The Tax-Man Cometh
February 23, 2011Current Events, Tax PlanningNo Comments
It’s that time of year again; the time of year when everyone starts gathering receipts, assessing income and expenses, and making appointments with tax advisors. Tax time can be a very stressful time for many families, but—with the help of this article from MSN Money—perhaps tax season can be made a little bit easier. The article lists 13 tax breaks from 2010 that can help save you money, including:
- The tax credit for first time homebuyers (if you’re not a first time homebuyer don’t give up, there’s a credit for existing homeowners too.)
- The parking and transit credit
- The college tuition tax credit
- The credit for energy-saving home improvements
And then of course there are the two we’ve been mentioning here on our blog for the past few months:
- The estate tax exemption, and
- The annual gift tax exemption
Of course, not every item on the list is going to apply to every reader, but if even one or two credits apply to you or your family it can be a huge help.
Don’t rely only on this article to ease your 2010 tax burden, your own advisors and tax planners—who know more about your family’s personal and business finances—will be able to give you much more in-depth advice on how best to address your own tax situation. In addition, talking to a professional advisor right now provides the perfect opportunity to tackle any issues in 2011, hopefully making this time next year a much happier and less stressful time for everybody.
December 1, 2010Current Events, Estate Planning, Tax Planning8 Comments
The season of giving is upon us… and thanks to 2010’s unusual tax laws we may see some very large gifts before the year is out! If you are considering being particularly generous this year, this article from Reuters explains why the federal government is making 2010 an exceptionally good year for giving.
Most people know that for this year only there is no estate tax. But the year is almost over, and next year the estate tax is slated to go up to an astounding 55%. The more you can afford to give away now, the less that will eventually be subject to the estate tax. However, “the incentive to give stems not just from a looming increase in the estate tax, but also from the lowest tax rate on gifts in a generation — a maximum of 35 percent. That top rate was 45 percent in 2009 and jumps to 55 percent next year unless Congress acts.”
Those last three words, “unless Congress acts,” carry a lot of weight. Congress could choose instate lower and more reasonable tax rates in 2011; but right now we just don’t know, and the clock is ticking to the end of this “golden year.” There is nothing wrong with waiting to see what happens, but you may want to at least have the conversation with your estate or financial planner, so you know your options and can act swiftly when the time comes.
Very few people really want to give away their hard-earned money; but as the saying goes, you can’t take it with you, and most people would rather leave their legacy to their family rather than the government.
Options Abound With Out-of-State Trusts
June 14, 2010Asset Protection, Estate Planning, Tax PlanningNo Comments
If you have a family trust—or are considering creating a family trust—to protect your assets you may want to ask your attorney about creating an out of state trust. It’s a grantor’s market (so to speak) and creating a trust these days doesn’t mean you have to simply accept the tax laws of your state of residence. Creating a trust in another state—with tax laws that are friendlier to trusts—is a perfectly legal option, “the only real requirement is that [you] choose an in-state trustee.”
As we mention frequently on our blog, there are many reasons for families to create a trust: credit protection, keeping assets in the family, estate planning, educational savings, and many more. Furthermore, trusts are no longer an exclusive tool for the rich and famous; trusts are useful for just about everybody, and the states recognize this.
“States such as Alaska, Delaware, Nevada, New Hampshire, South Dakota and Wyoming have modified their trust laws in recent years to make them more attractive to individuals and families, including nonresidents, looking to minimize taxes, shield assets from creditors and preserve family assets in the event of a divorce, among other things.”
If you would like to explore your options for out-of-state trusts we recommend working with your local attorney, someone you trust who can meet with you when needed, who can draft the trust documents for you. Your local attorney can then have a licensed attorney from the state of your choice review the documents for state-specific issues.
Robin Hood Lives On: Tax Breaks to Help Your Family
May 10, 2010Estate Planning, Tax PlanningNo Comments
It may seem like you just can’t catch a break when it comes to paying taxes, but according to this article in the Wall Street Journal there are a few little known tax breaks that could end up saving your family money. Some are new—so new, in fact, that it is still before the Senate—such as the tax exemption for employer provided cell phones and smart phones; and some—like the tax free income homeowners can earn if they rent out their home for 14 days or fewer during a year—have been around for a few years.
Of particular interest to our clients is the gift tax exclusion (another lesser known tax break that has been around for a few years.) As stated in the article, “Anyone may give anyone else up to [$13,000] per year in cash or property, free of gift tax. One partner of a married couple can double the gift and the exemption. So a couple with three married children and six grandchildren could give away over $300,000 a year, tax-free.”
We say that this gift tax exclusion may be of particular interest to our clients because if you are looking for a way to lower your estate tax, or anticipate applying for government medical services in the next few years, giving gifts to loved ones right now may help you achieve your goal—if you go about it the right way.
Contact our office for more information on how any of these “Robin Hood” tax saving techniques may help your family this year.
Tax Tips to Benefit YOUR Family
April 12, 2010Current Events, Tax PlanningNo Comments
Tax day is coming up quickly, are you ready to file? And just as important—are you taking advantage of all the savings and deductions available to you? Most people who do their own taxes are unaware of some of the lesser-known deductions which can help you save money come tax-time. We have a couple of articles we’d like to share with our readers that may make it easier for your family come April 15th.
A recent article on SmartMoney.com offers 3 often overlooked ways to save on your income taxes. Two of the three items have to do with parenthood and buying a home, but of particular interest to our readers is tip #2, Selling Grandma’s Stuff: “If you sold something last year that you inherited, understand that your tax basis for gain or loss purposes generally has nothing to do with what your benefactor paid for the asset. And that’s probably going to save you a bundle in taxes.” If you sold an asset from an inheritance last year (or if you received an inheritance last year at all, regardless of whether you’ve sold the asset or not) contact our office before filing your taxes.
Another potentially useful resource for tax savings is the ABC News article Top Ten Commonly Missed Tax Deductions to Put Cash in Your Wallet. This article reminds us to include the little things—such charity volunteer related expenses, the new car deduction, old school books used for work, and more. There are a number of tax deductions your family may be able to take advantage of… if you just know where to look.