IRS Web site a good place to learn latest tax laws January

IRS Web site a good place to learn latest tax laws


Q: Dear Rick: I read that you can make Roth IRA contributions up until April 15, 2009 and apply it to the 2008 tax year. At the same time, I heard you say that if you are converting into a Roth IRA your deadline is the end of the year. Which is right?
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A: Both are correct. There is a difference between converting a traditional IRA into a Roth IRA and making new contributions. The law looks at them totally different.

Unfortunately, our tax laws are not easy and they do have a wide variety of due dates. There are certain transactions like the Roth IRA conversion that must be completed by the end of the year while other transactions such as new contributions into a Roth that do not have to be completed until next year.

One of the things that make tax laws so confusing is that they are constantly changing. The tax law at the beginning of the year may not be the same tax law at the end of the year. Therefore, for specific advice, it pays to sit down with a tax professional to get the latest information. Another good resource for general issues with regard to taxes is the IRS Web site, www.irs.gov, which is very user friendly. It contains information on tax laws and all the IRS forms and instructions.

One last note regarding Roth IRAs and even traditional IRAs, the maximum contribution for 2008 is $5,000. However, those age 50 or older can make an additional $1,000 contribution by the end of the year, making the total contribution $6,000.

Q: Dear Rick: I remember reading your column that dealt with trusts for pets. I am a widow with no beneficiaries and I want to make sure my dog is taken care of when I die. My friend says that since dogs are property, you can't set up a trust for them.

A: A little over a year ago I did write an article with regards to pet statutory trusts. Michigan (as well as most states around the country) has enacted laws that make it much easier to leave money for the care and custody of a pet.

There are a couple of different issues that are important. The first is who is going to be in charge of the pet trust upon your death. This should be an individual whom you trust to handle the duties of taking care of your pet. You don't have to name just one person, you can name co-trustees if you choose so there's a natural checks and balance system. In addition, you should decide how much you plan to leave the pet. In your situation, it may be your entire estate or it may be a portion. Of course, it should be enough to take care of the pet in the manner in which you choose.

One last issue to consider is what happens if you over-fund the trust and upon the pet's death, there's money left in the trust. Obviously, you need to name an individual or a charity as to who would receive that money.

Pets are an important part of American society and the laws have changed to reflect that. In today's world, establishing trusts for pets is no longer considered unusual. More and more and more people are doing it.

Yes, you can establish a statutory pet trust on your own. However, I recommend consulting with an estate planning attorney to make sure that you dot your I's and cross your T's.
source: http://ww w.hometownlife.com/article/20090104/NEWS27/901040382