February 2015 Planning Pointers

Here are a few helpful tax planning tips.

Taxpayers, Start Your Engines!

With the filing season for 2014 tax returns well upon us, we thought it prime time for a review of upcoming tax filing deadlines. During the spring, we most commonly encounter the following filings for our family group clients:

  • March 15
    • 2014 filings
      • S corporations filing on a calendar year basis
  • April 15
    • 2014 filings
      • Individual income tax returns
      • Trust income tax returns
      • Estate income tax returns - filing on a calendar year basis
      • Gift tax returns
      • Partnerships - filing on a calendar year basis
    • 2015 filings
      • First quarter estimated taxes due for individuals, trusts, and calendar year estates
  • May 15
    • 2014 filings
      • Private foundations - filing on a calendar year basis
    • 2015 filings
      • First quarter estimated taxes due for private foundations
  • June 15

    • Second quarter estimated taxes due for individuals, trusts, and calendar year estates

Be advised that estates have the option in their initial year to elect a fiscal year filing period rather than a calendar year. Qualified Revocable Trusts and a related Estate making a timely election under IRC Section 645 may file a combined income tax return for a limited duration. There are a number of benefits – including filing on a fiscal year basis – that result from a Section 645 election.

Fifty Nifty United States: State Income Taxation of Trusts

Trusts are a popular and powerful estate planning tool. Trusts may save estate tax as well as avoid probate and offer creditor protection of assets. There are also significant income tax consequences of establishing trusts – not only federal but also state tax implications. The District of Columbia and most of the U.S. states have an income tax regime applicable to trusts. Unfortunately, the basis for taxing trusts is not the same under all state laws. As a result, trustees and their advisors are often challenged in determining where trusts must file and pay state taxes. Failure to file in the proper state(s) may result in tax penalties. For existing trusts, there may be opportunities to minimize state income tax depending upon the relevant states and parties. For trusts that are in the planning stage, it’s critical that the income tax effects be considered in advance.

For a more detailed discussion of this topic, please see the complete article.

For questions about these planning topics or other matters, please contact Jean McDevitt, tax principal and private client services lead, at 1.800.244.7444.

Disclaimer of Liability: This publication is intended to provide general information to our clients and friends. It does not constitute accounting, tax, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.