Why You Might Actually Owe Taxes in 2018

Was the 2018 tax year what you expected?

Like many taxpayers, if you’ve already filed your federal income taxes for 2018, you may be surprised to discover you’re not getting a refund this time.  If so, this was almost certainly due to the sweeping tax overhaul made by the 2017 Tax Cut and Jobs Act (TCJA).

Since personal tax rates were lowered by the TCJA, it’s natural to assume you would owe less taxes, not more. But as you may have discovered, this isn’t always the case.

Seeing that the TCJA was promised to offer most people a tax break, understanding why you might owe more taxes in 2018 (rather than less) can be confusing.  It is more complex than a blog post can really dive into, but the following questions and answers are designed to shed some light on this situation, so you can start revising your tax strategies for the coming years.

Q: What changed?

A: In addition to lowering personal income tax rates, the TCJA doubled the standard exemption to $12,000, added limits to deductions for state and local taxes (SALT), eliminated personal exemptions, set limits on deductions for home-mortgage interest, among many other changes.

Given all of the changes, you may find that you’re no longer withholding the proper amount of taxes from your paycheck and/or quarterly installments to the IRS. When filing, this can result in either overpaying your taxes (and getting a refund) or underpaying (and owing money).

Q: What does this mean for me?

A: In light of these new changes, you should carefully review your withholding and make adjustments if necessary. To help with this, the IRS published new withholding tables and updated its withholding calculator into which you can input your current tax data to see if you need to make any changes.

Q: How do I change my withholding?

A: If you work as an employee, you change your withholding by making adjustments to your W-4. If you work for yourself, you either increase or decrease your estimated quarterly payments.

A W-4 determines how much income tax is withheld from your pay by your employer. You fill out a W-4 when you start a new job, but you can change it at any time. Specifically, the form asks you for the number of allowances you want to claim based on personal factors, such as being married and/or having children and filing as head of household.

The more allowances you claim, the less federal income tax your employer will withhold, which translates to more money in your paycheck. The fewer allowances you claim, the more federal income tax your employer will withhold, lowering your take-home pay.

It’s important that you withhold the proper amount from your paycheck or make quarterly payments. Don’t withhold enough, and you’ll owe the IRS at the end of the year. Withhold too much, and you might get a big refund, but you’ve basically given the government an interest-free loan for that year.  Although for some folks, having the IRS save funds for them is the best alternative!

Q: What if I employ caregivers?

A: Many of our clients are at the point at which some amount of in-home or personal care is necessary.  Sometimes, that comes in the form of caregivers hired via an agency, or directly by the family.  Often, friends of the family or local neighbors, or church members offer their time to assist.  What you pay the caregiver might be tax deductible in some cases.

But, please note this very important fact.  If you pay that person for services, then you are also required by IRS rules to withhold taxes and submit that to the IRS on a quarterly basis.  The caregivers are actually “family employees” and should be treated correctly, from a wage and tax standpoint.  If you use an agency, they will take care of taxes.  If you hire them yourself, you will need to make the filings.

If you employ caregivers who are “independent contractors” then you must submit A “1099” form that specifies what you paid them.  Remember that the caregivers should be employees, not contractors.  But, if they ask you to pay on a 1099 basis, you still need to report and send them the right form.  They can use that form to self-report taxes.

Some people do not want the burden of wages and tax reporting.  Payment in cash “under the table” is common but presents a number of issues.  First of all, it is illegal according to the IRS and the NC Department of Revenue.  Secondly,  the employee caregiver will not receive workers compensation or insurance, and if s/he has an accident at your home, you may be liable personally for a large settlement.  Third, such cash payments cannot be hidden from Medicaid and if you need Medicaid in the future those cash payments may actually create a sanction penalty.  So, our advice is that you always pay caregivers W2 wages.

Maximize your tax savings

Adjusting your withholding is just one of many strategies you can use to save on your taxes.  As you might guess, the TCJA also changed tax laws that have the potential to affect your estate planning strategies as well. In light of this, when the 2018 tax season wraps up, we’ll be pairing up with one of our trusted local CPAs to bring you support and guidance that you can use to maximize your tax savings in 2019 and beyond. Contact us as your Personal Family Lawyer® to learn more.

Downsizing your aging loved ones

The Downsizing Generation: How to Handle a Surplus of Stuff When a Loved One Ages

The baby boomer generation is aging – and downsizing – which means that more and more adult children will be tasked with going through their loved one’s belongings to decide what to do with everything. As more and more people downsize after retirement, china sets, furniture, heirlooms, and other belongings are often left behind and unwanted.

Traditionally, these items have been passed down to the next generation. But today, the next generation has different needs, tastes, and wants. As a result, there is a surplus of “stuff” baby boomers don’t need or have room for, and their adult children don’t want. Maybe that includes you.

This is an all too common problem with a few helpful solutions.

The thought of tossing a lifetime of belongings in the trash is more than many can bear, which explains the advent of the senior move management industry. Today, there are a plethora of professionals who can help your loved one go through each item to decide what should be kept, what should be given away, and what should go to charity or donated.

The cost of this professional service is very reasonable for typical estates, but can be up to $5,000 for a large estate.  Regardless of the cost, it eases the burden on the adult children and ensures the loved one’s wishes are listened to and honored.

Too Many Donations?

Interestingly, as the baby boomer generation ages, charities and nonprofits that typically accept used furniture and other belongings are faced with the burden of too much stuff. The dated styles baby boomers preferred during their prime don’t fit the tastes and needs of today’s generation.

