Florida Estate Planning and Probate Law Blog focused on recent case law and planning ideas.

IRS REGULATIONS PROTECT LARGE GIFTS TODAY EVEN IF GIFT TAX EXEMPTION DECREASES LATER

On November 20, 2018, the IRS announced that individuals taking advantage of the 2018 through 2025 increased gift and estate tax exclusion amounts will not be adversely impacted if, after 2025, the exclusion amount reverts to pre-2018 levels. The Treasury Department and the IRS issued proposed regulations which implement this announcement so that individuals planning to make large gifts between 2018 and 2025 can do so without concern. To learn more please contact me directly.

THE CLOCK IS TICKING TO FINALIZE YOUR DIVORCE BEFORE JAN. 1, 2019

The Tax Cuts and Jobs Act of 2017 (the “Act”) that went into effect on January 1, 2018, made important changes to existing tax laws. In the family law area, the Act eliminated the ability to deduct alimony payments made pursuant to divorces that are finalized after December 31, 2018. Under current tax law, alimony is tax deductible by the payor and taxable to the payee. This means that if you are the person paying alimony, then you get a deduction for the amount you paid. However, for divorces finalized on or after January 1, 2019, all alimony payments will be tax-neutral (non-deductible by the payor and no longer income to the recipient). The new tax law only impacts alimony payments that are required under divorce or separation instruments that are: (1) executed after December 31, 2018 or (2) modified after that date if the modification specifically states that the TCJA tax treatment of alimony payments (not deductible by the payer and not taxable income for the recipient) now applies. The reclassification of alimony payments is expected to make settlements more difficult as the higher-earning spouse will have more income taxes to pay and fewer funds with which to settle the case.

INTERNAL REVENUE SERVICE DOLLAR LIMITATIONS FOR RETIREMENT PLANS AND OTHER BENEFITS FOR 2019

The Internal Revenue Service dollar limitations for retirement plans and other benefits for 2019. 401(k)/403(b) Contributions $19,000 457(b) Limit $19,000 Catch-up Contributions $6,000 SIMPLE Contributions $13,000 SIMPLE Catch-up Contributions $3,000 Compensation Limit $280,000 Highly Compensated Employees $125,000 Key Employee Officer Compensation $180,000 Maximum Annual Benefit Defined Benefit Plan $225,000 Maximum Annual Contribution Defined Contribution Plan $56,000 ESOP Limits Dollar limit for determining lengthening of 5-year period $225,000 Dollar amount for determining max. amount subject to 5-year distribution $1,130,000 FICA Wage Base $132,900