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Archive for October, 2018

Tax Breaks That Help Parents

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The bright, inquisitive eyes and delightful smiles of babies are incredibly endearing. What may not be so charming is the sticker shock parents face when raising their bundle of joy. A middle-income family will expect to shell out nearly a quarter of a million dollars, $233,610 to be exact, to bring up a baby who was born in 2015. On average, families spend anywhere from $12,350 to $14,000 per year to cover the expenses related to child rearing, according to the statistics gathered by the United States Department of Agriculture.

The Costs of Child-Bearing

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The costs of having children are astronomical. But these tax breaks can help to save thousands when parents need it most.

How could a giggling youngster possibly require hundreds of thousands of dollars to rear? Housing, namely an extra bedroom, is the primary expenditure. Growing babies need sustenance, and food costs contribute to the next highest expense for families—at least 18 percent of total child-rearing expenses. Child care costs, which average $37,378 per child, comes in third as the next most pricey responsibility parents face. As children grow into teenagers, transportation, and health care costs surge. Hungry teenagers also account for a rapid spike in food costs for parents—up to 22 percent more than feeding a child between 6 and 8 years of age.

The US government is keenly aware of the high cost of raising a child. As a benefit to parents, federal tax breaks are available. A parent simply needs the child’s social security number to claim the child as a dependent on the parent’s tax return.

Dependency Tax Break

Parents can claim their child as a dependent, saving the parents $4,050 (in 2017). Keep in mind that the more income parents earn, the exemption is accordingly lowered. Single parents who bring in over $259,400 in gross income or couples who file a joint return and earn over $311,300 see a reduction in the dependency exemption.

Child Tax Credit

Parents of children under the age of 17 receive an annual child tax credit of $1,000. Once the child reaches his or her 17th birthday, however, parents are no longer eligible to receive the credit. Parents may only claim the child tax credit if their income meets certain standards: income that does not exceed $110,000 for married parents, $75,000 for single parents and $55,000 for married people filing separately.

Child Care Credit

Paying for child care is taxing. Uncle Sam, however, gives parents a tax credit in the form of a child care tax credit. Working parents can earn a child care tax credit that falls in the range of $600 to $1,050 (if child care expenses are for one child under 13 years old) or $1,200 to $2,100 (if two or more kids under the age of 13 receive child care). The amount of child care credit parents receive depends on two factors: how much parents pay for child care and their annual income.

Paycheck Withholdings

Employees with children can boost their take home pay by claiming an additional withholding allowance. Parents simply need to fill out and submit a new W-4 form to their employer, to claim the allowance.

Head of Household Status

Those parents who file their taxes using the single filing status should instead consider filing as head of household. A single parent needs to first qualify as head of household. To be eligible to file as head of household, the filer must be unmarried for that tax year. Additionally, the parent must provide at least half the cost of housing a qualifying person or dependent, such as a son or daughter.

A qualifying child must also be under the age of 19 if he or she is not enrolled as a student and under the age of 24 if he or she is a student in college fulltime. A qualifying dependent must also have lived in the home of the head of household for six months or more.

Adoption Credit

Parents of adoptees are eligible to receive the adoption credit, provided their modified adjusted gross income does not exceed $243,540—at which point the adoption credit is eliminated. High-income earners with wages that fall between $203,541 and $243,539 (in 2017) will see a reduction in the amount of the adoption credit.

Earned Income Tax Credit

The earned income tax credit (EITC) is available to low-income or moderate-income working parents with qualifying children. Working parents receive a tax credit that is equivalent to a percentage of their income and which is capped at a maximum credit. The credits increase in proportion to the number of children in the family. In 2017, for example, parents with one child received a maximum of $3,400 in earned income tax credits. During the same year, families with three or more children received a maximum of $6,318 in earned income tax credits.

Wills, Trusts, and Estate Planning

No matter what tax breaks families receive, fresh-faced children, with eager inclinations to explore the new world around them, are vulnerable without solid, future financial plans arranged by their parents. Plan your family’s security with a legal will and trust. A trust is a fiduciary arrangement that outlines when assets are to be dispersed to beneficiaries by a designated third party. Trusts avoid probate, making the assets more quickly accessible to beneficiaries as opposed to a will.

When you elect to create a will or trust, Berry K. Tucker & Associates, Ltd. will guide you through the legal process. Our law firm of trust and estate planning attorneys offers over 50 years of combined legal experience, including drafting wills and trusts for area families. Our skilled trust and estate planning attorneys provide their legal expertise to create, modify or contest wills.

