Diane DeCesare

Call Me When… You need a trusted advisor to work with your team to maximize cash flow through reduction to tax and understanding of financial terms of the deal.

Among the safest and most tax-efficient ways to transfer assets is by using a trust. A properly drafted trust document is specifically designed to be both for the benefit of a third-party person or entity and protects the property that was transferred to the trust. But, do you know what exactly a trust is and how you can use a trust to benefit your loved ones, charities and even yourself? Today, we’ll provided a high-level overview of these incredibly useful vehicles. The Players Every trust has three key players. These players have different roles and responsibilities, and the breadth of what each do may differ slightly from state to state: Grantor – A grantor is the person or entity that establishes a trust and legally transfers control of assets to a trust. The grantor may also be referred to as the settlor, trustmaker, or trustor. In certain types of trusts, the grantor may also be the beneficiary, the trustee, or both. Beneficiary – A beneficiary of trust is the individual or group of individuals or entity for whom a trust was created. The grantor designates beneficiaries and a trustee. Trustee – A trustee is a person or entity that controls and administers property or assets for the benefit of a beneficiary. Trustees have a fiduciary responsibility in accordance with state law to the trust beneficiaries. What is a Trust? Under most state laws, a trust is established when the grantor contributes money or property into a trust and the trust becomes the owner of the property. A legal document must be created to give the trustee direction on how to manage the trust’s assets based on the terms in the trust for the benefit of beneficiary. Trusts can either be revocable or irrevocable. If selecting a revocable trust, the grantor has the right to change the terms of the trust anytime. In contrast, in an irrevocable trust the terms cannot be changed, as the grantor has relinquished control of the trust assets. A revocable trust becomes irrevocable upon the grantor’s death. Trusts could benefit you and the ones you care about. Below are the few more common ways they are used Estate Planning Certain assets which you own may have to go through the state probate process to ensure the property is distributed in accordance with the terms in your will. A trust, under certain circumstances, could avoid the probate process at your death. This could save time and costs and also reduce asset disposition concerns for your loved ones. Grantors may also consider create irrevocable trusts for estate planning purposes. Unlike a will, an irrevocable trust could remove assets out from your estate avoiding estate tax on the assets at your death. Contributions to a trust are considered a gift and subject to gift tax but not to estate tax. In 2022, the gift tax annual exclusion amount is $16,000 by an individual and $32,000 for married filing jointly taxpayers. The lifetime gift tax exemption for 2022 is $12,060,000. Therefore, you could use the annual exclusion and lifetime gift tax exemption to your advantage to create tax benefits. Set Up Specific Parameters on How Your Assets Will Be Passed On If you are worried about your beneficiaries not using assets according to your wishes, a trust could include specific parameters and guides for the trustees. The trust could include conditions such as age, purpose, or achievements that the beneficiary needs to satisfy before receiving distributions. For example, you can have it stated in the trust terms that you would like your beneficiary to receive distributions under certain conditions, such as an educational milestone or attaining age 30. As the grantor, the terms are up to you. Charitable Purposes The most common type of charitable trust is a Charitable Remainder Trust. A trust would be created to transfer assets which you want to donate to an IRS-recognized charity that has tax-exempt status. The charity will act as the trustee and manage the property you distributed to the trust to generate income for you for the period you specified in the trust term. At the end of this period, the assets in the trust will be transferred to the charity. Help Your Loved Ones During Disability or Illness Life is unpredictable. Creating a trust in advance to account for some of the possibilities could protect you and your loved ones if you become sick or incapable of managing your assets. Should that happen, the trustee could help you with different things, such as paying bills or providing financial support to those who depend on you. These conditions could be set up ahead of time to help trustee provide for the beneficiary’s needs. Trusts can be complicated and complex and require an attorney to draw up your wishes in the terms. However, they can serve many purposes. If you want to learn more about trusts or how you could utilize trusts for wealth planning or to benefits the people you care about. 

