Tag Archive for Tax Planning

The Smart Choice! Durable Power of Attorney

Today I received a frantic telephone call from the adult daughter of a senior citizen client for whom I prepared an estate plan 10 years ago. Unfortunately, the man, who is a widower, had a serious stroke. He is alive but is not communicative. The daughter called and asked if I had prepared a Durable Power Of Attorney. Even though I had prepared a Will and a Living Will, the client had insisted that he did not want a Power Of Attorney.

Specifically, this client is a very private person and wanted to be in complete control of all of his assets. I had suggested that we establish a Trust, with him being the Trustee and having one of his children as a Co-Trustee who could take over if he came incapacitated. That was rejected. Read More

Written by | Posted in Estate Planning Tax

Why Is Halloween So Scary? – 2015 Tax Planning Will Be Hugely Complicated And Profoundly Significant For Most ALL Taxpayers

Once again another year is almost behind us and right after the new year income taxes are coming. The forthcoming tax environment is extraordinarily unusual and can subsequently be very scary. Basically what you need to know is that ALL Americans will be seeing changes on their tax returns many of which congress ONCE AGAIN still hasn’t been able to work out as of yet. While the pusillanimous reprobates in federally elected positions of authority continue to ‘discuss’ last minute income tax bills you can be assured that I make a concerted effort to stay abreast of all the latest changes as they occur.

So have fun this weekend celebrating all hallows eve – may favorite of all the ‘holidays’ – but prepared to reach out to a knowledgeable and reputable Enrolled Agent to do some Read More

Written by | Posted in Tax Planning • Tax Tips

12 Days of Tax Planning

This is an update of something I did last year and it’s once again roughly twelve days before Christmas so let’s give it another try. If anyone wants to come on the podcast and sing it for the audience, let me know. I won’t be singing for fear of losing both our listeners. You can bring this to life on what would appear to be the world’s premier (and only) tax and tiger-based podcast. You will notice the theme is definitely higher tax rates as 2013 has brought us many changes to the tax code.

On the twelfth day of planning my accountant gave to me:

12 months of recordkeeping

11 pages of checklists Read More

Written by | Posted in Individual • Tax Tips

Foreign Nationals – Common US Tax Planning Technique With a Dynasty Trust

TaxConnections Picture - True FalseIntroduction

Many non-US persons have children, grandchildren and succeeding generations who are US citizen or resident individuals. The foreign person often wishes to create a trust for, or implement some other form of estate plan that will benefit these US individuals, whether during the lifetime of the foreign person or upon his or her death. When US individuals are to be the beneficiaries of such planning, extreme care must be taken so as not to run afoul of the numerous US tax rules that can result in harsh taxation to the US beneficiary who receives distributions from a foreign (non-US or “non-domestic”) trust. The creation of a so-called “Dynasty Trust” may be of benefit in some cases and can assist in the saving of significant US tax dollars.

What is a Dynasty Trust? How Does it Work?

In the past, many US States had laws in place that prevented a trust from continuing its existence through multiple levels of generations. This law was known as the “Rule Against Perpetuities.” This Rule was designed to prevent rich families from tying up family assets in trusts that continued through many generations of heirs. The Rule Against Perpetuities has been changed in many States, and as a result, the so-called “Dynasty Trust” appeared. Read More

Written by | Posted in Estate Planning Tax • Expatriate

Wag The Dog: Don’t Let The Tax Tail Wag The Financial Dog!

TaxConnections Picture - 2014It’s that time of year again. Time to start planning for your tax situation for 2014. You might be saying, “Wait! I haven’t even finished my 2013 planning yet!”. If that’s the case, my best advice is to see your tax adviser right now. It’s already too late for most elections and planning to have much effect on the end result of your 2013 taxes. There are still things that can be done for the end of the year, but that’s another blog entirely. (See tomorrows article)

This time of year we see lots of clients coming in with questions about how they can lower their tax liability for next year. Your tax professional is great at handling just that situation. However, as with all in life, don’t lose sight of the bigger picture. A slightly lower tax liability in this tax year may mean a much larger one in a following tax year. Structuring your income and deductions with only one year in mind is the road to long term disaster.

Here are four examples:

In 2012 your state income tax withholding was $100 more then your allowed optional sales taxes, so you take the state withholding and get a larger itemized deductions. Did you consider that in 2013 your are probably going to have to take the Read More

Written by | Posted in Tax Tips

Self Employed And Worried About Retirement Plans? Read On…

Manasa Nadig, EA
Manasa Nadig, EA

You did it! You quit your job and started that small business that had always been your dream! Exciting times, thrilling ups & downs, you are your own boss–but wait, you do miss the paychecks that arrived regularly every other week. You also miss the medical benefits that the company paid for & that retirement plan you contributed to. What’s more, you also miss that extra oomph on your paycheck-the employer contribution to the company 401(k).

In this post on Employer Retirement Plans for Small Businesses, let’s closely examine the Individual 401(k). This is also known as the Solo 401(k). Unlike other retirement plans, a solo 401(k) is only for sole proprietors or S Corps who have no employees. A spouse can contribute if he or she earns income from the business.
It comes in both the Traditional & Roth version. Just like IRA’s, Traditional is money put away pretax & is taxable when withdrawn. The Roth 401(k) is funded with after-tax dollars & is tax free when withdrawn. One can also split the contributions between the two. Loans can also be taken against savings in 401(k)’s.

Why I like these plans?

•They are ideal to sock away large amounts of money in the good years.

•It helps you save both as an employer & an employee. Here’s how for 2013 – you can contribute a maximum of $33500 (Up from $33000 in 2012) as an employer AND $17500 (Up from $17000 in 2012) as an employee- not to exceed a maximum of $51000 (Up from $50000 in 2012) or 100% of the employee’s compensation, whichever is lesser. Read More

Written by | Posted in Individual • North America • Partnership • Small Business
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