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Daniel R. Cuddy, CPA, CFP®
Personal Financial Representative
Cuddy Financial Services
7 William Street
Auburn, NY 13021
Phone: 315-252-3600
Fax: 315-252-3625
Email: dcuddy@cuddyfinancial.com
There are several notable changes and considerations for 2022. Let's take a closer look.
The Ten-Year Rule also applies to trusts that receive IRA assets on behalf of beneficiaries. If a conduit trust is established to help protect assets, it still must forward all the IRA income to beneficiaries. This would potentially expose the inherited IRA assets to heirs’ creditors and any bankruptcy or divorce proceedings—defeating the purpose of an asset protection trust. In some circumstances, you may wish to have an attorney redraft any existing conduit trusts to allow the trust to retain the assets, rather than distribute income to beneficiaries. The downside is that these assets would then be subject to less favorable trust tax rates. If you have significant assets in retirement accounts that you are planning to pass on to non-spousal beneficiaries, it is a good idea to review your estate plan documents.
Passive activity income may be subject to the 3.8% Net Investment Income Tax and passive activity losses are generally deductible only against income from other passive activities.
In general, a taxpayer materially participates in an activity only if the participation is regular, continuous and substantial. You’re deemed to materially participate if you meet just one of seven tests. So, understand the rules and document your time and activities carefully. (Special rules apply to real estate.)
Some states impose a “convenience” rule that sources income to the employer’s office location if an employee is working remotely out of convenience and not out of necessity for the employer. Also, changing state residency is typically scrutinized by the original state, because it creates a loss in revenue. Careful consideration must be given to ending residency in one state while establishing residency in another state.
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Cuddy Financial Services and LTM Client Marketing are unrelated companies. This guide was created by LTM Client Marketing and was not written or created by the named financial professional and does not necessarily represent the views and opinions of Avantax Wealth Management® or its subsidiaries.
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