123ArticleOnline Logo
Welcome to 123ArticleOnline.com!
ALL >> Insurance >> View Article

Florida Psk Planning: Increase Control And Reduce Taxes

Profile Picture
By Author: Dale Krause
Total Articles: 15
Comment this article
Facebook ShareTwitter ShareGoogle+ ShareTwitter Share

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!!

Total Views: 362Word Count: 350See All articles From Author

Add Comment

Insurance Articles

1. Innovations In Music: The Latest Trends In Instruments And Musicians Coverage
Author: micheljordan4

2. Abha Health Id: Your Easy Key To Better Healthcare Access
Author: Nilanjan Das

3. Why Music Teachers Need Insurance Now More Than Ever?
Author: musicinstrumentsins

4. How Do I Insure An Expensive Piano?
Author: victor12johnson

5. Why Every Guitarist Should Protect Their Most Treasured Instrument?
Author: Clarionins

6. Why The Bassoon Is The Breakout Star Of 2025’s Indie Fusion Movement?
Author: musicinstrumentsins

7. Essential Business Insurance Every Recording Studio Needs
Author: victor12johnson

8. Beyond The Music: Secure Your Viola With Coverage You Can Trust
Author: micheljordan4

9. Balancing Growth And Security: How Strategic Finance Drives Smarter Investing
Author: Drishti Desai

10. What Happens If Your Clarinet Is Lost Or Damaged By An Airline?
Author: musicinstrumentsins

11. Classic Car Auto Insurance In California: Protect Your Vintage Ride
Author: Namaste Insurance Agency

12. How To Choose The Best Insurance Plan For Your Musical Instrument Repair Business?
Author: victor12johnson

13. How Cloud-based Invoicing Services Streamline Financial Management
Author: SourceThrive

14. What Happens When You Don’t Insure Your Audio Gear?
Author: micheljordan4

15. The Hidden Risks Of Not Insuring Your Musical Instrument
Author: musicinstrumentsins

Login To Account
Login Email:
Password:
Forgot Password?
New User?
Sign Up Newsletter
Email Address: