The American Taxpayer Relief Act of 2012 made several changes to estate, gift, and generation-skipping transfer tax laws. It made the $5,250,000 estate and gift tax exemption permanent and increased the tax rate for transfers over the exemption amount from 35% to 40%. It also extended provisions like portability of exemption amounts between spouses and the deduction for state death taxes. The Act increased some annual gift and retirement account transfer limits and extended education savings incentives.
Highlights of the Final Tax Cuts and Jobs ActSarah Cuddy
The combined tax reform bill includes plans to lower tax rates on individuals and businesses and change many deductions. Those hoping for tax simplification, however, may be disappointed.
The American Taxpayer Relief Act of 2012:
1) Allowed Bush-era tax rates to expire for individuals earning over $400,000 and families over $450,000, raising their tax rate to 39.6%;
2) Permanently patched the AMT by increasing exemption amounts; and
3) Provided for a maximum 40% estate tax and $5 million exemption.
It effectively raised taxes for all by not extending a payroll tax cut and delayed mandatory spending cuts. Congress will revisit tax and spending policies when addressing the debt limit in February, with entitlement reforms and the "chained CPI" likely to be controversial topics.
Current Thinking, November/December 2012Kevin Lenox
- If lawmakers cannot agree on a deal by the end of the year to avoid the "fiscal cliff", $560 billion in tax increases and $136 billion in spending cuts will automatically go into effect in 2013, resulting in a 3.6% decline in GDP and average household tax bills rising by $3,500.
- With many popular tax deductions and credits set to expire, tax planning strategies are more important than ever given the uncertainty around which provisions will be extended or changed.
- Estate and gift tax exemptions could be reduced substantially if Congress does not act, so accelerating gifts may help move assets out of estates before year-end.
Life Insurance Planning in an Era of Estate Tax Uncertainty - 5 Things To KnowtheBurgessGroup
The document discusses uncertainty around potential federal estate tax repeal and provides recommendations for life insurance planning. It notes that while repeal seems imminent under the current administration, the estate tax has been repealed and reinstated before so future reinstatement is possible. It recommends that individuals incorporate flexibility into their life insurance plans through means like flexible irrevocable life insurance trusts in case the tax code changes. Permanent repeal may not occur and life insurance may still be needed to meet other wealth transfer goals even without the estate tax.
The document provides 30 key points summarizing changes to the new US tax law. Some major changes include doubling the standard deduction, increasing the child tax credit, capping the state and local tax deduction at $10,000, lowering the corporate tax rate to 21%, and eliminating some itemized deductions for moving expenses, tax preparation, and alimony payments. The new law also expands tax breaks for education expenses and increases exemption amounts for the alternative minimum tax and estate tax.
The document discusses tax planning strategies in light of upcoming tax increases and steps business owners can take to reduce their audit risk. It summarizes upcoming changes to individual income tax rates, capital gains tax rates, the payroll tax holiday expiration, provisions of the Affordable Care Act, and the American Taxpayer Relief Act of 2012. It stresses the importance of maintaining thorough financial records supported by source documents to substantiate tax filings and withstand potential audits. Business owners should organize records by year and transaction type and retain them for the applicable statute of limitations.
This presentation discusses how homeowners, businesses, and municipalities would benefit from a repeal of Indiana's proprty tax and presents a plan for accomplishing repeal.
Highlights of the Final Tax Cuts and Jobs ActSarah Cuddy
The combined tax reform bill includes plans to lower tax rates on individuals and businesses and change many deductions. Those hoping for tax simplification, however, may be disappointed.
The American Taxpayer Relief Act of 2012:
1) Allowed Bush-era tax rates to expire for individuals earning over $400,000 and families over $450,000, raising their tax rate to 39.6%;
2) Permanently patched the AMT by increasing exemption amounts; and
3) Provided for a maximum 40% estate tax and $5 million exemption.
It effectively raised taxes for all by not extending a payroll tax cut and delayed mandatory spending cuts. Congress will revisit tax and spending policies when addressing the debt limit in February, with entitlement reforms and the "chained CPI" likely to be controversial topics.