We have all been there. We start a new job, whether it is a career starter or after-school gig, and we are excited. Then, HR brings us all these documents to sign, and one is Form W-4. The assumption is that we know how to complete it.  But do we really? In this blog post, part of our Generation Z series, we will break down the mysteries of Form W-4 and what its information really means. What is a W-4? Employee’s Withholding Allowance Certificate, 

The Consolidated Appropriations Act of 2021 created new, but temporary, deduction limits for meal expenses for the 2021 and 2022 tax years. Meals are treated as costs of furthering business development, which, of course, changes the economics of the expense. Let’s take a closer look…   The new rules permit a 100% deduction for meals provided by restaurants. The IRS defines restaurants as, “businesses that prepare and sell food or beverages to retail customers for immediate on or off premises consumption.” The new rules continue the already-established meal deduction of 50% for all other non-restaurant meals, which include pre-packaged food that, in most cases, comes from grocery stores.   The previous regulations regarding meal expenses were created by the Tax Cuts and Jobs Act of 2017 (TCJA). Under the TCJA, all meal deductions were limited to 50%, whether from a restaurant or grocery store. The provisions of the TCJA made it less advantageous to use meals as a vehicle for business development.   The new deduction limits have no effect on the current entertainment expense rules. In the past (before TCJA), meals and entertainment were linked together and each deductible, albeit limited to 50%; however, under the TCJA, deductions for entertainment are not deductible, and that treatment remains unchanged for 2021 and 2022.   Now that we’ve explained the new deduction limits, it is necessary to understand how to take advantage of these changes. First, it is important to separate food and beverage expenses from entertainment expenses in your accounting records. If they are grouped together, the expenses will be non-deductible, because entertainment expenses are not deductible, without exception. To maximize the potential deduction for meal expenses, record keeping of meals should be categorized between meals that fall under the 100% deduction (provided by a restaurant) and meals that are 50% deductible.   See below for the deduction limits:  Tax As A Business Strategy®. Contact your accountant or tax advisor if you have any questions or need assistance regarding the new meal deduction rules.

