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BACK-TO-SCHOOL ESSENTIALS: TAX AND ESTATE PLANNING TIPS

By Bonie Montalvo

BACK-TO-SCHOOL ESSENTIALS: TAX AND ESTATE PLANNING TIPSSummer break is fast fading and another school year is upon us. Before sending your children back to school, review the following and how they may impact your family.

Sales Tax Holiday
The 2019 Florida Back-to-School Sales Tax Holiday begins Friday, August 2, 2019, and runs through Tuesday, August 6, 2019. During this period, everyone (do not need to have school-aged kids to qualify) will be able to save at least 6% on the purchase of qualifying items (6% state sales tax savings— might be able to save even more if county charges surtax). No tax will be collected on purchases of (1) clothing, footwear, and certain accessories selling for $60 or less per item; (2) certain school supplies selling for $15 or less per item, and; (3) Personal computers and certain computer-related accessories selling for $1,000 or less per item.

Summer Job
If your child had a job this summer, your child may have to file a tax return to report those summer job earnings to the Internal Revenue Service. Depending on the amount of your child’s income, you may be able to include your child’s income on your own tax return—thus avoiding having to file a separate return for your child. Your child’s income is broken down into two categories, earned income and unearned income. A child’s earned income includes, salaries, wages, tips, professional fees, and other amounts received as pay for work actually performed. If your child’s earned income is under $12,000 they will not have to file a return, however, if your child’s employer withheld taxes from your child’s pay, a return will be necessary in order to recover any refund for the amounts withheld. Unearned Income includes investment income, interest, dividends, capital gains, rents, royalties, and so on. If your child’s unearned income is over $1,050 they will have to file a return.

529 Plans
529 Plans can be used to pre-pay tuition and/or to establish educational investment accounts, in which the account’s earnings grow tax free — no tax is paid if the funds are used for qualified educational expenses. In 2017, President Trump’s Tax Cuts and Jobs Act expanded the definition of qualified educational expenses for 529 Plans. The new definition covers qualifying expenses for education in private, public, and religious schools from kindergarten through twelfth grade. Under prior rules, 529 plans could only be used to cover the post-
secondary school expenses for students in colleges and universities.

Health Care Surrogate Designation
Parents are a child’s natural guardians and unless parental rights have been terminated, parents are the ones authorized to make medical decisions on behalf of their child. Florida law allows parents to designate and individual who will act as the child’s health care surrogate to make medical decisions regarding their child’s health care in the event that the parents are unable to do so. For example, a couple is in a comma after a car accident, and while both spouses have appointed health care surrogates to make medical decisions on their behalf, they have not appointed a health care surrogate for their minor child. Under Florida law, if a minor’s parents are incapacitated, preference to make medical decisions on behalf of the child is first given to a minor’s stepparent, then to a grandparent, then to an adult brother or sister of the minor, and then an adult aunt or uncle of the minor. If you are not in

agreement with Florida statute, it is best to set up an advanced directive for your child, this will allow you to appoint a person who you trust to make the best medical decisions regarding your child’s care.

Guardian Designation
Parents will also want to designate guardians for the minor children in the event of their passing. Parents can make this designation in their last will and testament. Parents can designate a guardian to take care of their child’s wellbeing and another guardian to take care of the child’s finances. Parents can also make this designation during life via preneed guardianship, which designates a guardian in case of a parent’s incapacity rather than a parent’s death.

Pay attention to these matters before the school season starts again, taking a little time to do your homework now, will pay off greatly later. For more information, contact us—our experienced attorneys are ready to help.

This Article does not constitute legal advice and may not be relied upon as such. Each individual’s facts and circumstances are different. If you have any questions regarding your particular situation, please consult with legal counsel.

Bonie Montalvo practices in the areas of estate planning, business succession planning, tax planning, and not-for-profit law. Ms. Montalvo has her LL.M. in Taxation from the University of Florida and is fluent in Spanish.

Wood,  Buckle & Carmichael
Attorneys at the Law

239.552.4100
www.wbclawyers.com

2150 Goodlette Road North . Sixth Floor . Naples, Florida 34102

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