Current Thinking, November/December 2012Kevin Lenox
- If lawmakers cannot agree on a deal by the end of the year to avoid the "fiscal cliff", $560 billion in tax increases and $136 billion in spending cuts will automatically go into effect in 2013, resulting in a 3.6% decline in GDP and average household tax bills rising by $3,500.
- With many popular tax deductions and credits set to expire, tax planning strategies are more important than ever given the uncertainty around which provisions will be extended or changed.
- Estate and gift tax exemptions could be reduced substantially if Congress does not act, so accelerating gifts may help move assets out of estates before year-end.
Life Insurance Planning in an Era of Estate Tax Uncertainty - 5 Things To KnowtheBurgessGroup
The document discusses uncertainty around potential federal estate tax repeal and provides recommendations for life insurance planning. It notes that while repeal seems imminent under the current administration, the estate tax has been repealed and reinstated before so future reinstatement is possible. It recommends that individuals incorporate flexibility into their life insurance plans through means like flexible irrevocable life insurance trusts in case the tax code changes. Permanent repeal may not occur and life insurance may still be needed to meet other wealth transfer goals even without the estate tax.
The document provides 30 key points summarizing changes to the new US tax law. Some major changes include doubling the standard deduction, increasing the child tax credit, capping the state and local tax deduction at $10,000, lowering the corporate tax rate to 21%, and eliminating some itemized deductions for moving expenses, tax preparation, and alimony payments. The new law also expands tax breaks for education expenses and increases exemption amounts for the alternative minimum tax and estate tax.
The document discusses tax planning strategies in light of upcoming tax increases and steps business owners can take to reduce their audit risk. It summarizes upcoming changes to individual income tax rates, capital gains tax rates, the payroll tax holiday expiration, provisions of the Affordable Care Act, and the American Taxpayer Relief Act of 2012. It stresses the importance of maintaining thorough financial records supported by source documents to substantiate tax filings and withstand potential audits. Business owners should organize records by year and transaction type and retain them for the applicable statute of limitations.
This presentation discusses how homeowners, businesses, and municipalities would benefit from a repeal of Indiana's proprty tax and presents a plan for accomplishing repeal.
The document discusses America's growing debt problem and some potential solutions. It outlines several "hidden debt bombs" not captured in official debt figures, such as losses from Fannie Mae and Freddie Mac, unfunded promises for Social Security and Medicare, and reduced tax revenue from tax breaks. Some proposed solutions mentioned include raising the Social Security retirement age, reducing health insurance tax breaks, broadening the tax base, and considering new revenue options like a value-added tax.
Attached is an excellent, easy to read newsletter summarizing the important changes, legislative extensions, and issues relating to your individual tax return for 2009 and beyond. Please read it well before 12/31 as there are items that need to be considered or acted upon before the end of this year to take full advantage of the legislation. It’s the best one I’ve come across. Its current and includes some commentary, planning suggestions, and even some health care issues as they relate to your taxes.
I will later post a copy of year end letters for both businesses and individuals that my clients receive.
If you should have any questions at this time on any of these items, please contact me anytime.
Thanks
Wally Wleklinski
This summary provides the key information from the document in 3 sentences:
The document discusses recent changes to estate planning laws, including the extension of certain expiring tax provisions and the new Achieving a Better Life Experience (ABLE) Act, which allows tax-free savings accounts to support disabled individuals. It outlines the key aspects of ABLE programs and accounts, including eligibility, contribution limits, tax treatment, and potential "clawback" of funds by states. The document also briefly summarizes two estate tax court cases related to reliance on an incompetent attorney and valuation of a partnership interest.
Extension of Tax Cuts, Estate Changes Highlight Final Bill of 2010RobertWBaird
The Tax Relief, Unemployment Insurance Reauthorization and Jobs Creation Act of 2010 extended several expiring tax provisions, including extending the 2001 and 2003 tax cuts through 2012. It also increased the estate tax exemption to $5 million per individual for 2011-2012, reduced the top estate tax rate to 35%, and made the exemption portable between spouses. Additionally, it reduced the employee portion of the payroll tax from 6.2% to 4.2% for 2011 and extended Alternative Minimum Tax relief for 2010-2011.
