Adopting a child? Tax benefits can help defray the cost
The process of adopting a child is expensive. Although expenses are minimal for adoptions through the foster system, the cost of adopting a child through a private agency averages around $43,000 in the United States. Fortunately, there are tax benefits that can help offset some of the costs. This article details a tax credit for qualified adoption expense and an income exclusion for employer-provided adoption assistance. A sidebar explains the rules for adopting a child with special needs.
Section 179D —
Congress enhances tax deduction for energy-efficient buildings
The Inflation Reduction Act (IRA) significantly enhanced the Section 179D deduction for energy-efficient commercial building improvements placed in service after 2022. Among other things, the IRA nearly tripled the maximum deduction to $5 per square foot under certain circumstances and made it easier for improvements to qualify for the deduction. The IRA also expanded eligibility for the deduction to include real estate investment trusts (REITs) as well as designers of buildings owned by nonprofit organizations, religious organizations, tribal organizations, and nonprofit schools or universities. This article details the enhancement to Sec. 179D.
Holding a life insurance policy can provide peace of mind if a person has concerns about loved ones’ financial well-being after his or her death. Whether the person “holds” the policy or a trust holds the policy can result in different tax outcomes. In short, if one is left holding the policy at death, its proceeds will be included in his or her taxable estate and may be subject to estate taxes. This article examines the option of creating an irrevocable life insurance trust (ILIT) to hold the policy.
These brief tips detail why the current economic environment may be an ideal time for a Roth conversion; explain why higher interest rates may be beneficial to certain estate planning vehicles; and report on why a business should carefully respond to a sales tax nexus inquiry letter.