2018 - For high net worth individuals there was some lingering doubt about gift tax exemption levels (after 2025). This doubt was dispelled by a recent IRS ruling (posted November 20, 2018). According to the IRS…Making large gifts now won’t cause any harm to estates after 2025… “On Nov. 20, 2018, the IRS clarified that individuals taking advantage of the increased gift tax exclusion amount in effect from 2018 to 2025 will not be adversely impacted after 2025 when the exclusion amount is scheduled to drop to pre-2018 levels.”
There is a FAQs available on the IRS website: (https://www.irs.gov/newsroom/estate-and-gift-tax-faqs)…
There is a FAQs available on the IRS website: (https://www.irs.gov/newsroom/estate-and-gift-tax-faqs)…
2018 - The new tax bill signed in December, 2018 will impact individual paychecks via a new withholding system.
Here is the link to the ‘early release’ by the IRS of the 2018 Percentage Method Tables for Income Tax Withholding: https://www.irs.gov/pub/irs-pdf/n1036.pdf
The 2018 changes do not go into effect until 2019. It is anticipated that individuals will not see any changes in their paycheck until February, 2019, or later.
For Employers: According to the IRS table (for employers)…” In addition to withholding Medicare tax at 1.45%, you must withhold a 0.9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year.”
Here is the link to the ‘early release’ by the IRS of the 2018 Percentage Method Tables for Income Tax Withholding: https://www.irs.gov/pub/irs-pdf/n1036.pdf
The 2018 changes do not go into effect until 2019. It is anticipated that individuals will not see any changes in their paycheck until February, 2019, or later.
For Employers: According to the IRS table (for employers)…” In addition to withholding Medicare tax at 1.45%, you must withhold a 0.9% Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year.”
Senate Bill 15-206 Signed into Law
Colorado Gov. Hickenlooper signed into law Colorado Senate Bill 15-206 which increases the individual conservation easement tax credit in Colorado.
Colorado Gov. Hickenlooper signed into law Colorado Senate Bill 15-206 which increases the individual conservation easement tax credit in Colorado.
Passage of SB-206 in Colorado.
On May 6, 2015 the Colorado State Legislature passed Senate Bill 206. The Bill allows landowners with a larger or high value parcel of land to earn up to $1.5 million in Colorado tax credits in a single year. This is a significant increase from the previous formula of 50% of the donated value of the conservation easement up to a $375,000 credit. The Colorado individual conservation easement tax credit formula is now 75% of the first $100,000 donated value of the conservation easement and 50% of any remaining donation up to a total credit of $1.5 million.
On May 6, 2015 the Colorado State Legislature passed Senate Bill 206. The Bill allows landowners with a larger or high value parcel of land to earn up to $1.5 million in Colorado tax credits in a single year. This is a significant increase from the previous formula of 50% of the donated value of the conservation easement up to a $375,000 credit. The Colorado individual conservation easement tax credit formula is now 75% of the first $100,000 donated value of the conservation easement and 50% of any remaining donation up to a total credit of $1.5 million.
2014-2015 Tax Alert - ABLE Act 2014
Achieving a Better Life Experience (ABLE) Act of 2014, went
into effect in 2015. There were three versions of the bill (H.R.647 113th
Congress – ABLE Act 2014- notably 2/13/2013; 11/12/2014; and 12/3/2014. You may access the amended texts via www.congress.gov
As noted in the title of ABLE Act: The purposes of this Title are as follows:
(1) To encourage and assist individuals and families in saving private funds for the purpose of supporting individuals with disabilities to maintain health, independence, and quality of life.
(2) To provide secure funding for disability-related expenses on behalf of designated beneficiaries with disabilities that will supplement, but not supplant, benefits provided through private insurance, the Medicaid program under title XIX of the Social Security Act, the supplemental security income program under title XVI of such Act, the beneficiary’s employment, and other sources.
As of this writing, individual state legislations are pending and qualified ABLE programs may vary from state to state.