Shockingly, many of the eldest of those who fall into Generation Z are ready to start planning for marriage and building families. In today’s post we will discuss how marriage impacts tax filings status and tax liabilities for newlyweds.   Once you are married, you are no longer single. This seems like an obvious statement; however, you would be surprised how often we are asked if someone can file “single for one more year.” The correct answer is, “no,” unless you are married and divorced in the same year. The reason for this is, filing status is determined as of the last day of the year. Thus, if you are married on January 2nd or December 30th, you will be considered married for the entire year for tax purposes.   Generally newly married couples have two choices for your filing status: 1) Married Filing Jointly (MFJ); and 2) Married Filing Separately (MFS).   Better Together Often, spouses will choose the filing status that results in the lowest combined tax.  This is almost always the MFJ status. This is due to the “averaging” effect of combining two incomes, which could bring some income out of a potentially higher tax bracket if the couples filed MFS. If one spouse has $75,000 of taxable income and the other has $15,000, filing jointly instead of separately for 2022 can save $2,192 in taxes. In addition, the items below are not available, reduced, or subject to additional limitations for individuals that file as MFS: Child and Dependent Care Credit; Earned Income Credit; Adoption Expense Credit; American Opportunity Tax Credit; Lifetime Learning Credit; Credit for the Elderly or the Disabled (unless you and your spouse lived apart for the entire year); Qualified Education Loan Interest Deduction IRA Contributions (if either you or your spouse was covered by an employer retirement plan); Exclusion for Adoption Assistance Payments; and Exclusion of interest income from series EE or Series I savings bonds you used for higher education expenses. Unfortunately, sometimes couples may have a higher effective tax rate while filing MFJ. This is widely known as the “marriage penalty,” which exists when the combined incomes and the number of children involved lead to a married couple paying more income tax as married than they would pay as two separate singles.   Separate, But Not Equal In addition to possibly forgoing the items above, if you decide to file MFS, you will not go back to using the single rates that applied before you were married.  Instead, each spouse must use the MFS rates. These rates are based on brackets that are exactly half of the MFJ brackets, which almost always end up being less favorable than the “single” rates.   On rare occasions, the MFS status can yield tax savings for a couple. These situations usually occur when one spouse has significant amounts of medical expenses, and the other spouse has significant income. Since deductible medical expenses are reduced by a percentage of adjusted gross income (AGI), if the deductions are isolated on the separate return of a spouse, that spouse’s lower (separate) AGI can cause a larger portion of the deductions to be allowed.   Filing separately can make sense economically even if it creates a higher tax burden when couples are managing student loan debt repayments because one or both spouses expect to have loan forgiveness under special programs for working in public service. Some complex calculations are required to determine if this is advantageous, so we highly recommend you consult a tax or financial planning advisor to assist you with these calculations.   Lastly, there can be other reasons to not file jointly, such as complying with pre-nuptial agreement provisions, privacy concerns (e.g., if one spouse has political ambitions that could require the release of their tax returns publicly) or concern about the joint and several liability that comes from filing MFJ.   Joint & Several Liability While filing MFJ often results in paying less total tax, it also makes each spouse jointly and severally liable for the tax on combined income, including any additional assessed tax, interest, and most penalties. This means that the IRS can come after either spouse to collect the full amount. Although provisions in the law offer relief from joint and several liabilities, each provision has its limitations. Even if a joint return results in less tax, you may file a separate return if you want to be certain of being responsible only for your own tax.   Domestic Partners & Civil Unions Domestic and civil union partners cannot file returns as married (MFJ or MFS). For federal tax purposes, you would be considered single. A domestic or civil union partner can file as head of household if they meet the requirements for that filing status. However, maintaining a home for the other partner, or for a child of the partner who is not the taxpayer’s biological or adopted child, does not entitle a taxpayer to file as head of household. Your state tax filing status(es) may vary from your federal filing status in the case of domestic partnership or civil unions. Advisors from our this marriage tax calculator available to help you quantify the tax impact of various filing statuses.

The question has been popped; and the answer is “yes.”  Now, you have a wedding to plan.  Both of you immediately think of things like a dress, a reception hall, guest lists, honeymoon locations, etc. Rarely are pre-marital asset protection measures part of the equation while planning a wedding. However, they may be an important part of your new life together. In today’s blog, part of our Gen Z Series, we will touch on some important considerations regarding the various considerations of Prenuptial Agreements, in making the transition from being single to married as smooth as possible. Before getting to the details, it is highly advised to obtain legal counsel before agreeing to any terms as a prenuptial agreement is a legally binding contract. Who Needs a Prenup? Most people think that a Prenuptial Agreement only pertains to those of great wealth, but there are other factors. It is becoming more common for Gen Z to consider prenuptial agreements. The average age of marriage today is 30-years old. The average age in 2000 was 25-26, this delay has resulted in Gen Z acquiring more personal assets before their marriage. Pros & Cons The most important point to note is that a Prenuptial Agreement is a choice with significant and long-term consequences. So, when considering your prenup, always weigh options with a Pros & Cons list. Pros: Protects both parties from “losing” their pre-marital assets Business assets are better protected Clarifies financial rights Avoids arguments and confusion in the case of divorce Avoids property division subject to state law or the party with a strong bargaining position Cons: Takes away from the romanticism of wedding planning Not 100% foolproof if parties fail to disclose properly Sets a tone for the marriage to fail Understandably, Prenuptial Agreements are a sensitive subject. However, marriage is a lifelong commitment and having meaningful conversations about your future is crucial. A prenuptial agreement is a legal document, which will bind the couple for years. Accordingly, the parties must have candid discussions with each other as well as their legal and financial advisors. Your Drucker & Scaccetti advisor can work with your attorney as part of the team.

