Posts Tagged "tax changes"

It’s tax planning time

Posted on Jun 13, 2013

It’s midyear 2013, and if you haven’t thought about your 2013 tax situation yet, it’s time to do so. By now, you should have a good idea of what your 2013 income and deductions will be. There are several very significant tax changes this year, and you need to start planning now if any of them will affect you. Don’t procrastinate or you could end up paying more tax for 2013 than necessary. Contact us to schedule your midyear...

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Supreme Court rules on health care law

Posted on Jul 10, 2012

On June 28, the Supreme Court ruled that the “Patient Protection and Affordable Care Act of 2010” was constitutional, including the provision in the law requiring individuals to have health insurance coverage starting in 2014.  Several provisions in the health care law had already gone into effect, and many new tax provisions are scheduled to take effect in 2013. These are the provisions you should factor into your tax planning for the rest of this year. A quick review of these tax provisions:  * Annual contributions to health flexible spending accounts (FSAs) will be limited to $2,500.  * The 7.5% income threshold for deducting unreimbursed medical expenses increases to 10% for those under age 65. Those 65 and older may continue to take an itemized deduction for medical expenses exceeding 7.5% of adjusted gross income through the year 2016.  * The payroll Medicare tax will increase from 1.45% of wages to 2.35% on amounts above $200,000 earned by individuals and above $250,000 earned by married couples filing joint returns.  * A new 3.8% Medicare tax will be imposed on unearned income for single taxpayers with income over $200,000 and married couples with income over $250,000.  Contact our office for tax planning guidance following this landmark Supreme Court...

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Act now, pay later with a Roth conversion

Posted on Apr 27, 2010

Are you thinking of converting your traditional IRA, SEP IRA, SIMPLE IRA, or other qualifying retirement plan to a Roth IRA this year?  Depending on your tax bracket and financial situation, acting in 2010 could be a good idea. One reason: For conversions made this year, a change in the law provides a one-time “act now, pay later” option.  * How it works. You instruct the custodian of your retirement plan assets to convert all or part of your account to a Roth during 2010. Normally, the amount you convert is treated as ordinary income on your 2010 federal income tax return — and you can still choose to report it that way.  However, for 2010 conversions only, you have another alternative: You can include the conversion income on your 2011 and 2012 returns instead. You will report no income from the conversion on your 2010 return, 50% on your 2011 return, and 50% on your 2012 return.  * What’s the catch? As you begin your planning, you’ll want to take into account estimated future tax rates. Why? Because you’re deferring the income from the conversion, not the tax on that income. In other words, you’ll pay federal income tax on the conversion in future years at the rates applicable to those years.  In addition to potential changes in tax law, you’ll need to consider your personal financial outlook. Expected – and unexpected – increases in income may put you in a higher tax bracket.  The opportunity to defer income is only one of the many factors to keep in mind as you determine whether a Roth conversion makes sense for you. Please call for a review of your...

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President Obama posts his health care proposal

Posted on Mar 2, 2010

On February 22, just prior to the start of a White House health care summit scheduled for February 25, President Obama released his version of health reform.  The 11-page plan uses as its base the bill passed by the Senate in December 2009 (the “Patient Protection and Affordable Care Act of 2009”).  Obama’s proposal includes the tax on so-called “Cadillac” plans, but raises the threshold at which the tax would apply from the Senate’s $23,000 for families to $27,500. The tax would not go into effect until 2018.   Among the other revenue provisions in President Obama’s proposal is a .9% increase in Medicare tax for singles with incomes over $200,000 and couples filing jointly with incomes over $250,000. A 2.9% Medicare tax would apply to the unearned income (such as interest, dividends, annuities, royalties, and rents) of these high-income taxpayers.  According to the White House communication director, President Obama’s proposal was “the opening bid for the health meeting” on February 25.  For more information about the Obama proposal, go to the White House website at...

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