What does the new Tax Cuts and Jobs Act mean for you? Our January Investment Insights explores the key points of the most significant overhaul of the tax system since '86, reviewing the new tax brackets, deductions and exemptions, and the effects on the economy.
Current Tax Legislation And Estate Planning Practicesdkprintz
The document summarizes current estate tax legislation and planning practices. It discusses the gift tax, estate tax, and generation-skipping transfer tax. It then provides details on current tax exemption amounts and rates, pending legislation that could decrease estate tax rates and increase exemptions, and recommended estate planning techniques like gifting, grantor retained annuity trusts (GRATs), and discounts for minority interests.
The House Republican fiscal 2013 federal budget blueprint proposes significant cuts in government spending and includes reforms to the tax code. It recommends consolidating the current six individual tax brackets into two brackets of 10 and 25 percent, lowering the corporate tax rate to 25 percent, and shifting the U.S. to a territorial tax system. The blueprint also proposes expanding the tax base by enacting unspecified base broadening measures for both individual and corporate taxpayers.
Tax, Benefits and Nonprofit Organizations Alert: American Taxpayer Relief Act...Patton Boggs LLP
The American Taxpayer Relief Act of 2012 permanently extends lower individual income tax rates for income under $400,000 and reinstates the "Pease limitation", which reduces itemized deductions including charitable deductions for individuals with over $250,000 income. The act also reinstates increased limits for contributions of real property and IRAs for charitable deductions and extends deductions for food donations and S corporations contributions through 2013. However, it does not extend enhanced deductions for book donations or computer contributions past 2011.
The document discusses estate planning considerations related to unwanted heirs and the federal estate tax. It notes that upon death, assets may not automatically pass to loved ones, as unwanted heirs like taxes may claim a portion. Life insurance can be used to pay estate taxes and costs, protecting more from passing to these heirs. Several case studies and tables show how estates of different sizes may face taxes and shrinkage without proper planning.
Will My Heirs Be Forced to Pay an Inheritance Tax in CaliforniaRoy W. Litherland
The document discusses inheritance and estate taxes in California. It notes that in California, there is no inheritance tax and no state-level estate tax. Californians do have to pay the federal estate tax if the value of their estate exceeds $5.43 million, which is the current federal estate tax exclusion amount. The document provides details on the differences between inheritance tax and estate tax, as well as outlining various estate planning strategies that can help mitigate federal estate tax exposure.
The 2014 Essential Tax and Wealth Planning Guide discusses opportunities available through the final few months of 2013, and the planning environment beyond as policymakers continue a tax reform debate that could fundamentally change how individual taxpayers compute their taxes.
The tax-related decisions you make today, and at various points in your career, may have a marked effect on how you save for retirement and how much you will have down the road to support your goals. Many tax decisions you make about retirement are one-time choices that can be very costly to change, so it pays to plan.
For more information, visit http://www.deloitte.com/us/taxandwealthguide
Status of Estate and Gift Tax Law as of Jan 2010; planning opportunities in 2010; cautions and traps if retroactive estate tax passed in 2010; planning for 2011.
Thanks to Ulster Savings Bank for hosting this event, guest speaker Jonathan Gudema of Planned Giving Advisors and to all of our participants for joining us to learn more about the impact of the new tax law on charitable giving.
The document summarizes key fiscal issues facing Congress and the Obama administration. It reports that the Congressional Budget Office warned that allowing the Bush tax cuts to expire and automatic spending cuts to take effect would likely trigger a recession, but continuing high deficits would hamper the government's ability to respond to future crises. It also notes that House Democratic Leader Nancy Pelosi predicted Congress would address the fiscal cliff in the lame duck session to avoid going over it.