By: A.J. Fusco and Sam Shikiar, CFA   The price of nearly every consumer good is up, and the dollar is worth less than a few months ago. We are in a time of significant inflation. We feel the impact in everyday purchases, but should we be thinking about our investments and inflation’s impact on them? To help answer this question our friends A.J. Fusco and Sam Shikiar, CFA, of Shikiar Asset Management in New York City, offer guidance on working with investments through these tough economic times. Click

So much has changed since the pandemic, including many tax laws, but one thing that hasn’t changed is the Philadelphia City Wage Tax withholding requirements for non-residents. City Wage Tax is imposed on all the wages for Philadelphia residents (whether they work inside or outside of the city) and on non-residents when they work in Philadelphia. Since July 1, 2021, the Philadelphia resident rate is 3.8398% and the non-resident rate is 3.4481%. Click

The question has been popped; and the answer is “yes.”  Now, you have a wedding to plan.  Both of you immediately think of things like a dress, a reception hall, guest lists, honeymoon locations, etc. Rarely are pre-marital asset protection measures part of the equation while planning a wedding. However, they may be an important part of your new life together. In today’s blog, part of our Gen Z Series, we will touch on some important considerations regarding the various considerations of Prenuptial Agreements, in making the transition from being single to married as smooth as possible. Before getting to the details, it is highly advised to obtain legal counsel before agreeing to any terms as a prenuptial agreement is a legally binding contract. Click

A typical investment allocation for investors is to bonds and, more increasingly, alternative investments such as private equity and hedge fund investments. As effective as these allocations may be to your investment strategy, they have painful tax implications due to high-income tax rates on interest income and non-deductibility of investment fees. In a case such as this, a Private Placement Variable Annuity (PPVA) should be considered for these investors. Here’s how it works… Continue reading

It’s the start of a new year, and the perfect time to plan ahead for this year’s gifts. Annual gifts are not only a great way to benefit your children or grandchildren, but also an opportunity to teach them smart financial management. When we last wrote about this topic five years ago, we discussed teaching this to teenagers. Many of those teenagers are now young adults just starting their careers and may have access to retirement plans provided by their employers. This opens additional ways that annual gifts or cash gifts can be used to help them to maximize their retirement plan benefits early in their careers. Click

Filing taxes can be complicated and burdensome. There may come a time when what was once a plain vanilla tax return becomes too complex to file on your own or even for your current tax preparer. Sophisticated tax advisors can be crucial in assisting with complicated tax planning and compliance issues. Engaging a sophisticated tax advisor can save time, reduce stress, avoid errors, and uncover potential tax savings. Many situations can trigger a need to seek help, but today we will look at five (5) of the more common signs you may need to engage a more sophisticated tax advisor. Click

We’re off to the races as the 2022 tax season is officially underway. You may have received (or will soon receive) your 2021 tax documents, including W-2s and 1099s, and we tax advisors are gearing up to help you maximize your tax savings. Today, we list and discuss three (3) of the IRS’s top things to remember when filing your 2021 tax returns (plus two bonus tips). Let’s get at it! Click

We, in the tax profession, tend to use acronyms and terms that aren’t always well-known by the masses, and “Carried Interest” is one of those terms. The concept is simple enough; however, its application and incorporation into a strategic tax plan can be quite complex, especially with recent changes in the law. Today, we’ll provide an overview of Carried Interests to help you determine if and how to use it in your financial planning. Click

As we close the books for the 2021 year, there is no need to close the door on tax planning strategies for that year. The Federal Research and Development (R&D) Credit is available to reduce your tax liability for the years 2018 to 2021. New IRS guidance, and a few more requirements in some cases, may provide tax credit for your enterprise’s research and development activities. Click

Why are estimated tax payments required and who must pay them? When are they due? What are the penalties for late payments or if you underpay? What options do you have to pay to avoid penalties? These are the questions we are going to answer in today’s blog, as the fourth quarter estimated tax payment deadline is quickly approaching. If you have significant and/or complex non-W-2 income, you need to read this blog post. Click