Happy Thanksgiving from the Massachusetts/Rhode Island NATP Chapter

Medicare B Premiums for 2020

The base Medicare Part B monthly premium for 2020 increases to $144.60/month (from $135.50/month for 2019).

The higher premiums some taxpayers have to pay for 2020 vary depending on the taxpayers’ modified AGI (MAGI) as shown on their 2018 income tax returns.  The various MAGI levels increased a small amount with the exception of the maximum MAGI levels.  The exact costs and modified AGI levels can be found at www.medicare.gov by clicking on the “Your Medicare Costs” tab and then on “Part B Costs”.

The highest Medicare Part B premium for 2020 is $491.60/month and applies to:

• Individuals with modified AGI of $500,000 or more
• Married Filing Jointly taxpayers with modified AGI of $750,000 or more
• Married Filing Separately taxpayers with modified AGI of $413,000 or more

This text has been shared courtesy of: David & Mary Mellem, EAs & Ashwaubenon Tax Professionals, 920-496-1065 (fax 920-496-9111).

©2019 Ashwaubenon Tax Professionals.  No reproduction of this article is permitted without the express consent of Ashwaubenon Tax Professionals, 2140 Holmgren Way, Suite 1040, Green Bay, WI 54304.

This Return Filing Includes a Schedule K-1; I Don't Have It, My Client Can Not Obtain It, What Should I Do?

William Delaney, EA
Westwood, MA

A paid preparer signs a jurat (that little statement opposite Sign Here) along with the taxpayer(s) which says (in part) “Declaration of the preparer…is based on all information of which the preparer has any knowledge.”  Some of us think that this is the only part which holds us to a standard.   But, we sign the entire jurat which also says…”true, correct, and complete.”  We are only off the hook if we don’t know about it, but we do know that the K-1 is missing and we are faced with that extended due date filing deadline, the Dr. Silber defense (see below) notwithstanding.

You can file a return with incomplete information, so long as you disclose this to the IRS.  No, I don’t want to file an 8275-R – Regulation Disclosure Statement!   They will audit my client!  And, your Editor is in agreement---you don’t want to attach that form; it is only used for disclosing a position which is inconsistent with treasury regulations.  What to do…

Use form 8275 (without the R).  Explain what you are doing (Part II) and reference the pass-through entity (Part III).  Then, let the IRS chase the entity for you!

What is the Dr. Silber defense?  If you are old enough, you will remember the 1990 MA state election for governor.  William Weld (Republican) v. John R. Silber (Democrat).  During the campaign, Dr. Silber (then President of Boston University) was asked when he planned to make public his income tax return.  To which he replied, it’s on extension (i.e. incomplete).  After October 15th, the press asked again, and Dr. Silber replied that his accountant had obtained another extension because he was missing a K-1.

The pesky press were not satisfied, so they interviewed a spokesperson for the IRS Boston office who explained that no extension is possible after October 15th except for someone who is still out of the country.  Dr. Silber was insistent---he had an extension. Of course, since he lost the election to his opponent, we never did see his tax return.

Rhode Island's Health Coverage Mandate

All Rhode Islanders must have qualifying health coverage beginning January 1, 2020. Failure to have such coverage in 2020 may result in a Rhode Island personal income tax penalty in 2021. So now's the time to plan ahead.

Rhode Island residents can enroll in new health insurance or renew their coverage for 2020 with Rhode Island's health insurance exchange -- HealthSource RI. For more information, including details about the current open enrollment period and about how eligible Rhode Islanders can receive financial assistance to lower the cost of health insurance, see https://healthsourceri.com/.

Open enrollment began November 1 and ends December 31. But you must pick your plan and pay for it by December 23 in order to get coverage starting January 1, 2020.

IRA Beneficiary Waits 2 1/2 Years For Her Money - Obtains Consumer Protection Relief Under MA Ch 93A

William Delaney, EA
Westwood MA

Taxpayer Patrick Kenney opened three IRA accounts with UBS Financial Services, Inc. in 2008.  The UBS financial advisor was taxpayer’s one-time sister-in-law.  At the time,  Kenney was smitten by but not legally married to Donna M. Aliberti (the defendant).  Therefore, it is not surprising that Kenney named Aliberti as the sole beneficiary of each IRA.

Five years later (Nov. 2013) Kenney decided to change the beneficiary on two of the three IRAs and completed an UBS update form for each, “writing in the names of four individuals with the notation ‘25%’ next to each…Kenney completed each of the forms improperly…” and they were rejected by UBS.

The financial advisor thereupon arranged for new beneficiary forms to be sent to Kenney, who apparently did not complete and resubmit them prior to his unexpected death on Dec. 2, 2013.

“Approximately two weeks following Patrick Kenney’s death, Aliberti contacted Margaret Kenney (financial advisor/former sister-in-law) about the three IRAs.”  The two which were in flux at death contained relatively small amounts.  The third, which had been left intact as to beneficiary, was valued at approx. $276,000.

Margaret (former sister-in-law) Kenney’s initial reaction was to send a series of trash talk e-mails to Aliberti; finally she did send a message which stated “Documents mailed to you today please sign and return ASAP for distribution.”

Now, to an event which threw a monkey wrench into the distribution process.  One of the four who were named as updated beneficiaries on the forms which UBS had rejected, Craig Gillespie (a friend of the late Patrick Kenney), contacted UBS in writing (attorney letter) asserting that Kenney had changed the beneficiaries on the two small IRAs and was in the process of changing the beneficiary on the large IRA at the time of his death.  “The letter also stated that Gillespie intended ‘to have a court of law resolve the issue of whether or not he is a named beneficiary of the third IRA account’ and asked UBS not to make any distributions therefrom.”  Apparently, Gillespie thought that his 25% beneficial interest in the smaller IRAs could not be disputed.  UBS put a hold on the large IRA.

Aliberti contacted UBS in Jan. 2014 and filed a verbal claim to all three accounts.  UBS acknowledged the claim by sending an unsigned letter received on Feb. 4, 2014.  On Feb. 19, 2014, Aliberti “sent completed beneficiary processing forms for all three IRAs, a copy of Patrick Kenney’s death certificate, and a copy of her driver’s license to UBS.”