Summary Of The American Recovery And Reinvestment Act Of 2009Charles Knox
The American Recovery and Reinvestment Act of 2009 provided $787 billion in tax breaks, investments in healthcare and energy, funding for infrastructure projects, and expanded unemployment benefits. Specifically, it offered individual tax relief through credits and deductions such as the Making Work Pay tax credit, increased earned income tax credit, and expanded first-time homebuyer tax credit. It also provided assistance to the unemployed through an extension of unemployment benefits and COBRA health insurance. The legislation aimed to stimulate the economy through these various tax cuts and spending measures.
Congress passed legislation to avoid the fiscal cliff by increasing taxes for some high-income individuals and preventing scheduled tax increases and spending cuts. The legislation permanently extends many individual and business tax provisions and temporarily extends others. It also increases estate, gift, and GST tax rates while keeping exemption amounts intact.
An immediate annuity can provide increased monthly cash flow for retirees by converting premium payments into guaranteed monthly payments for life or a term of years. While tax-free bonds are a popular source of income, an annuity may provide higher cash flow due to a portion of payments being tax-free as a return of principal. A hypothetical example showed an annuity providing $17,918 more annual spendable income than tax-free bonds. However, annuities do not leave assets for heirs unless a refund feature is purchased.
This document provides an estate planning update for 2011-2012. It discusses potential changes to the minimum distribution rules for inherited retirement plan benefits. It also covers proposals for the Uniform Trust Code in Minnesota, the estate tax exemption amount and portability, and proposed legislation for fiscal year 2012. The document provides details on drafting trusts to take advantage of the new qualified small business and farming deduction in Minnesota.
Estate and Gift Tax Laws: New Rules - Dec. 2011RobertWBaird
The document summarizes new rules for estate and gift taxes under legislation passed in December 2010. It outlines increases to the estate and gift tax exemption amounts to $5 million per person and $10 million per married couple. The top tax rate was lowered to 35%. Executors can elect to apply the new rules retroactively for those who died in 2010. Other changes include reunifying the estate and gift tax systems, and allowing portability of unused exemptions between spouses. However, the changes only apply through 2012 unless extended by Congress.
Here is a summary of the sources and objectives of modern income tax statutes:
The primary sources of US tax law are Congress and the Treasury Department. Congress has the power to initiate tax legislation through the House of Representatives, but all tax bills must pass both the House and Senate and be signed by the President to become law. While Congress establishes the overarching tax policies, it often leaves details of legislation to the Treasury Department to adopt through regulations. The objectives of modern income tax statutes are to raise revenue for the government, promote social welfare programs, and influence the economy through incentives and penalties within the tax code. Tax laws aim to fairly and efficiently collect taxes from individuals and businesses based on their ability to pay.
The document discusses America's growing debt problem and some potential solutions. It outlines several "hidden debt bombs" not captured in official debt figures, such as losses from Fannie Mae and Freddie Mac, unfunded promises for Social Security and Medicare, and reduced tax revenue from tax breaks. Some proposed solutions mentioned include raising the Social Security retirement age, reducing health insurance tax breaks, broadening the tax base, and considering new revenue options like a value-added tax.
Attached is an excellent, easy to read newsletter summarizing the important changes, legislative extensions, and issues relating to your individual tax return for 2009 and beyond. Please read it well before 12/31 as there are items that need to be considered or acted upon before the end of this year to take full advantage of the legislation. It’s the best one I’ve come across. Its current and includes some commentary, planning suggestions, and even some health care issues as they relate to your taxes.
I will later post a copy of year end letters for both businesses and individuals that my clients receive.
If you should have any questions at this time on any of these items, please contact me anytime.
Thanks
Wally Wleklinski
This summary provides the key information from the document in 3 sentences:
The document discusses recent changes to estate planning laws, including the extension of certain expiring tax provisions and the new Achieving a Better Life Experience (ABLE) Act, which allows tax-free savings accounts to support disabled individuals. It outlines the key aspects of ABLE programs and accounts, including eligibility, contribution limits, tax treatment, and potential "clawback" of funds by states. The document also briefly summarizes two estate tax court cases related to reliance on an incompetent attorney and valuation of a partnership interest.
