Jun 07

A stunning graph on U.S. debt in the near future

why tax and estate planning is important

Projections from the CBO on Federal Debt Projections to 2087

This is a stunning graph from the Congressional Budget Office that represents the US public debt as a percentage of GDP. The steady line at the bottom is the Extended Baseline Scenario, which is what the CBO must use assuming the rosiest projections.

However, the dashed line that goes completely off the chart around 2042, according to the CBO, “is more representative of the fiscal policies that are now (or have recently been) in effect than is the extended baseline scenario.”

Just remember as you delay your own planning on your estate or your taxes, the fox is guarding the henhouse in Washington, D.C. and if you haven’t already made your own plans, this graph shows that the government will likely make a plan for you.

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Hat tip to Legal Insurrection for the graphic.

Jun 05

Business Planning Tax Deductions for 2012 & 2013

This is a continuation of the series I started last week looking at the tax law changes that will have the greatest effect on small businesses and individuals in the coming year. This post will highlight a few of the changes that will go into effect at the stroke of midnight on January 1, 2013. This has been called Taxmageddon and if all plans stay in effect will result in a $5.8 TRILLION tax increase over the next ten years.

The Payroll Tax Holiday will sunset once again. This will mean that your employer (or yourself, if self-employed) will have to start deducting full amounts for social security from your paycheck. This is a 2% tax increase on all earned wages (up to $112,000). In reports I have seen, this will mean a tax increase of $840 per average household.

Capital Gains taxes, the taxes imposed on the gain realized on the sale of assets held for investment, will increase from a maximum rate of 15% to a maximum rate of 20%.

Dividend taxation: The preferred rate, currently 15% for qualified dividiends, money that is already taxed at the corporate level and distributed to the shareholders, will increase from a maximum of 15% to potentially as high as 42% just at the federal level.

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Planning time is still available. I will pursue a few more of these articles to show how to protect your hard earned wealth through proper tax and estate planning.

 

 

Jun 01

Gifts

Oklahoma estate planning

New boots from Ray Harshman of Edmond

This morning I came into the office and found a package waiting on me. In the package I found this new pair of boots from a friend from Edmond, Oklahoma, Ray Harshman.

This is now the third pair he has made for me and I cherish each pair because they are the best fitting shoes I have ever owned. They are boots that I will probably never wear out and will pass down to the next generation, someday.
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That brings up a point that I like to make with my clients: estate planning is not just about money, real estate, or financial accounts, it is also about passing on the legacy and stories you have accumulated over your lifetime. These boots represent a friendship between Ray and myself and the story of these boots are worth more than the liquidation value in an estate sale would be.

What stories would you like to tell your children; and do you have the planning in place so those stories will last into future generations? Thank you, Ray, for the boots and the friendship.

Jun 01

Business deductions for 2012 and 2013

Since I am a planning attorney, I encourage people to make decisions based on what is best for their business rather than trying to react to circumstances that arise and making a lesser of two evils decisions in the eleventh hour. One of the main areas that this arises is with tax planning. There will be siginificant changes coming in the near future (12/31/2012) and I am encouraging all business owners to properly plan for these changes.

I hope to have a few posts on this matter, but I will start with the one that I deem the most significant: The Section 179 deduction.

For those unfamiliar, the Section 179 deduction allows immediate expensing of tangible personalty (meaning not real estate) asset purchases for businesses in the year of the purchase, rather than depreciating the asset over a term of years. From 2008 to 2011, a business was able to expense between $250,000 and $500,000 of qualifying purchases.

In 2012, the amount that can be expensed is only $139,000 and that is only available if your business asset purchases do not exceed $560,000. For any amount over $560,000, the deduction decreases dollar for dollar.

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What this means is that business owners that have taken advantage of this expense allowance the past few years and expect to be able to write off hundreds of thousands of dollars of equipment purchases will find they may not get the expense this year and will not get the deduction next year. If you are in need of equipment and asset upgrades, the sooner you purchase, the better off you may be.

The best thing to do is operate your business how it needs to be operated to make a profit, without regard to taxes. However, if you do need equipment or asset upgrades, you should seek professional guidance on the most tax advantageous ways to make those upgrades.

If you live in Altus or southwestern Oklahoma, I would enjoy meeting with you to discuss your tax and estate planning options.