Some of the (current) qualified disability expenses encompassing the ABLE Act include: education; housing, employment training; personal support devices and assistive technology; health related; financial management and administrative services; and funeral and burial expenses. (Note, currently, funds remaining in a qualified ABLE account on the death of the designated beneficiary must be distributed to the state that holds the account. Read more on individual state legislation websites.)
In addition to the above expenses, included are other expenses as approved by the Secretary of Treasury.
Presently, as the ABLE Act is written, a qualified ABLE program can only accept cash contributions, the total of which can’t exceed the current year’s limitation for gift tax exclusion (currently $14,000 per year). ABLE accounts will also allow for tax-free growth while the funds are in an ABLE account and allow for tax-free distribution when funds are used, provided they are used for the qualified disability expenses.
This is offered only as a brief synopsis of the ABLE Act 2014. You are encouraged to continue to find out more information going forward from the federal and state government websites as legislation evolves.
Consult with a tax advisor for the individual tax implications for your circumstances.
As noted in the title of ABLE Act: The purposes of this Title are as follows:
(1) To encourage and assist individuals and families in saving private funds for the purpose of supporting individuals with disabilities to maintain health, independence, and quality of life.
(2) To provide secure funding for disability-related expenses on behalf of designated beneficiaries with disabilities that will supplement, but not supplant, benefits provided through private insurance, the Medicaid program under title XIX of the Social Security Act, the supplemental security income program under title XVI of such Act, the beneficiary’s employment, and other sources.
As of this writing, individual state legislations are pending and qualified ABLE programs may vary from state to state.
Some of the (current) qualified disability expenses encompassing the ABLE Act include: education; housing, employment training; personal support devices and assistive technology; health related; financial management and administrative services; and funeral and burial expenses. (Note, currently, funds remaining in a qualified ABLE account on the death of the designated beneficiary must be distributed to the state that holds the account. Read more on individual state legislation websites.)
In addition to the above expenses, included are other expenses as approved by the Secretary of Treasury.
Presently, as the ABLE Act is written, a qualified ABLE program can only accept cash contributions, the total of which can’t exceed the current year’s limitation for gift tax exclusion (currently $14,000 per year). ABLE accounts will also allow for tax-free growth while the funds are in an ABLE account and allow for tax-free distribution when funds are used, provided they are used for the qualified disability expenses.
This is offered only as a brief synopsis of the ABLE Act 2014. You are encouraged to continue to find out more information going forward from the federal and state government websites as legislation evolves.
Consult with a tax advisor for the individual tax implications for your circumstances.
April 16, 2015 - Passage in the House of Representatives of H.R.1105: Death Tax Repeal Act of 2015. Voting was 240-179, with 12 Representatives not voting.
Jan. 20, 2015 - State of the Union Address by President Obama
There were many proposals in President Obama's State of the Union Address that could affect the tax rates and lives of Americans into the future. A brief synopsis of some proposals: increase top tax rate on capital gains and dividends to 28%; impose capital gains taxes on asset transfers at death; allow workers to earn 7 days paid sick leave per year; make community college free for some students; a tax credit for married couples when both spouses work; increase maximum tax credit for child care; repeal of flexible spending accounts for child care; require companies to automatically enroll workers in IRA...There is an excellent article by Richard Rabin and Margaret Talev (Bloomberg Business, Jan. 17, 2015) titled "Promoting a plan for new taxes on wealthiest Americans". Regardless of which side of the fence you are one, it will be important to watch any of these initiatives unfold.
There were many proposals in President Obama's State of the Union Address that could affect the tax rates and lives of Americans into the future. A brief synopsis of some proposals: increase top tax rate on capital gains and dividends to 28%; impose capital gains taxes on asset transfers at death; allow workers to earn 7 days paid sick leave per year; make community college free for some students; a tax credit for married couples when both spouses work; increase maximum tax credit for child care; repeal of flexible spending accounts for child care; require companies to automatically enroll workers in IRA...There is an excellent article by Richard Rabin and Margaret Talev (Bloomberg Business, Jan. 17, 2015) titled "Promoting a plan for new taxes on wealthiest Americans". Regardless of which side of the fence you are one, it will be important to watch any of these initiatives unfold.