Extension of Tax Cuts, Estate Changes Highlight Final Bill of 2010RobertWBaird
The Tax Relief, Unemployment Insurance Reauthorization and Jobs Creation Act of 2010 extended several expiring tax provisions, including extending the 2001 and 2003 tax cuts through 2012. It also increased the estate tax exemption to $5 million per individual for 2011-2012, reduced the top estate tax rate to 35%, and made the exemption portable between spouses. Additionally, it reduced the employee portion of the payroll tax from 6.2% to 4.2% for 2011 and extended Alternative Minimum Tax relief for 2010-2011.
What does the new Tax Cuts and Jobs Act mean for you? Our January Investment Insights explores the key points of the most significant overhaul of the tax system since '86, reviewing the new tax brackets, deductions and exemptions, and the effects on the economy.
Current Tax Legislation And Estate Planning Practicesdkprintz
The document summarizes current estate tax legislation and planning practices. It discusses the gift tax, estate tax, and generation-skipping transfer tax. It then provides details on current tax exemption amounts and rates, pending legislation that could decrease estate tax rates and increase exemptions, and recommended estate planning techniques like gifting, grantor retained annuity trusts (GRATs), and discounts for minority interests.
The House Republican fiscal 2013 federal budget blueprint proposes significant cuts in government spending and includes reforms to the tax code. It recommends consolidating the current six individual tax brackets into two brackets of 10 and 25 percent, lowering the corporate tax rate to 25 percent, and shifting the U.S. to a territorial tax system. The blueprint also proposes expanding the tax base by enacting unspecified base broadening measures for both individual and corporate taxpayers.
Tax, Benefits and Nonprofit Organizations Alert: American Taxpayer Relief Act...Patton Boggs LLP
The American Taxpayer Relief Act of 2012 permanently extends lower individual income tax rates for income under $400,000 and reinstates the "Pease limitation", which reduces itemized deductions including charitable deductions for individuals with over $250,000 income. The act also reinstates increased limits for contributions of real property and IRAs for charitable deductions and extends deductions for food donations and S corporations contributions through 2013. However, it does not extend enhanced deductions for book donations or computer contributions past 2011.
The document discusses estate planning considerations related to unwanted heirs and the federal estate tax. It notes that upon death, assets may not automatically pass to loved ones, as unwanted heirs like taxes may claim a portion. Life insurance can be used to pay estate taxes and costs, protecting more from passing to these heirs. Several case studies and tables show how estates of different sizes may face taxes and shrinkage without proper planning.
Will My Heirs Be Forced to Pay an Inheritance Tax in CaliforniaRoy W. Litherland
The document discusses inheritance and estate taxes in California. It notes that in California, there is no inheritance tax and no state-level estate tax. Californians do have to pay the federal estate tax if the value of their estate exceeds $5.43 million, which is the current federal estate tax exclusion amount. The document provides details on the differences between inheritance tax and estate tax, as well as outlining various estate planning strategies that can help mitigate federal estate tax exposure.
The 2014 Essential Tax and Wealth Planning Guide discusses opportunities available through the final few months of 2013, and the planning environment beyond as policymakers continue a tax reform debate that could fundamentally change how individual taxpayers compute their taxes.
The tax-related decisions you make today, and at various points in your career, may have a marked effect on how you save for retirement and how much you will have down the road to support your goals. Many tax decisions you make about retirement are one-time choices that can be very costly to change, so it pays to plan.
For more information, visit http://www.deloitte.com/us/taxandwealthguide
Status of Estate and Gift Tax Law as of Jan 2010; planning opportunities in 2010; cautions and traps if retroactive estate tax passed in 2010; planning for 2011.
Thanks to Ulster Savings Bank for hosting this event, guest speaker Jonathan Gudema of Planned Giving Advisors and to all of our participants for joining us to learn more about the impact of the new tax law on charitable giving.
The document summarizes key fiscal issues facing Congress and the Obama administration. It reports that the Congressional Budget Office warned that allowing the Bush tax cuts to expire and automatic spending cuts to take effect would likely trigger a recession, but continuing high deficits would hamper the government's ability to respond to future crises. It also notes that House Democratic Leader Nancy Pelosi predicted Congress would address the fiscal cliff in the lame duck session to avoid going over it.
