Request a Transcript or Copy of a Prior Year Tax Return

Request a Transcript or Copy of a Prior Year Tax Return: from the IRS

You may need copies of your filed tax returns for many reasons. For example, they can help you prepare future tax returns. You’ll need them if you have to amend a prior year tax return. You often need them when you apply for a loan to buy a home or to start a business. You may need them if you apply for student aid. If you can’t find your copies, the IRS can give you a transcript of the information you need, or a copy of your tax return. Here’s how to get your federal tax return information from the IRS:

• Transcripts are free and you can get them for the current year and the past three years. In most cases, a transcript includes the tax information you need.

• A tax return transcript shows most line items from the tax return that you filed. It also includes items from any accompanying forms and schedules that you filed. It doesn’t reflect any changes you or the IRS made after you filed your original return.

• A tax account transcript includes your marital status, the type of return you filed, your adjusted gross income and taxable income. It does include any changes that you or the IRS made to your tax return after you filed it.

• You can get your free transcripts immediately online. You can also get them by phone, by mail or by fax within five to 10 days from the time IRS receives your request.

- To view and print your transcripts online, go to IRS.gov and use the Get Transcript tool. - To order by phone, call 800-908-9946 and follow the prompts. You can also request your transcript using your smartphone with the IRS2Go mobile phone app. - To request an individual tax return transcript by mail or fax, complete Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript. Businesses and individuals who need a tax account transcript should use Form 4506-T, Request for Transcript of Tax Return.

• If you need a copy of your filed and processed tax return, it will cost $50 for each tax year. You should complete Form 4506, Request for Copy of Tax Return, to make the request. Mail it to the IRS address listed on the form for your area. Copies are generally available for the current year and past six years. You should allow 75 days for delivery

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Trust inheritance provisions to protect your children’s inheritance from in-laws and divorce

Just because California is a community property State does not mean that an inheritance here is community property.

For a married Californian, property received by gift or inheritance is separate property, not community property.

For many parents, that fact alone is enough protection.

Perhaps most parents have confidence that their children will do the “right thing” with the inheritance, be that keep it separate or commingle it.

But many parents fear that any number of “bad results” will follow from their son-in-law or daughter-in-law’s influence over the inheritance. Some fear the inheritance may be lost in a divorce. Others fear that the in-law’s children from a prior marriage may wind up with the inheritance. Many simply want to protect their child from a divorce or from a manipulative in-law. Such parents wonder what can be done to protect their child’s inheritance.

Here are two planning options to help preserve the separate property character of your child’s inheritance:

  1. Your trust could state your wishes that, before your child receive his or her inheritance, your consult privately with an attorney as to how to preserve the separate property character of the inheritance. In other words, you want your child to get an education about this before the trustee gives the inheritance.
  2. Some parents believe that simply asking their child to get such an education before the inheritance is received will not work.  Perhaps the child cannot withstand the ongoing pressure or manipulations of the spouse. Perhaps the child is incapable of following directions. Perhaps it would inevitable that the child would commingle the separate property with community property so as to make the inheritance “50-50″ community property. Perhaps, to the parents’ dismay,  the child simply wants to make it “50-50.” For these parents, the options to explore involve leaving the child’s inheritance in trust. While there are countless types of such trusts, what they all have in common is that the inheritance in trust remains separate property and is bound by the terms written by the parents for their child. For example, such a trust would spell out:
  • Appointment of the trustee and the successor trustees
  • Guidelines for trust investments
  • When trust income and trust principal can be used for the child (or the college education or other needs of the child’s children)
  • When the trust ends and who inherits the trust when it ends
  • Who inherits if the child dies during the trust
  • Tax planning for the trust, including estate tax, income tax, property tax, and generation skipping transfer tax planning

The point is that, in California,  there are many options available (from simple to more complicated) to protect your wishes as to how to preserve the separate property character of your beneficiary’s inheritance.

copyright James J. Phillips 2014

 

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Trust inheritance provision to help your beneficiaries buy a home

Your living trust can provide that, after your death, wealth remains in trust for your child (or other intended beneficiary) to help with designated purposes.

Well known examples of such purposes are health and education. But another purpose is help with buying a house.

For example, your trust could provide that, after your death, the trustee may help your  beneficiary buy a house, with such assistance not to exceed a certain percentage of the purchase price (such as 20% or 30%). In other words, the trust could provide the down payment  for the house.