2014 - 2015 - Tax Alert
For those individuals who do not have access to any employer sponsored retirement plan, the Treasury Department will continue the myIRA. To learn more go to the website: www.myRA.gov There are allocation limits set and funds into the personal IRA account can only be done through payroll deduction.
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For those individuals who do not have access to any employer sponsored retirement plan, the Treasury Department will continue the myIRA. To learn more go to the website: www.myRA.gov There are allocation limits set and funds into the personal IRA account can only be done through payroll deduction.
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2014-2015 Tax Alert
The Patient Protection and Affordable Care Act required all non exempt U.S. citizens and legal permanent residents to maintain essential health insurance coverage. There will be penalties assessed (2014 taxes filed in 2015) for individuals who do not comply.
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The Patient Protection and Affordable Care Act required all non exempt U.S. citizens and legal permanent residents to maintain essential health insurance coverage. There will be penalties assessed (2014 taxes filed in 2015) for individuals who do not comply.
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2015 Social Security Alert
The Social Security Administration has been on a five year cycle of sending out Social Security information. If you are turning 25, 30, 35, 40, 45, 50, 55, 60 or 60+ in 2015...(and not already receiving social security) then you should receive your Social Security statement to use as a financial planning tool for retirement. Make sure to verify the statement for accuracy. If you believe there is an error contact the Social Security office for more information. The Social Security statement is used to allocate your benefits when you apply for social security, so make sure it is accurate.
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The Social Security Administration has been on a five year cycle of sending out Social Security information. If you are turning 25, 30, 35, 40, 45, 50, 55, 60 or 60+ in 2015...(and not already receiving social security) then you should receive your Social Security statement to use as a financial planning tool for retirement. Make sure to verify the statement for accuracy. If you believe there is an error contact the Social Security office for more information. The Social Security statement is used to allocate your benefits when you apply for social security, so make sure it is accurate.
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2015 Tax Alerts from www.irs.gov
go to the website for more information and discuss effect of these changes with your tax advisor
Estates of decedents who die during 2015 have a basic exclusion amount of $5,430,000, up from a total of $5,340,000 for estates of decedents who died in 2014.
•For 2015, the foreign earned income exclusion breaks the six-figure mark, rising to $100,800, up from $99,200 for 2014.
•The annual exclusion for gifts remains at $14,000 for 2015.
•The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSA) rises to $2,550, up $50 dollars from the amount for 2014.
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According to the IRS website: The tax items for tax year 2015 of greatest interest to most taxpayers include the following dollar amounts -
•The tax rate of 39.6 percent affects singles whose income exceeds $413,200 ($464,850 for married taxpayers filing a joint return), up from $406,750 and $457,600, respectively. The other marginal rates – 10, 15, 25, 28, 33 and 35 percent – and the related income tax thresholds are described in the revenue procedure.
•The standard deduction rises to $6,300 for singles and married persons filing separate returns and $12,600 for married couples filing jointly, up from $6,200 and $12,400, respectively, for tax year 2014. The standard deduction for heads of household rises to $9,250, up from $9,100.
•The limitation for itemized deductions to be claimed on tax year 2015 returns of individuals begins with incomes of $258,250 or more ($309,900 for married couples filing jointly).
•The personal exemption for tax year 2015 rises to $4,000, up from the 2014 exemption of $3,950. However, the exemption is subject to a phase-out that begins with adjusted gross incomes of $258,250 ($309,900 for married couples filing jointly). It phases out completely at $380,750 ($432,400 for married couples filing jointly.)
•The Alternative Minimum Tax exemption amount for tax year 2015 is $53,600 ($83,400, for married couples filing jointly). The 2014 exemption amount was $52,800 ($82,100 for married couples filing jointly).
•The 2015 maximum Earned Income Credit amount is $6,242 for taxpayers filing jointly who have 3 or more qualifying children, up from a total of $6,143 for tax year 2014. The revenue procedure has a table providing maximum credit amounts for other categories, income thresholds and phaseouts.
•Estates of decedents who die during 2015 have a basic exclusion amount of $5,430,000, up from a total of $5,340,000 for estates of decedents who died in 2014.