Summary Of The American Recovery And Reinvestment Act Of 2009Charles Knox
The American Recovery and Reinvestment Act of 2009 provided $787 billion in tax breaks, investments in healthcare and energy, funding for infrastructure projects, and expanded unemployment benefits. Specifically, it offered individual tax relief through credits and deductions such as the Making Work Pay tax credit, increased earned income tax credit, and expanded first-time homebuyer tax credit. It also provided assistance to the unemployed through an extension of unemployment benefits and COBRA health insurance. The legislation aimed to stimulate the economy through these various tax cuts and spending measures.
Congress passed legislation to avoid the fiscal cliff by increasing taxes for some high-income individuals and preventing scheduled tax increases and spending cuts. The legislation permanently extends many individual and business tax provisions and temporarily extends others. It also increases estate, gift, and GST tax rates while keeping exemption amounts intact.
An immediate annuity can provide increased monthly cash flow for retirees by converting premium payments into guaranteed monthly payments for life or a term of years. While tax-free bonds are a popular source of income, an annuity may provide higher cash flow due to a portion of payments being tax-free as a return of principal. A hypothetical example showed an annuity providing $17,918 more annual spendable income than tax-free bonds. However, annuities do not leave assets for heirs unless a refund feature is purchased.
This document provides an estate planning update for 2011-2012. It discusses potential changes to the minimum distribution rules for inherited retirement plan benefits. It also covers proposals for the Uniform Trust Code in Minnesota, the estate tax exemption amount and portability, and proposed legislation for fiscal year 2012. The document provides details on drafting trusts to take advantage of the new qualified small business and farming deduction in Minnesota.
Estate and Gift Tax Laws: New Rules - Dec. 2011RobertWBaird
The document summarizes new rules for estate and gift taxes under legislation passed in December 2010. It outlines increases to the estate and gift tax exemption amounts to $5 million per person and $10 million per married couple. The top tax rate was lowered to 35%. Executors can elect to apply the new rules retroactively for those who died in 2010. Other changes include reunifying the estate and gift tax systems, and allowing portability of unused exemptions between spouses. However, the changes only apply through 2012 unless extended by Congress.
Here is a summary of the sources and objectives of modern income tax statutes:
The primary sources of US tax law are Congress and the Treasury Department. Congress has the power to initiate tax legislation through the House of Representatives, but all tax bills must pass both the House and Senate and be signed by the President to become law. While Congress establishes the overarching tax policies, it often leaves details of legislation to the Treasury Department to adopt through regulations. The objectives of modern income tax statutes are to raise revenue for the government, promote social welfare programs, and influence the economy through incentives and penalties within the tax code. Tax laws aim to fairly and efficiently collect taxes from individuals and businesses based on their ability to pay.
Estate Planning For The Business Owner Updated 1 5 2011 For 2010 Tax ActDeborahPechetQuinan
1) The document provides an overview of estate planning strategies for business owners, including minimizing estate taxes through techniques like valuation discounts, grantor retained annuity trusts, and generation-skipping trusts.
2) It discusses how these strategies can help business owners transfer their business interests to future generations while reducing tax liability.
3) Examples are given showing how techniques like valuation discounts and GRATs allow business interests to be transferred to children at discounted values, reducing total estate taxes.
This newsletter from Cedar Point Financial Services provides information on upcoming interest rate hikes and how they could impact various financial products. It discusses how adjustable rate mortgages, credit cards, and variable rate student loans may be affected if interest rates rise. The newsletter recommends ways for readers to protect themselves, such as refinancing a mortgage, paying down credit card debt, and reviewing student loan terms. It also provides two articles on estate tax reform possibilities and the connection between health and personal finances.
The document summarizes changes to the estate, gift, and generation-skipping transfer (GST) taxes under the 2010 Tax Relief Act. It notes that the estate tax exemption will increase to $5 million per person for 2011-2012 and the top tax rate will be reduced to 35%. It also discusses the new portability provision that allows the unused exemption of a deceased spouse to be transferred to the surviving spouse. The document recommends taking advantage of the increased gift and estate tax exemptions over the next two years through gifting and outlines options for estate planning structures.