Numerous trusts are available based on varying state laws. Examples of trusts include dynasty trusts, spendthrift trusts, charitable trusts, family trusts, irrevocable trusts, and special needs trusts. The knowledgeable lawyers at Berry K. Tucker & Associates, Ltd. will help you navigate through the many trust options and select the most appropriate trust to benefit your family’s individual needs.

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Berry Tucker has years of experience with wills and trusts as well as estate planning. Give him a call to learn more about how he can help you with your documents.

Our lawyers at Berry K. Tucker & Associates, Ltd. stay current on the changing Illinois laws surrounding trusts and estate planning. We serve the Oak Lawn, IL and surrounding communities with dedication and commitment.

Schedule a Consultation

To schedule your initial consultation with one of our estate planning attorneys, give us a call at (708) 425-9530 or fill out a contact form. We look forward to working with you soon!

How Bankruptcy Affects a Cosigner

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Major life events can trigger a bankruptcy. Divorce, illness, or losing a job may push people to the brink of financial ruin. Bankruptcy offers a strategic path out of financial disaster. Individuals, spouses and corporations can file for bankruptcy. Federal courts handle all bankruptcy cases in accordance with the US Bankruptcy Code.

Bankruptcy Classifications

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Bankruptcy falls into two primary classifications for individuals: Chapter 7 bankruptcy and Chapter 13 bankruptcy. The former, Chapter 7 bankruptcy, wipes out certain debts completely, giving debtors the chance to start anew, without the burden of repaying debts.

Be aware that Chapter 7 bankruptcy discharges only certain forms of debt. Such debt includes medical bills, credit card balances, and personal loans. Non-dischargeable debt falls under such categories as income tax acquired over the past three years or more, student loan debt, and child or spousal support.

Chapter 13

Chapter 13 bankruptcy requires the debtor to repay a portion of the incurred debt. The debtor has an obligation to develop a repayment plan and to repay monetary dues over the course of 3 to 5 years. Factors that affect the minimum payment amounts include how much income is earned, the value of the individual’s nonexempt property and the sum of money owed.

Debt limits exist in Chapter 13 bankruptcy cases. Those eligible for filing for Chapter 13 bankruptcy cannot have over $1,081,400 (figure is as of 2018) in secured debt. Secured debts include any purchased items, like boats, houses and vehicles, that are linked to property.

The Role of the Cosigner

Qualifying for a loan may require a cosigner. The critical role of the cosigner is to repay any part of the debt that goes unpaid. First time borrowers, those with poor credit histories and people who are starting new businesses almost always experience obstacles when attempting to secure funding. Loans are acquired more readily when a cosigner signs the dotted line—giving the lender assurance that the loan will be repaid. Cosigners are those who earn higher incomes, who possess good credit and who own greater assets.

Unsecured loans are not associated with collateral, such as property. Examples of unsecured loans are credit card debt, personal loans, and student loans. Unsecured loans pose as a greater risk for lenders. The increased risk prompts the lender to require a cosigner prior to offering borrowers an unsecured loan.

In the unfortunate event a debtor must file for bankruptcy, the part of the cosigner comes in. Cosigners are just as affected by a bankruptcy as the debtor. A cosigner is legally the co-debtor and is responsible for repaying the debt as the borrower. Should the amount of debt owed exceed what a cosigner is able to repay, as in the worst scenario, the cosigner may also struggle with the decision to file for bankruptcy.

Cosigner Protection

Chapter 13 Bankruptcy—Codebtor Stay

A borrower can make efforts to protect a cosigner by filing for Chapter 13 bankruptcy. Cosigner debts are often discharged under Chapter 13 bankruptcy proceedings. Chapter 13 bankruptcy allows the debtor to repay the loan, thereby protecting the cosigner.

The Chapter 13 codebtor stay provides protection to the cosigner. Once bankruptcy is filed, creditors cannot take actions to recoup the loan. Simultaneously, a stay is also placed on the cosigner in a Chapter 13 bankruptcy filing. The codebtor stay prevents creditors from collecting from the cosigner. The cosigner is protected until the courts reach a final decision in the bankruptcy case.

Under certain circumstances, creditors can request the courts to lift the codebtor stay. Instances when a lender can request the courts to remove the codebtor stay include when the cosigner benefits from the debt instead of the creditor, when the creditor’s interests are harmed if the codebtor stay remains in effect and when the debtor, under the Chapter 13 bankruptcy repayment plan, fails to repay the debt.

Cosigners can qualify for a codebtor stay: The cosigner must be an individual, not a corporation; and, the debt for which a cosigner signed should be consumer debt and unrelated to business debt.

Failing to repay the debt under a Chapter 13 bankruptcy could jeopardize the cosigner’s protection under the codebtor stay, especially if the debt is not discharged. In such a case, the creditor has the right to pursue the outstanding debt from the cosigner.

