Just so you know, here’s the “normal” behind-the-scenes calendar for Centralia IL (and beyond) tax professionals:
- January-May: Hopped-up on caffeine, flying through tax season
- May-June: Recover
- July-August: Recover from the recovery, squeeze in some continuing education
- September-October: Tax planning and flurry of corporate taxes and extension work
- November: Brief recovery
- December: Get the coffee ready for tax season (and the office and staff)
- Rinse. Repeat.
Well, in case you haven’t heard, there are a few tax breaks which are set to expire on January 1, 2013 — and by a “few”, I mean loads of them. The government currently estimates that these tax increases will add 19% more revenue to their coffers at current economic output levels. So, do the math — taxes are going up pretty dramatically (unless something changes).
Commentators have taken to calling this situation “the fiscal cliff” (with a hat tip to Fed Chairman Ben Bernanke, who first used the term).
Which means that we’ll be VERY busy helping our smarter clients do what they can do to position their finances for maximum tax savings this year.
(If you want to be one of those smart clients, call us soon [(618) 485-2549], before our calendar completely fills.)
But, in the meantime, I’ll be posting here various quick-strategies which you should be using NOW, to avoid paying more than you should be to Uncle Sam in 2013. Here’s a first installment…
A Centralia IL Tax Accountant Explains How To Prepare For The Fiscal Cliff (Part 1)
Since the last article from Team Newcomb was a bit on the long side, I’m going to keep this “Fiscal Cliff Series” short, sweet and actionable. After all, we’re all busy, we understand a cliff is hurtling our way — so let’s cut to the chase, shall we?
1) Start the gift-giving process NOW. That’s because the current federal tax exemption on estates and gifts is set to roll back on Jan. 1, 2013, from $5.12 million to $1 million — which is the same level it was at in 2002, before the “Bush Tax Cuts”.
And just as banks and mortgage brokers often encourage clients to “lock in today’s low rates,” I’m telling people to take advantage of this high exemption while it is still in effect. And this is often done by you (or your loved ones) making sizable gifts under the current limits so that they can reduce the size of the estate — and the potential tax hit — at the time of death.
Just as important, by the way: If you wait too long to begin the process, there is a good chance you won’t be able to complete the paperwork before year’s end.
So get cranking.
I’ll be back at you with more advice in the near future, my friend.