcare expenses paid so they can work. In the summer, many parents send their children to a structured day camp or an overnight camp for a week or two at a time. In most cases, the cost of sending your child to a camp of this nature does not qualify as a childcare expense, even if one of the reasons for sending the child is for care.

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Personal Quick Tip

In 2010, premiums that are paid or accrued for "qualified mortgage insurance" in connection with home acquisition debt on your residence are deductible as home mortgage interest.