ALL >> Insurance >> View Article
Florida Psk Planning: Increase Control And Reduce Taxes
Total Articles: 15
A personal services contract (“PSK”) can be an excellent tool to outline the services a caregiver is expected to provide, and compensate the individual accordingly. As long as the services are needed and reasonably valued, the PSK can be an excellent tool to facilitate a Florida Medicaid spend-down.
If the anticipated future care is valued at $200,000, we may ask ourselves “What is the best way to pay for those services?” If the caregiver is given a check as a lump-sum payment, without question the caregiver has dominion and control of the funds. The Internal Revenue Service will then take the position that the caregiver received taxable compensation when he or she received the check. Assuming the caregiver is single, under age 65, with a standard deduction and personal exemption and does not have any outside income, the federal income tax consequences as a result of the transaction are $46,831 in the year of receipt.
What if the caregiver cannot be trusted with the money in the form of a lump sum? Maybe the caregiver has a gambling problem, an abusive significant other, is a compulsive shopper, or is about to go through a divorce or declare bankruptcy. Rather than give him or her a check for the entire lump-sum, the care recipient can arrange for the caregiver to own an immediate annuity. The advantage of an immediate annuity is the lack of access to funds, other than the scheduled payments. For example, assume the funds were invested into a 10-year period certain immediate annuity with monthly payments that mirror the compensation outlined in the PSK – $1,667 per month. In one year’s time the caregiver would receive compensation of $20,004. Assuming the same filing status as noted above, the federal tax liability would be $1,054. To compare apples to apples, assume the federal tax rate does not change for the next 10 years, resulting in a total tax payment of $10,540. This is $36,291 less than taxing the entire amount in one year. What a significant difference!!
Insurance Articles1. What To Know About Ncb
Author: Bhargav Baweja
2. Steps To Follow After A Car Accident
3. How The Car Insurance Calculator Calculates Your Premium
Author: Bhargav Baweja
4. Permanent Protection For Temporary Living Identifying The Three Elements Of Effective Coverage
5. Do I Need To Compare Bike Insurance To Only Cut My Cost?
Author: Dinesh Mittal
6. Types Of Auto Insurance Discount Programs
7. Satisfy Your Dream Of Owning A Home With The Home Loan
Author: Bank Bazaar Loan
8. Public Insurance Adjusters And Few Factors To Consider Before Hiring Them
9. Clarifying Coverage - Why Insurance Is Essential For Modern Living
10. Select One Of The Best Auto Insurance Companies In California
11. Unique Ways To Save On Auto Insurance A No-nonsense Guide To Save Money Without Sacrificing Coverage
12. Health Insurance Company
Author: Kent Pinkerton
13. Compare Health Insurance Online & Plan For The Emergency Room
Author: Muhammad Waqar Asghar
14. The Best Mortgage Advice Liverpool
15. Professional Mortgage Advice Liverpool