Under this trust concept for assistance in buying a house, elements to consider include your wishes as to:

  1. Is this assistance solely for a principal residence?
  2. For a married beneficiary, do you want the assistance to acquire a separate property interest?
  3. What are the minimum age and minimum educational requirements to be eligible for this assistance?
  4. Must the beneficiary qualify for whatever mortgage is necessary in order to buy the house?
  5. Who will be trustee (and alternate trustees) of the trust? (See prior post on that subject.)
  6. Is this concept consistent with how you would like the inheritance to improve your beneficiary’s life?

copyright James J. Phillips 2014

 

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Create an “Inheritance Plan” for how to improve your life with your inheritance

Over the years, I’ve seen lots of people regret what they did with their inheritance.

Regrets over how their inheritance was spent or how it was invested or how it was taxed. Regrets over who later will inherit it. And regrets about what happened to their inheritance in a divorce.

Often, people tend to do something that they “wanted to do” without first  identifying all of their  “wants” or without prioritizing all of their “wants.”

So my advice to clients is to create an “inheritance plan” of how to improve your life with your  inheritance, following these three steps:

Step 1: IDENTIFY ALL OF YOUR WANTS: Without being critical or judgmental of yourself, write down all the things that you want do that involves money. Dream.

  1. Think of your present and your future.
  2. Include what wealth you want to leave on your death for others. 
  3. Identify any health, family, or financial necessities (as opposed to wants or desires).
  4. Try to fill up at least one page. For example, consider:
  • Your health wants or needs
  • Paying off debt
  • Your education
  • Your career
  • Your home
  • Helping your children (or grandchildren or others) with college
  • Helping your children buy a home
  • Increasing your income now
  • Increasing your income upon retirement
  • Reducing your income tax liabilities (or your estate tax liabilities)
  • Financial security throughout the rest of your life, including your wants for home health care or independent living
  • Travel
  • Cars and “toys”
  • If you are married, keeping your inheritance your separate property or sharing it with your spouse
  • Charity
  • Etc.

Step 2: RANK (PRIORITIZE) YOUR WANTS. Now be serious. Based on your values and your goals, rank the above wants from least important to most important. It’s a good idea to repeat this process until you find that your ranking of your wishes has not changed. When you are confident that your priorities are well informed and won’t change, then go to step 3.

Step 3: INVEST (OR SPEND) YOUR INHERITANCE ACCORDING TO YOUR PRIORTIES.  Don’t be swayed by the first “want” that hits you or by pressure from others. Be intentional. Be thoughtful. Understand any potential investment (and the tax implications) before you make the investment.  Ask your legal, tax, and investment advisors for their objective input.

Spend or use your inheritance according to your most important, most valued, most long lasting “wants.” Doing this, I believe, gives you the best opportunity (a) to improve your life with the inheritance and (b) to avoid regret.

As part of your estate plan, update your estate planning documents to reflect your wishes as to (a) how these investments are to be handled if you become ill and (b) who inherits these investments on your death.

Copyright James J. Phillips 2014

 

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Family tree: due process implications in trust, estate, and conservatorship cases

Due process and California law requires that your closest blood relatives* be notified by the person in charge of your estate if you died or became incompetent in each of these California contexts:

1.      If probate is required because you died without a will, your administrator must notify your heirs*, as your heirs are those who would inherit. In some case where your spouse died before you and you had no children or descendants who survive you, this can include your spouse’s children (i.e., your stepchildren) or your spouse’s relatives.

2.     Your heirs must also be notified if there is a probate of your will, even if your will does not leave your estate to your heirs and even if your executor is not an heir. In some case where your spouse died before you and you had no children or descendants who survive you, this can also include your spouse’s children (i.e., your stepchildren) or your spouse’s relatives.

3.     And  your heirs even have to notified by the trustee of your living trust, even if your living trust leaves nothing to your heirs.

4.     If a conservatorship of your person or estate is required due to your incompetency, your heirs must be notified (even if you would not want them notified).

But what if  no one knows the name or location of your children or your siblings or your niece and nephews or your cousins or your closest blood relatives? What if you kept as secret a child born outside of wedlock? What if you were estranged from some of your closest relatives?  What if your administrator or executor or trustee or conservator cannot identify your heirs?

This can lead to the costly searches and delay, stress, and uncertainty.