The document summarizes key tax changes resulting from the American Taxpayer Relief Act of 2012, which addressed the fiscal cliff. Two new taxes take effect in 2013 - a 3.8% Net Investment Income Tax on investment income above thresholds and a 0.9% additional Medicare tax on wages above thresholds. The top capital gains and dividend tax rate increases to 20% for income above $400,000/$450,000. Estate and gift tax exemptions remain at $5.25 million and the top rate is 40%. Itemized deductions are reduced for incomes above $250,000/$300,000.
Health Care Act Includes Variety of Tax Changes - Dec. 2011RobertWBaird
The document summarizes key tax provisions and changes contained in the Patient Protection and Affordable Care Act (ACA). It outlines new taxes such as a 3.8% tax on investment income exceeding $250,000 and an additional 0.9% Medicare tax on wages over $200,000/$250,000. It notes these will significantly increase marginal tax rates for many and could incentivize Roth conversions. The ACA also increases penalties for non-qualified withdrawals from HSAs and MSAs, limits health FSA contributions, and penalties those without minimum health insurance as of 2014.
The Tax Relief Act of 2010 made significant temporary changes to estate, gift, and generation-skipping transfer tax laws through 2012. It established a $5 million exemption and 35% rate for these taxes. It also allows portability of exemption amounts between spouses and modified carry-over basis rules instead of estate tax for those who passed away in 2010. Estate planning professionals should be consulted to determine if existing plans need updates due to these new temporary laws.
The new law imposes a new tax rate structure with seven tax brackets: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. The top rate was reduced from 39.6% to 37% and applies to taxable income above $500,000 for single taxpayers, and $600,000 for married couples filing jointly. The rates applicable to net capital gains and qualified dividends were not changed. The “kiddie tax” rules were simplified. The net unearned income of a child subject to the rules will be taxed at the capital gain and ordinary income rates that apply to trusts and estates. Thus, the child's tax is unaffected by the parent's tax situation or the unearned income of any siblings.
Your Taxes 2013 - What will change (and what won't)csawaf
Several tax hikes, some tax breaks. Now that the fiscal cliff deal assembled in Congress is becoming law, it is time to look at some of the tax law changes that will result.
The document discusses major changes to retirement rules under the Secure Act of 2020. It notes that beneficiaries must now take inherited retirement funds within 10 years of the original owner's death, eliminating the stretch IRA. However, spouses can still use their life expectancy and exceptions exist for disabled, chronically ill, and minor beneficiaries. The changes have significant tax implications, but planning opportunities include naming a charity as beneficiary, using a charitable remainder trust, purchasing life insurance, or doing Roth conversions to reduce taxes owed by beneficiaries.
Regulation us tax - aicpa 2019-convertedmadhuri199
To learn more about the following career choices, you will visit our USA, CMA USA, CFA etc. controller centers. In the metropolis, Bangalore, Delhi, Gurgaon, Hyderabad or visit www.simandhareducation.com
The document provides an update on estate planning topics including proposed changes to inheritance of retirement plan benefits, the Uniform Trust Code in Minnesota, portability, proposed federal legislation for fiscal year 2012, drafting for the qualified small business deduction, and planning for income tax basis step-up in bypass trusts. Key points covered include possible changes to required minimum distributions for inherited retirement plans, the requirements and advantages of portability, and new rules for the Minnesota qualified small business property deduction.
1. AmericanTaxpayer Relief Act:Tax Code Revisions
4
The American Taxpayer Relief Act of 2012
(“Act”) was passed by Congress at the last
moment on January 1, 2013. While the Act
addresses a broad range of tax concerns related
to the automatic sunset of the so-called Bush
tax cuts, it is essentially a stop-gap measure
and its provisions are still subject to additional
changes as Congress deals with the ongoing
sequestration. A number of the provisions
related specifically to estate planning concerns.
Estate and Gift Taxes
Unified Exemption
Many of the existing tax provisions related to
estate and gift taxes were made permanent by
the Act rather than being allowed to sunset
per the provisions of the Bush-era tax cuts.