•For 2015, the exclusion from tax on a gift to a spouse who is not a U.S. citizen is $147,000, up from $145,000 for 2014.
•For 2015, the foreign earned income exclusion breaks the six-figure mark, rising to $100,800, up from $99,200 for 2014.
•The annual exclusion for gifts remains at $14,000 for 2015.
•The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSA) rises to $2,550, up $50 dollars from the amount for 2014.
•Under the small business health care tax credit, the maximum credit is phased out based on the employer’s number of full-time equivalent employees in excess of 10 and the employer’s average annual wages in excess of $25,800 for tax year 2015, up from $25,400 for 2014.
The above information from the IRS website is for informational purposes only. Further information can be obtained via the website or from your financial advisor.
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go to the website for more information and discuss effect of these changes with your tax advisor
Estates of decedents who die during 2015 have a basic exclusion amount of $5,430,000, up from a total of $5,340,000 for estates of decedents who died in 2014.
•For 2015, the foreign earned income exclusion breaks the six-figure mark, rising to $100,800, up from $99,200 for 2014.
•The annual exclusion for gifts remains at $14,000 for 2015.
•The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSA) rises to $2,550, up $50 dollars from the amount for 2014.
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According to the IRS website: The tax items for tax year 2015 of greatest interest to most taxpayers include the following dollar amounts -
•The tax rate of 39.6 percent affects singles whose income exceeds $413,200 ($464,850 for married taxpayers filing a joint return), up from $406,750 and $457,600, respectively. The other marginal rates – 10, 15, 25, 28, 33 and 35 percent – and the related income tax thresholds are described in the revenue procedure.
•The standard deduction rises to $6,300 for singles and married persons filing separate returns and $12,600 for married couples filing jointly, up from $6,200 and $12,400, respectively, for tax year 2014. The standard deduction for heads of household rises to $9,250, up from $9,100.
•The limitation for itemized deductions to be claimed on tax year 2015 returns of individuals begins with incomes of $258,250 or more ($309,900 for married couples filing jointly).
•The personal exemption for tax year 2015 rises to $4,000, up from the 2014 exemption of $3,950. However, the exemption is subject to a phase-out that begins with adjusted gross incomes of $258,250 ($309,900 for married couples filing jointly). It phases out completely at $380,750 ($432,400 for married couples filing jointly.)
•The Alternative Minimum Tax exemption amount for tax year 2015 is $53,600 ($83,400, for married couples filing jointly). The 2014 exemption amount was $52,800 ($82,100 for married couples filing jointly).
•The 2015 maximum Earned Income Credit amount is $6,242 for taxpayers filing jointly who have 3 or more qualifying children, up from a total of $6,143 for tax year 2014. The revenue procedure has a table providing maximum credit amounts for other categories, income thresholds and phaseouts.
•Estates of decedents who die during 2015 have a basic exclusion amount of $5,430,000, up from a total of $5,340,000 for estates of decedents who died in 2014.
•For 2015, the exclusion from tax on a gift to a spouse who is not a U.S. citizen is $147,000, up from $145,000 for 2014.
•For 2015, the foreign earned income exclusion breaks the six-figure mark, rising to $100,800, up from $99,200 for 2014.
•The annual exclusion for gifts remains at $14,000 for 2015.
•The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSA) rises to $2,550, up $50 dollars from the amount for 2014.
•Under the small business health care tax credit, the maximum credit is phased out based on the employer’s number of full-time equivalent employees in excess of 10 and the employer’s average annual wages in excess of $25,800 for tax year 2015, up from $25,400 for 2014.
The above information from the IRS website is for informational purposes only. Further information can be obtained via the website or from your financial advisor.
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Alert for 2015 - 401(k) Contributions
IRS Announces 2015 Pension Plan Limitations; Taxpayers May Contribute up to $18,000 to their 401(k) plans in 2015 (go to www.irs.gov for complete announcement and details)
IR-2014-99, Oct. 23, 2014
WASHINGTON — The Internal Revenue Service today announced cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2015. Many of the pension plan limitations will change for 2015 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged because the increase in the index did not meet the statutory thresholds that trigger their adjustment.