This can be very problematic in cases where the person who is incompetent or died:

  • Was estranged from the family.

  • Kept as a secret the existence of a child born out of wedlock.

  • Had no spouse and no offspring, but had step children or in-laws from a deceased spouse.

  • Had as closest relatives persons whose existence was unknown by others.

California law expects the person in charge of your estate to attempt to identify and locate your heirs with:(1) Inquiry of the relatives, friends, acquaintances, and employers; (2) Review of appropriate city telephone directories and directory assistance; and (3)Search of the real and personal property indexes in the recorder’s and assessor’s offices for the county where the person was last known or believed to reside. (See California Rule of Court 7.52; Probate Code Sections 1206, 1821,  6402, and 16061.7.)

Just imagine how difficult this would be if you keep the identity and location of your relatives a secret.

For these reasons, consider placing the names and last known address of your heirs* with your original will and trust and other estate planning documents in your safe deposit box. And consider giving a copy to your estate planning attorney.

*Your heirs are often your closest blood relatives, such as your spouse or registered domestic partner and:

            A.        Your children and the offspring of any deceased children.

            B.        If none, your parents.

            C.        If none, the descendants of your parents.

            D.        If none, your grandparents or, if none, the descendants of your grandparents.

            E.         If none, the descendants of your  predeceased spouse may be included.

            F.         If none,  your next of kin.

Copyright James J. Phillips 2014

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Planning to avoid an increase in California real property taxes

For most California estate plans, federal estate tax can be avoided, as can probate. Of increasing concern is how to avoid an increase in California real property tax.

For the California residence, it can pass from parent to child (or child to parent) without an increase in property tax. But, without proper planning, property taxes may increase if one sibling buys out another sibling at death in order for one child to inherit the house with the other child receiving assets of equal value. Proper planning is required to avoid the problem of the County treating a transfer after death as being between siblings and not from parent to child.

In addition, a parent can transfer up to $1,000,000 of assessed value (not fair market value) to the children (or a child can do the same to the parents). Assessed value is the value described on the property tax bill, not to be confused with fair market value.

This $1M exclusion is for transfers both during life and at death. Excluding the residence, once a parent transfers (combined in life and in inheritance after death) more than $1,000,000, then all transfers to children will be reassessed to fair market value, with property taxes based on those (usually higher) fair market values.

So it is important to review the assessed values of the real estate in an estate plan in deciding upon which children will receive the benefit of the $1,000,000 assessed value exclusion and which children will receive the residence and which children will be stuck with an increased property tax bill upon inheritance. (Similar rules apply from child to parent.)

Special rules apply for the transfers to a person’s deceased child’s children and to son-in-laws and daughter-in-laws.

Otherwise, real property taxes will be reassessed upon an inheritance to a person who is not the spouse, not the registered domestic partner, not the parent, not the child, and (with certain rules beyond this post) not a child of a person’s deceased child.

For example, real property taxes will be reassessed on a gift or inheritance to siblings, cousins, and friends. Over time, increases in such property taxes can amount to significant dollars.

Hence, real property tax planning is an important part of an estate plan.

copyright James J. Phillips 2014

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Excellent Article on Medi-Cal Planning

http://www.canhr.org/factsheets/medi-cal_fs/html/fs_medcal_overview.htm

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California Advanced Health Care Directives

All California competent adults should consider signing a California Advanced Health Care Directive.

In the aftermath of the Terri Schiavo case in Florida, most people recognize how important this estate planning document is to protect yourself and your family.

In this document, you empower someone to make medical decisions for you if you become unable to give informed consent to your medical decisions.  You name your first choice and your alternate choices.

Included in this document can be your wishes on such matters as:

  1. Whether and when you want so-called “heroic measures” used to prolong your life if you were in a terminal condition;
  2. Whether you want your health care agent’s authority to start now or only when you are unable to make health care decisions for yourself;
  3. Whether you wish to be an organ donor and, if so, for what purposes you want the donations;
  4. Whether and when nutrition and hydration may be withheld if you were in an irreversible coma;
  5. Whether you prefer home health care versus nursing home care, as long as home health care were appropriate;
  6. Whether you prefer to be told the truth or whether you prefer not to be told the details of your condition, especially if the news is bad;
  7. Whether you prefer to be buried or cremated or whether you prefer for your health care agent to decide;
  8. Whether your religious beliefs are to be considered;
  9. Who is to be in charge of your funeral or memorial service.

