By Hampton & Pigott
Posted on 5-26-2021
2020 has been particularly hard year on families. President Biden’s Plan is one of the most progressive plans in American history. Families could get up to $3600 per child during this 2021 tax year. The Child tax credit is part of the $1.9 trillion covid relief billed passed in March. However, the money is different from the stimulus check payments. The disbursements are likely to roll out in July as a series of payments and the amount of money all depends on the age of the child and how much income the parent reported making on his/her taxes.
The child tax credit is not a new concept, normally parents filing their taxes could claim a credit of $2000 for every child 16 and under. Sometimes part of that can come as a tax refund when the parent files but under the new rules for 2021 the amount of credit has increased for many households and those families don't have to wait until they file 2021's taxes.
The credit is income dependent: so, a single tax filer needs to have an adjusted gross income of $75,000 or less to get the full child tax credit amount. But heads of households need to have an adjusted gross income of 100 and $12,500 or less to qualify for the full amount; and married couples filing jointly need to have an income of $150,000 or less to qualify for the full amount.
The age of each child matters: parents of children ages 5 and younger can get $3600 per child, including babies born this year. Parents with children ages 6 to 17 may qualify to receive up to $3000 per child. Additionally, parents may also receive money for their son or daughter age 18 and those between the age of 19-24 who are currently attending college- Parents can get up to 500 dollars.
There are stringent stipulations to receiving the money, the child being claimed must reside with the parent at least part time and must also be a U.S. citizen. For married couples filing jointly at least one spouse needs to have the Social Security number or individual taxpayer identification number and the child must have a Social Security number.
Some details are still being worked out on the delivery of the money. We don't yet know how frequently these child tax credit payments will be distributed to families.
By Hampton & Pigott
Posted on 5-24-2021
Once upon a time in a land far, far away there was a king, Larry King. This King was loved by everyone far and wide. On one fateful day the King passed away. He left his Queen and a few sons to grieve his passing.
He also left something else... A piece of paper was found that detailed who would get his treasures. Now this piece of paper was no ordinary piece of paper because this piece of paper would determine where his entire wealth would go. Now, before this piece of paper was found the Queen thought she would be his heir, but this little piece of paper changed all that. This paper said, instead of the Queen receiving his treasures, his sons would.
Now, this left the Queen very angry. Even though the Queen might be angry the rest of us can take away some very important lessons from this.
1. Holographic wills, what this piece of paper would be considered, is likely to be upheld and the Queen will receive nothing. These wills, that are not witnessed, are most likely accepted throughout the land.
2. A prenuptial agreement could have been beneficial. Why? The King and Queen were about to get divorced before the King passed away but since he passed away and no prenuptial agreements were in place, the Queen will most likely get 50% of his estate, regardless of his will he left.
Having an estate plan in place is always a good idea so please, learn from the King and make sure your assets are all secured, and a will is in place, just in case. Contact Hampton and Pigott today to take care of your estate planning needs.
By Hampton & Pigott
Posted on 5-4-2021
In the first edition of this series about legal entity types, we discussed sole proprietorships, general partnerships, and limited partnerships. Let’s continue our article series with a discussion on LLCs, C Corporations, and S Corporations.
If you've ever taken a close look at the businesses around you, you've probably noticed an awful lot of LLCs. These limited liability corporations are incredibly popular because they do something important - as the name suggests, they limit the liability of the members. This form of corporation is usually seen as a middle ground between a partnership or sole proprietorship and a true corporation, with some of the benefits and drawbacks of both.
LLC's are typically chosen not just for legal liability reasons, but also for tax reasons. Unfortunately, those same benefits do put a limit on who can invest in the company. LLCs also require a formal filing, which means drafting Articles of Incorporation that lay out the business's basic structure.
A C Corporation is a true entity in its own right. Once created, it continues to exist - even the death of the original founders doesn't bring this structure to an end. C Corporations have their own liabilities separate from their founders, hold their own debts, and can even own property. Shares can be bought and sold of these companies to raise capital, which increases the number of voices that can control the corporation but that also allows these corporations to grow quickly. There's a big divide between those who operate the corporation and those who actually own the shares, helping to keep a legal wall between the two.
The S Corporation is quite a bit like a C Corporation, but it handles taxation differently. While both the entity and the shareholders are taxed in a C Corporation, only the shareholders are taxed in an S Corporation.
S Corporations also differ in terms of who can invest in them. Only one hundred shareholders may hold shares in an S corporation, and who those shareholders may be is limited by the law. This tends to make S Corporations more of a favorite among individual investors, as funds can rarely invest in S Corporations.
Most companies will fit into one of the formats discussed in this and the previous article, but if they don’t then a hybrid entity might be the right choice. Look out for the final article in this series to learn what a hybrid entity is and for a few more tips on how to choose the perfect entity for your circumstance.
By choosing the right business structure you can protect yourself and your business, increase your tax advantages and make running your business easier. Contact an attorney at Hampton & Pigott to help you decide how best to structure your business based on your unique needs.