A panel of local accountants and attorneys discussed the intricacies of filing taxes for the 2013 year, as well as the importance of having a will.
Sponsored by Farmers Alliance Mutual Insurance, in association with Young Professionals Making Active Connections in McPherson County, the room consisted of young entrepreneurs in their 20s and 30s, as well as a few visitors ranging in age.
The panel consisted of Jaymie Rothrock and Jenny Lang, certified public accountants with
Swindoll, Janzen, Hawk & Loyd, as well as Bret Christiansen and Ann Parkins, attorneys with Wise & Reber.
Rothrock and Lang opened the panel with tips on filing a federal tax return. To the entrepreneurs in the audience, Rothrock suggested owners of their own businesses have separate bank accounts for their businesses. Rothrock said it’s easier to manage, and you don’t need to sift between personal funds.
Rothrock also discussed filing status, saying the individual should file based on his or her status by the end of the fiscal year.
“As an example, if you were to have previously been married, then divorced in the middle of the year, you would file as single, head of household on your federal tax return for that year,” Rothrock said.
Lang discussed itemized deductions on federal tax returns, and what qualifies as deductions. Some examples include medical expenses, home equity debt and vehicle registration taxes. Lang also said charity contributions and volunteer expenses also can qualify as itemized deductions.
“Let’s say you donated some clothing or shoes to Goodwill, or Salvation Army.” she said. “If you keep a detailed list of what you donated, such as the number of shoes, you can list those as itemized deductions on your federal tax return.”
Lang also discussed the changes to the Kansas 2013 tax rates. The highest rate for the state of Kansas in 2013 is 4.9 percent, down from 6.9 percent in 2012. Lang also said non-wage business income is tax exempt for the 2013 year.
Last will and testament
Bret Christiansen defined a last will and testament as a coordinated planning with the state to determine where your assets go when you die. Christiansen said if a will is not present when the individual dies, the state determines where the assets of the deceased end up, which, he said, can create a number of complications.
Christiansen said the state normally splits up assets evenly between the wife and children of the deceased. If there is no spouse or children, assets can go back to parents or siblings.
“You have a case where an 18 year old is suddenly very rich,” he said. “Then two cars and a nice house later, and he’s broke as a joke.”
Page 2 of 2 - Christiansen also discussed the importance of having a trust; a legal entity apart from a last will and testament that can own and hold assets. Christiansen said a trust, unlike a last will, is not subject to a probate court, which normally monitors the recording and execution of a last will and testament, and can be subject to high costs and delays. There are two types of trusts, a living trust, which exists while you are alive, and a testamentary trust, which is formed after you die. Christiansen also noted the limitations on trusts, including the higher costs and the greater complexity with their creation.
In general, Christian encouraged everyone to have something official in writing.
“All of our state plans are based on ‘what ifs,’” he said.
Ann Parkins also noted the importance of a last will, saying the tough decisions are better left to an official document
“Consider those decisions, and who they are left to,” Parkins said. “You don’t want an already distraught family to try to decide what to do with everything that’s left.”