The current generation views belongings like furniture and dishes as functional and more disposable, better suited to their urban, fast-paced lives where minimalism and portability are more prized than sentimentality and tradition.

What is an heirloom?

Another way to decrease the time and effort it takes to dispose of all your belongings is to be very clear about what you consider to be heirlooms and valuable items by indicating in your will, or in a separate writing ancillary to your will, exactly what’s important to you and what isn’t.  In that way, your family can see, in the Will, what matters to you and they can handle things accordingly.

One of my clients has gone through several downsizes … each time losing items that were of sentimental value.  In the next version, she will end up in skilled nursing, with very little space.  To the extent possible she has been able to give away most of the items she cared about.  That softens the loss.  But, be aware that some aging elders will have significant grief associated with the loss of sentimental items.  Try to give things away that matter to your loved ones so you can enjoy their delight at receiving a treasured item.

Have the conversation!

Most importantly, talk to your children or other heirs to see what they want and don’t want. And to make sure they know what’s important to you, and what isn’t. The more you can communicate about this now with your loved ones, the better.

You may be surprised to discover that many family fights that break up families aren’t over money at all, but over mom and dad’s personal property … the fight arises because there were no clear instructions.

Plan ahead

As more baby boomers age and non-profits turn away dated donations,  the need for thoughtful estate planning is greater than ever. A comprehensive estate plan can ensure your belongings either go to those who will cherish them or to charities that will benefit from them.

Contact us!

If you need assistance with finding the right resource, or just a way to facilitate a conversation about possessions, we are here to help.

Call us at 919-883-2800, or schedule a meeting.

Digital Assets – explained and protected!

What is a “digital asset”?  And, why does it matter to you?

Digital assets are non-tangible things you own (assets) that tend to live on or in the Internet “digital”.  Tangible assets like cars, hours, or money can be transferred by deed or title.  Digital assets are much hard to transfer or for some even to conceptualize.

Three Different types of Digital Assets

I like to think about three types of digital assets.

One is passwords, or secrets, that you use to access your digital assets, and are digital assets themselves.

The second is social media, including Facebook, Twitter, and other sites.  This also may include your email or website.  This type of asset contains information that is specific to you (pictures, email conversations, and so on) that are your “assets”.

The third type is a new idea … that is digital currency, also known as “cryptocurrency“.

Passwords and other secrets

For example, think about your bank account.  If you use on-line access, the password and the “access” to the account could be considered a Digital Asset.  When you actually remember the password, access is easy.  If you forget it, it is harder, but recovery can be easy if you recall the answers to secret questions.   But, you might forget those too, making recovery much harder.  A solution is to use a password manager or to simply write it down.  What is the “best” appraoch?   I can assist you in thinking through what makes sense for you.

Here is a video that goes into a little more depth

Social Media

Another type of digital asset is your social media accounts.  If you have an email account, or Facebook or Twitter, and you have ever posted or emailed anything .. those are your digital assets.  When you die, you’d probably like them to be turned off, deleted, or sent to your heirs, right?  Well, a “digital executor” can be named to do this.  Recent changes in North Carolina law to adopt the Uniform Power of Attorney act (which is a body of law that hopes to commonize laws across the 50 states) includes Digital Executor provisions.

Our office can assist you in getting this set up for you, by adding the appropriate provisions to your will and/or financial Power of Attorney documents.  Visit the office today!

Here is a short video that goes deeper into social media accounts.


The third type of digital asset is more like the traditional assets we leave to heirs.  But, it is fundamentally different in complex and intriguing ways.

One of the key differences is that it is by nature very secret and very protected.

You can see the bank, or you receive bank statements, and accounts show up ion your credit report.  That means that your executor or agents can figure out what you own.  But secret accounts just do not show up anywhere!  And, the asset itself might reside as a token on a hardware “wallet” that looks like a little flash drive…   Some families have been known to throw away the “flash drive” not realizing that it contained thousands of dollars of real digital currency!  Here is a short video that highlights a few areas of interest in crypto currencies.

Don’t let this be you!

Call our office at 919-883-2800 to schedule a meeting to discuss your crypto-currency and learn how to protect it while also making it available to your heirs.

Why does this matter in Estate Planning?

You need to know that your assets transfer to the people you want, in the way you want, and in the amounts and duration that you want.  While traditional wills and trusts do this just fine for traditional assets, digital assets make this harder and more complex.

Standard approaches just don’t work.

Call us today for help and to get the
digital assets in your life squared away!



Kids Protection Planning

Kids Protection Planning should be part of every estate plan!

Protect the Kids!

Do you worry about what might happen to your kids if you and your spouse were killed in a terrible accident today?

I know we did!  When we were raising three young kids, my wife and I had a lawyer make up a will that gave our best friends the right to raise the kids.  We thought that was good enough.  Fortunately, we never found out that probably would not have worked.

There were several issues with that approach … using a will is too late, mostly.  Buy the time anyone actually gets around to looking at a will, the kids might have spent a month in foster care, been assigned a guardian, had property “managed” by the state, and been handed off between several organizations.  They might not even be together by that point!  And, we’d have no say about which sibling “should have” the right to raise them, or which family, part of the country, or even religion they would be exposed to.


So, now that I’m an estate planning attorney, I want things different for you.

Get started today

If you want to start by naming guardians for the kids, go to my web page and get started.

When you are ready or even if you just have questions, give me a call and we will finish up the six or eight separate documents and letters you will want to have to Protect Your Kids!

Schedule a no-cost phone call

Or, plan a consultation.

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