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IRS Announces 2015 Pension Plan Limitations; Taxpayers May Contribute up to $18,000 to their 401(k) plans in 2015 (go to www.irs.gov for complete announcement and details)
IR-2014-99, Oct. 23, 2014
WASHINGTON — The Internal Revenue Service today announced cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2015. Many of the pension plan limitations will change for 2015 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged because the increase in the index did not meet the statutory thresholds that trigger their adjustment.
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Alert for 2014 - Colorado Conservation Easements
For 2014…(citing from the colorado.gov website) “Beginning in 2014, Senate Bill 13-221 established a pre-approval process prior to the tax credit claim for conservation easement donations made on or after January 1, 2014. SB13-221 authorizes the Director of the Division of Real Estate (“Director”) to determine the credibility of appraisal and the nine-member Conservation Easement Oversight Commission (“Commission”) to determine whether the donation is a qualified conservation contribution. The Department of Revenue no longer has jurisdiction to disallow a tax credit for issues relating to the appraisal or conservation purposes…” (www.colorado.gov)
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For 2014…(citing from the colorado.gov website) “Beginning in 2014, Senate Bill 13-221 established a pre-approval process prior to the tax credit claim for conservation easement donations made on or after January 1, 2014. SB13-221 authorizes the Director of the Division of Real Estate (“Director”) to determine the credibility of appraisal and the nine-member Conservation Easement Oversight Commission (“Commission”) to determine whether the donation is a qualified conservation contribution. The Department of Revenue no longer has jurisdiction to disallow a tax credit for issues relating to the appraisal or conservation purposes…” (www.colorado.gov)
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Alert for 2015 -
Increase in Social Security for 2015
Recently released by the Social Security Administration (www.ssa.gov) is the information about the annual increase of the social security benefits for 2015
In January, 2015 those receiving social security benefits will see an increase of 1.7% in the social security (the increase known as the COLA (cost of living) increase.
The Social Security Act ties the annual COLA to the increase in the Consumer Price Index as determined by the Department of Labor’s Bureau of Labor Statitstics. To compare this 2015 increase with prior years: going back five years – In 2010 there was 0% increase in social security (COLA); in 2011 there was 0% increase; in 2012 the increase was a “whopping” 3.6%; in 2013 the increase was 1.7% and in 2014 the increase was 1.5%.
For those individuals who depend solely on social security, those increases would probably not allow one to live a “comfortable’ retirement.
According to the social security administration site: “Some other changes that take effect in January of each year are based on the increase in average wages. Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $118,500 from $117,000. Of the estimated 168 million workers who will pay Social Security taxes in 2015, about 10 million will pay higher taxes because of the increase in the taxable maximum.”
For more information specifically about COLA, go to www.socialsecurity.gov/cola
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Recently released by the Social Security Administration (www.ssa.gov) is the information about the annual increase of the social security benefits for 2015
In January, 2015 those receiving social security benefits will see an increase of 1.7% in the social security (the increase known as the COLA (cost of living) increase.
The Social Security Act ties the annual COLA to the increase in the Consumer Price Index as determined by the Department of Labor’s Bureau of Labor Statitstics. To compare this 2015 increase with prior years: going back five years – In 2010 there was 0% increase in social security (COLA); in 2011 there was 0% increase; in 2012 the increase was a “whopping” 3.6%; in 2013 the increase was 1.7% and in 2014 the increase was 1.5%.
For those individuals who depend solely on social security, those increases would probably not allow one to live a “comfortable’ retirement.
According to the social security administration site: “Some other changes that take effect in January of each year are based on the increase in average wages. Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $118,500 from $117,000. Of the estimated 168 million workers who will pay Social Security taxes in 2015, about 10 million will pay higher taxes because of the increase in the taxable maximum.”
