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10 Money Moves to Make before New Year’s

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By Claudia Buck

5. Taxes for same-sex couples: Same-sex couples should take note of several tax changes — and possible tax refunds. Last June, when the U.S. Supreme Court struck down part of the federal Defense of Marriage Act, it gave legally married same-sex couples certain tax benefits they’d previously been denied. The ruling also allows those couples to file an amended federal tax return — and possibly get a refund — for 2010, 2011 and 2012.

“If they’re legally married, they’ll want to be sure their employers have corrected their W-2s in 2013 to report correctly any benefits that have been paid for their spouse,” such as health care premiums, says CPA Terri Davis of Harper Davis Financial in Sacramento.

She says employees should check their pay stubs to be sure, for instance, that health care premiums for a same-sex spouse are being paid as “pre-tax” income, the same as heterosexual couples would receive.

Also, if a same-sex couple were legally married in tax years 2010-2012 but had to file their federal taxes separately, they could be entitled to an IRS refund. To see if you qualify, check with your tax preparer or sites like TurboTax.com. Davis says about 70 percent of her same-sex clients have applied for federal tax refunds, ranging between $1,000 and $2,500. “It’s definitely worth doing,” says Davis, noting that the first filing deadline — for a 2010 refund — is April 15 next year.

6. Get covered. If you’ve never had health care or couldn’t get affordable coverage in the past, now’s the time to sign up under the federal Affordable Care Act. Technically, consumers have until March 31 to enroll in the mandatory coverage, but the earlier the better.

7. Year-end gifting? In years past, many higher-income families gifted up to the maximum — $10,000 — to their adult children and grandchildren in an effort to keep their taxable income below the $1 million-per-person threshold that triggers the federal estate tax. But that’s no longer necessary, thanks to federal tax code changes that went into effect in 2013. Those changes raised the estate tax to 40 percent, but also raised the estate tax exemption to $5.25 million per person, meaning a married couple could leave $10.5 million in assets that wouldn’t be subject to federal estate taxes.

“Literally, 99 percent of Americans don’t need to worry about annual gifting anymore,” says estate planning attorney Mark Drobny. But while there may be no estate tax reasons to give those amounts, “there may be practical reasons in your family why you should be making a gift.” Many seniors have adult children in their 40s and 50s who were hit hard by the recession and still haven’t recovered. It could make a significant difference to receive a gift now, he noted.

8. Home for the holidays: If you’ve got college-age kids home for the holidays, be sure they’ve filled out an advance health care directive. “Too many parents don’t realize that Mom and Dad don’t have any right to medical information or to make health care decisions once a kid turns 18,” Drobny says. If there’s a medical emergency while a son or daughter is away at school, parents could legally get shut out of crucial information.

As a 19-year-old sophomore at the University of Arizona, Drobny’s son was severely injured in a car accident and whisked to a hospital. When Drobny called, the hospital’s first question was: How old is your son? Hospital officials wouldn’t divulge any information until he could submit proof that his son had signed an advance health care directive, giving his parents access to his medical records.

When clients bring in their college-age children to fill out the necessary documents, “We don’t charge for it; it’s that important,” Drobny says.

9. Check beneficiaries: If you’ve had a major lifestyle change — divorce, wedding, children — it’s a good time to check beneficiaries on your various accounts: IRAs, 401(k), life insurance, annuities, etc. It’s not uncommon to forget about changing the beneficiary paperwork after getting married or divorced, Drobny noted. “If those accounts never get updated and someone dies, Mom and Dad get their benefits, not the spouse and kids. Or the ex gets the money,” says Drobny, who sees examples of those situations every year.

10. Take heart: With the new year just around the corner, take a moment to reflect. If you need a financial boost, think about a session with a nonprofit credit counselor. If you haven’t updated your estate plan or will/trust, see your attorney. Maybe you want to figure out your retirement finances by sitting down with a certified financial planner. Above all, find reasons to be grateful for things that go well beyond money: family, friends and health.

©2013 The Sacramento Bee (Sacramento, Calif.)
Distributed by MCT Information Services

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