Chapter 7 Bankruptcy—Repaying & Reaffirming Debt

When filing a Chapter 7 bankruptcy, all collections against the filer stop. Collectors, however, are free to collect the unpaid debts from the cosigner. A debtor can protect the cosigner by voluntarily paying off the debt in the event of a Chapter 7 discharge.

Reaffirming debt in a Chapter 7 bankruptcy also protects the cosigner. By once again becoming liable for the original debt before the debt is discharged, the cosigner can no longer be pursed for the money owed. Possessions such as jewelry, computers and furniture can be returned if the purchase cost remains unpaid.

Work with Bankruptcy Attorneys

In the unforeseen event you file for bankruptcy, either Chapter 7 or Chapter 13, make sure you are represented by highly qualified, experienced bankruptcy attorneys. Financial interests are heavily at stake. The bankruptcy attorneys at Berry K. Tucker & Associates, Ltd. are skilled negotiators, who will help you under numerous Chapter 7 bankruptcy scenarios, including vehicle repossession, medical debt, credit card debt, and home foreclosure judgements.

Our qualified team of bankruptcy lawyers will also see you through Chapter 13 bankruptcy cases, assisting you with developing a workable repayment plan.

Knowledgeable in all current Illinois laws surrounding bankruptcy, the attorneys at Berry K. Tucker & Associates, Ltd. will expertly guide you through the complicated bankruptcy process when you elect to file. Our team of bankruptcy lawyers offer professional, legal advice that will help you navigate the complex bankruptcy filing proceedings.

Schedule a Consultation

Berry K. Tucker & Associates, Ltd. is committed to serving the legal needs of individuals who are considering filing for bankruptcy and who reside in Oak Lawn, IL or its surrounding communities.

To schedule a consultation with one of our experienced attorneys, give us a call at (708) 425-9530.

Filing Bankruptcy to Prevent Foreclosure

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Filing for bankruptcy in order to save your home from foreclosure may sound too good to be true – but it’s not! Bankruptcy cannot only stop foreclosure threats, but end debt collector harassment, allowing borrowers extra time to make up for the missed payments and review their financial situation. For some situations, filing for bankruptcies can also help those who have mortgages save their homes completely.

What to Keep in Mind Before Filing for Bankruptcy

Filing for bankruptcy can prevent a home foreclosure but it is not the solution to all problems. Be sure to check out these conditions.

Just because bankruptcy can save homeowners from foreclosure, it is not the solution to all problems. The exception is that if the homeowner does not have enough money to make the payments, bankruptcy will not save them.

But for homeowners that have ongoing income and are able to make payments, filing bankruptcy would be an ideal solution.

Preventing Foreclosure

After filing bankruptcy, the first and most important step is to put the foreclosure process to a halt. Legally, lenders are not able to foreclose or even try to collect the debt from the borrower without the permission from the court.

Two Types of Bankruptcy

There are multiple chapters of bankruptcy, but Chapter 7 and 13 are among the most common.

Chapter 7. This type will delay the foreclosure process, but not prevent it. In most cases, most assets will be liquidated and almost always ends in the owner losing their home.

Despite this downside, some bankruptcy attorneys recommend Chapter 7 because it gets rid of all unsecured debt, leaving behind secured debt, such as mortgages. This allows homeowners to start with a clean slate, so they can then afford to pay other debts.

Chapter 13. Preferred by many professionals, this type of bankruptcy is more effective when it comes to allowing borrowers to keep their homes. They are given more time to review and fix their financial situation, around 3 – 5 years, while given an income-based budget to make monthly payments to trustees.

The trustees then use the money to pay bills, starting with the secured debt, then the unsecured debt, including credit cards and medical bills. But after this, there’s little to no cash left, so they are paid off at a low percentage of the full rate.

But as long as they keep up on their payments, borrowers are able to come back from bankruptcy and still keep their homes.

The Powers of the Courts

While the courts have significant power, they are not allowed to reduce the mortgage debt to the net worth of the home. They are also not able to lower interest rates or lengthen the term of the mortgage.

On the other hand, they can remove second mortgages, such as lines of credit or home equity loans, as long as the net worth of the home falls below the first mortgage balances.

For borrowers, this is a big relief. For example, a homeowner may have $300,000 balance on the first mortgage and $75,000 from the home equity loan. During the time that the homeowner was unable to make payments, the home’s value dropped below $300,000, the court may rule that the $75,000 is unsecured debt. This allows the home equity loan to be paid off at a significantly lower rate than the original $75,000.

Keep in mind there are other downsides. Filing for bankruptcy can knock off as much as 240 points from a credit score. They can also stay on the reports for 10 years, while other problems disappear after 7 years or less.