For more information specifically about COLA, go to www.socialsecurity.gov/cola
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Alert for 2014: The legal issue of Cost of Living Adjustments (COLA) is back in the Colorado Courts. For more information about COLA and public service employees you can go to www.copera.org (Colorado Public Employees Retirement Association)
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Alert for 2014: Colorado has joined the group of 25 other states that have designated Benefit Corporations. The Colorado Benefit Corporation is known as PBC (Public Benefit Corporation) and is effective as of April 1, 2014 (with a proviso.) The other states that have Benefit Corporations in place as effective or pending (awaiting signature) are currently Arizona, Arkansas, California, Delaware, Florida, Hawaii, Illinois, Louisiana, Maryland, Massachusetts, Minnesota, Nebraska, Nevada, New Hampshire, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, South Carolina, Utah, Vermont, Virginia, Washington D.C. and West Virginia. Other states are considering the adoption of Benefit Corporation designation. You can access more information about Benefit Corporation through the website benefitcorp.net.
Alert for 2013: On January 2, 2013,
President Obama signed the American Taxpayer Relief Act of 2012 (“ATRA”) into
law. ATRA adds many new tax provisions
and extends the application of some old tax provisions. In addition to the tax law changes brought
about by ATRA, there are other taxes (enacted by earlier Congressional legislation)
that will apply to certain taxpayers beginning in 2013. ATRA permanently unified the estate, gift, and generation-skipping tax rate structure. The unified federal estate and lifetime gift tax exclusion amount — the amount each taxpayer can transfer without incurring estate, gift or generation-skipping taxes — is $5,000,000, adjusted for inflation after 2011. The 2012 amount was set at $5,120,000. The 2013 amount is $5,250,000 per taxpayer; for a married couple, the aggregate amount for 2013 is $10,500,000. Lifetime gifts and assets inherited at death that exceed the unified exclusion amount are subject to a 40% maximum rate. As an aside and not part of ATRA, for federal gift tax purposes, the “annual exclusion” amount for gifts increased for 2013 from $13,000 to $14,000 per gift recipient; this annual exclusion amount is in addition to the unified estate and lifetime gift tax exclusion amount. ATRA also made permanent the so-called “portability” provisions. For married couples, if a spouse dies without exhausting his or her estate and lifetime gift tax exclusion amount, the deceased spouse’s exclusion amount can be used by his or her surviving spouse, thereby increasing the amount of exclusion available for the surviving spouse to use to make lifetime gifts and pass assets at death. This portability provision does not apply to gifts made or inheritances passing to grandchildren (i.e., generation-skipping transfers). Click on this link for a more detailed summary of the ATRA tax law changes: 2013taxlawalert.pdf
Alert for 2012: The “Bush Tax Cuts” (which were extended for an additional two year period) will expire at the end of 2012. Absent Congressional action, January 1, 2013 will bring with it numerous federal tax law changes. I have posted to my website a short summary of the “Important Federal Tax Law Provisions that Expire at the End of 2012.” The remaining months of 2012 will be a critical time for individuals to evaluate their financial, tax and estate planning in light of the anticipated changes in the federal tax law. It is not too early for individuals to discuss the anticipated tax law changes with their advisors and evaluate options to manage the impact the changes may have on financial, tax and estate planning objectives. Reviewing and updating estate planning documents to respond to changing circumstances and tax laws is also appropriate as part of a comprehensive year-end analysis. Click on this link for a summary of the anticipated tax law changes: 2012taxlawalert.pdf
Alert for 2012: The “Bush Tax Cuts” (which were extended for an additional two year period) will expire at the end of 2012. Absent Congressional action, January 1, 2013 will bring with it numerous federal tax law changes. I have posted to my website a short summary of the “Important Federal Tax Law Provisions that Expire at the End of 2012.” The remaining months of 2012 will be a critical time for individuals to evaluate their financial, tax and estate planning in light of the anticipated changes in the federal tax law. It is not too early for individuals to discuss the anticipated tax law changes with their advisors and evaluate options to manage the impact the changes may have on financial, tax and estate planning objectives. Reviewing and updating estate planning documents to respond to changing circumstances and tax laws is also appropriate as part of a comprehensive year-end analysis. Click on this link for a summary of the anticipated tax law changes: 2012taxlawalert.pdf