Copies of your California advance health care directive should be given to your nominated agents, doctors, hospitals, and all health care providers.

Seriously ill patients may also want to confer with their physician about a POLST form (Physician Orders for Life-Sustaining Treatment).  A POLST form states what kind of medical treatment patients want towards the end of their lives.  Printed on bright pink paper, and signed by both a doctor and the patient, POLST helps give seriously ill patients more control over their end-of-life care.

copyright James J. Phillips 2014

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Inheritance: Avoiding an Increase in California Real Property Tax

For most California estate plans, federal estate tax can be avoided, as can probate.  Of increasing concern is how to avoid an increase in California real property tax.

For the California residence, it can pass from parent to child (or child to parent) without an increase in property tax.  But, without proper planning, property taxes may increase if one sibling buys out another sibling at death in order for one child to inherit the house with the other child receiving assets of equal value.  Proper planning is required to avoid the problem of the County treating a transfer after death as being between siblings and not from parent to child.

In addition, a parent can transfer up to $1,000,000 of assessed value (not fair market value) to the children (or a child can do the same to the parents).  (Assessed value is the value described on the property tax bill, not to be confused with fair market value.)  This $1M exclusion is for transfers both during life and at death.  Excluding the residence, once a parent transfers (combined in life and in inheritance after death) more than $1,000,000, then all transfers to children will be reassessed to fair market value, with property taxes based on those (usually higher) values.

So it is important to review the assessed values of the real estate in an estate plan in deciding upon which children will receive the benefit of the $1,000,000 assessed value exclusion and which children will receive the residence and which children will be stuck with an increased property tax bill upon inheritance.  (Similar rules apply from child to parent.)

Special rules apply for the transfers to a person’s deceased child’s children and to your children’s spouses.

Otherwise, real property taxes will be reassessed upon an inheritance to a person who is not the spouse, not the registered domestic partner, not the parent, not the child, and (with certain rules beyond this post) not a child of a person’s deceased child.

For example, real property taxes will be reassessed on a gift or inheritance to siblings, cousins, and friends.  Over time, increases in such property taxes can amount to significant dollars.

Hence, real property tax planning is an important part of a California estate plan.

copyright James J. Phillips 2014

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Pets in Your Estate Plan

If you have pets, consider including them in your estate plan.  Who will take your pets if you die or become incompetent?  Who will find them a good home?  How will the costs of your pets be handled?  These questions can be addressed in your estate planning documents.

Regarding who will take your pets or who will find them a good home, options include:

  1. Your estate documents can give your pets outright to someone you know, ideally a responsible, trustworthy person.  You can designate alternate choices to take your pets.  If you wish, funds can be given to the caregiver for each pet.  You may wish to provide detailed care and feeding instructions; or
  2. For California residents, you can use a trust to provide for your pets.  This provides a flexible method for managing the funds to care for your pets.  Funds remaining in the trust can be distributed in the manner directed by you.  With a pet trust, you should nominate a trustworthy and suitable caretaker (and alternates) or instruct the trustee regarding the trustee’s responsibility for finding a suitable home for your pets.  The pet trust can pay for all expenses related to the proper care of your pets; or
  3. When you have no suitable person to take your pets, you can leave your pets to an organization.  A number of California animal protection organizations have programs that provide permanent care or guarantee placement of companion animals when their owners die or become incompetent.  Here are some examples:
  • San Francisco Society of Prevention of Cruelty of Animals-Sido Service
  • Animal Rescue Foundation-Guardian Program
  • Berkeley East Bay Humane Society
  • California Cat Center, Inc-Lifecare Program
  • East Bay SPCA-Pet Survivor Placement Program
  • Friends of Cats, Inc-Lifetime Care
  • Helen Woodward Animal Center
  • Hopalong Animal Rescue Pet Survivor
  • Humane Society of Marin County
  • National Cat Protection Society-Retirement
  • North County Humane Society-Friends of Life
  • Pet Pride (Los Angeles)
  • Pets in Life-Guardian Program
  • SPCA of Monterey-Guardian Angel Future Care Program
  • Tony La Russa’s Animal Rescue Foundation (ARF)-Guardian Program
  • Valley Animal Center-No Kill Shelter (Fresno)

copyright James J. Phillips 2014

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