Tax Advantage During Bankruptcy

Yet another pro of filing for bankruptcy compared to undergoing foreclosure. If the home is foreclosed and the lender forgives the remaining balance of the mortgage above the market value, there is a tax liability. If there is a difference between what borrowers borrow and what they pay, it is considered income in the eyes of the court.

Although Congress is temporarily allowing this unpaid debt to be forgiven, this is only for the money that was specifically spent on the home; it doesn’t not cover any additions, remodeling, or improvements.

Free Money is Still Taxable

It’s common for homeowners to refinance mortgages and take out additional home equity loans to pay for other things, like college tuition, fancy vacations, and nice cars. But the kicker is that the money is still taxable.

In the case of foreclosures, say if a homeowner had purchased a home for $1 million but had taken out another loan for $2 million, most of which is not spent on the house, the money is taxable. But if the homeowner files for bankruptcy right afterwards, the deficiency is discharged. That’s the key.

Filing for Bankruptcy

While not for everyone, filing for bankruptcy has saved many American homeowners from losing their homes. As it provides them with a “fresh start,” they are able to focus their payments strictly on their mortgages.

But before filing, it is crucial to meet with a bankruptcy attorney to ensure that this is the best option for you. The last thing you will want to do is file and find out that you still have to undergo the foreclosure.

Simply meeting with an experienced bankruptcy attorney can provide a lot of relief to your situation. They can review your documents and options while discussing the best plan of action according to your specific situation.

When it comes to providing tailored solutions, the bankruptcy attorneys at Berry K. Tucker & Associates, Ltd. not only have years of experience, but have worked with

diverse cases. When meeting during the initial consultation, we will listen closely to each detail while applying our knowledge of updated laws in order to reach a solution that works in your best interest.Cheri-Costa-Family-Child-Custody-Attorney-Oak-Lawn-IL

Schedule Your Consultation

For more about filing bankruptcy or determining whether it is the best option for you, contact the bankruptcy attorneys at Berry K. Tucker & Associates, Ltd. at (708) 425-9530 to schedule your initial consultation. We proudly serve the residents Oak Lawn, IL and the surrounding areas.

Using Witnesses in a Divorce Trial

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In any divorce case, there are a number of methods and resources you can employ to gather evidence showing that you possess good character. For a parent, using a character witness is especially beneficial when it comes to proving their ability to care for a child.

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Having a witness who speaks on your behalf can provide additional support for your case.

Choosing reliable character witnesses is a challenging task especially if you are not sure what role a witness plays in a divorce case. Therefore, in order to improve the outcome of your family law trial, you need to know what a character witness does and whether or not there is a requirement for one in your particular case and who you will ultimately choose for that role.

The Role Of A Witness In A Divorce Case

When going through a divorce, a character witness testifies about your moral character, responsibility, and other personal qualities. The court relies on this person’s word, so the witness must be very familiar with the person that they are testifying about.

If you have to use a witness or witnesses, your attorney should ask the witness questions before court. After your attorney has reviewed the questions with the witness, it will be your spouse’s attorney’s opportunity to ask their questions. But before the witness leaves, your attorney will have a final opportunity to ask any remaining questions.

The Need For A Witness In A Divorce Case

For people going through a divorce or a child custody issue or any family law related matter, it is beneficial to have a strong witness or witnesses. A witness is absolutely necessary in cases where your some allegations have been made about your character.

If your divorce case involves children, or if you are dealing with a child custody issue, a good character witness can point out your good qualities as a parent in front of the court. However, not every divorce case requires character witnesses, especially if the divorce process is amicable or if both spouses are working towards a mutually agreed upon settlement.

Choosing a Witness in a Divorce Case

Courts may not allow family members to act as character witnesses, due to certain perceived biases. So it’s advisable to have a friend, a colleague, or someone else who knows you very well to act as a character witness.

It’s always best to choose someone close to you because they have first-hand accounts of both your behavior and your spouse’s. For example, in a case where abuse has been alleged, your best friend may have seen your spouse hit you, whereas your colleagues might have only seen the bruises and other evidence of abuse.

In certain divorce cases, a witness may be used who can testify regarding both sides. For example, a nanny or housekeeper generally has firsthand experience watching the family and how each spouse behaves with their children.

Such a witness can be instrumental in testifying about the qualities of both parents. If the couple shares a business, a colleague or business partner can attest to how each person contributed to the growth of the business. Every divorce case is unique and has its own specific set of challenges. When it comes to deciding whether you need a character witness or not, it is best to consult with your attorney.

Work with an Attorney

A competent and experienced family law attorney can evaluate your situation and determine the best legal methods to employ to protect your interests.

Every Case is Unique

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