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Last Things First

Living Wills and Health Care Powers

Recent events highlighted in the national news have brought living wills to the forefront of our minds.  A living will states a person’s intentions in certain limited situations, making it perhaps more important to draw up a health care power of attorney.  A health care power of attorney appoints a surrogate decision maker, who can make a number of different decisions about a person’s care, sometimes extending to end of life decisions.

There are many legal implications to consider when executing a living will or health care power of attorney.  In addition, Ohio , Michigan and Florida laws differ on the subject, and each state has its own version of the documents.  The effect of the Federal Health Insurance and Portability and Accountability Act (HIPAA) should also be considered, so as not to limit the decision maker’s access to health information. 

We encourage you to take time to review your personal situation.  Do not overlook this important piece of your estate plan.  If you would like to discuss this matter we would be happy to meet with you at your convenience.

Tsunami Relief Contributions

A new law encouraging tsunami relief contributions may add an additional benefit to taxpayers who desire to donate to relief efforts underway after the recent tsunami in the Indian Ocean . Cash contributions made prior to January 31, 2005 are now eligible as a charitable deduction on your 2004 Federal Form 1040 if you itemize your deductions.  The contribution must be cash; gifts of securities, food, clothing and similar items do not qualify.  The contribution also must be designated for the relief of victims in areas affected by the December 26, 2004 tsunami.  This can be accomplished simply by including the phrase “Tsunami Relief” in the notes section of your check. 

As always, care should be taken to be sure contributions go to qualified charities.  Contributions to foreign organizations are generally not deductible, but contact us if you have questions regarding a charity’s qualifications.

New Sales Tax Deduction

The Internal Revenue Service has recently provided guidance on a new itemized deduction put into place by Congress late in 2004.  At the taxpayer’s option, the taxpayer may choose to deduct either their state and local income tax paid or their state and local sales tax paid.  Actual sales tax paid may be used; however, since this law was passed late in 2004, the IRS has provided a standardized table that can be used to determine an estimated sales tax paid based on income and the number of exemptions.

While in most cases for Ohio residents, the traditional state and local income tax deduction will be more advantageous, the purchase of “big ticket” items such as a new vehicle or a boat may make the sales tax deduction the right choice.  Please contact us if you have questions about the sales tax deduction.

Cafeteria Plan

Section 125 of the Internal Revenue Code provides employers the opportunity to give employees a variety of benefits, at the option of the employee – hence it’s name, Cafeteria Plan.

Cafeteria Plans are most often associated with medical insurance, medical flexible spending accounts, and dependent care flexible spending accounts, but can provide other benefits to employees, such as parking, dental, life insurance and disability insurance.

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Independent Contractor

Depending on the situation, there are inherent benefits to properly classifying a worker, and distinct dangers in incorrectly classifying an employee. The cost of labor is always an issue for small businesses. But the imagined cost savings of considering someone an independent contractor is far outweighed by the risks if the worker is misclassified.

Granted, by classifying a worker as an independent contractor, the business does not have to deal with withholding taxes, periodic payroll reports, or other administrative disadvantages. But if a worker is incorrectly classified, the company can be severely penalized for that failure.

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