The $5,000,000 exemption for estate and
gift tax transfers was made permanent and
will continue to be indexed for inflation. The
2013 unified exemption is currently set at
$5,250,000. But, not every provision remains
the same after the passage of the Act. The
maximum tax rate for transfers in excess of the
unified exemption amount was increased from
35 to 40 percent.
Estate Taxes
Portability was extended by the Act, so a
surviving spouse can continue to utilize the
unused exemption of a deceased spouse. The
Act also extended the provision allowing for
deduction of funds used to pay State death
taxes. Another aspect of the Act is the repeal of
the 5 percent surtax on estates valued between
$10,000,000 and $17,184,000.
The Act also extended the availability of the
election for installment payments of estate taxes
for closely held businesses. An estate is eligible
for payment of estate tax in installments if the
value of the decedent’s interest in a closely held
business exceeds 35 percent of the decedent’s
adjusted gross estate. Generally estate taxes are
due within 9 months following the decedent’s
death. But, this provision effectively extends the
time for paying estate tax by 14 years from the
original due date of the estate tax.
Gift Taxes
The annual exclusion for gifts that can be
passed tax-free was increased also. The annual
gift exemption for 2013 is $14,000. This
amount will continue to be indexed for
inflation as well.
Generation Skipping Transfers
The generation skipping transfer tax imposes
a flat tax of 40 percent on gifts and bequests
above the unified exemption amount that
avoid gift or estate taxes by skipping one
or more generations. This tax is assessed in
addition to estate and gift taxes. It generally
equals the amount of transfer tax that would
have been generated had the property made
all the generational steps, not just the skipping
ones. The Act permanently extended many of
the provisions related to generation skipping
transfers that were scheduled to sunset at the
end of 2012. That means that generation
skipping estate plans implemented since 2001
will remain valid. It also means that generation
skipping transfers are still a viable option for
inclusion in estate plans.
Income Taxes on Trusts and Estates
The Act retains all but the highest rate bracket
in regard to trusts and estates. Now the top tax
rate for income from trusts and estates is 39.6
percent. This rate applies to what was the entire
35 percent bracket range and is projected to
apply to taxable income from trusts and estates
in excess of $11,950.
Retirement Accounts
The Act lifted most restrictions relating to the
ability to roll over funds from a 401(k) account
into a Roth IRA. Now participants of a 401(k)
with in-plan Roth conversion features can make
transfers at any time. However, such transfers
will still be considered a taxable event.
By Andrew A. Willaert, Jr.
507-387-1115
awillaert@gislason.com
By Abbie S. Olson
(507) 387-1115
aolson@gislason.com
2. 5
The IRA Charitable Rollover provisions
allowing individuals over 70 ½ to directly
transfer up to $100,000 per year from an IRA
to charities has been extended through 2013.
These transfers will still count toward the
minimum required distribution rule for IRA
accounts.
Coverdell Education Savings
Accounts
Coverdell Education Savings Accounts (ESAs)
are tax-advantaged investment accounts which
allow tax-deferred growth of funds that will
be used for qualified educational expenses.
These are very similar to state-sponsored 529
plans, with the primary differences being that
Coverdell ESA funds can be invested outside of
specified state plans and distributions must be
completed by the time the beneficiary reaches
age 30. Distributions from these accounts
are tax-free so long as the funds are used for
elementary school, secondary school, and/
or post-secondary school expenses. The Act
permanently extended the $2,000 annual
maximum contribution to Coverdell accounts.
Employer Provided Education
Assistance
The Act also extends permanently the exclusion
from income and employment taxes up
to $5,250 in qualified employer-provided
education assistance. The amount of employer-
provided education assistance is still available as
a deduction to the employer.
Student Loan Interest Deduction
The Act permanently suspends the 60-month
limitation on the number of months during
which interest paid on student loans is
deductible. Now student loan interest is
deductible subject only to the phase-out
based on modified adjusted gross income. The
Act also repealed the restriction that made
voluntary payments of interest non-deductible.
The deduction stands at $2,500 above-the-line.
Conclusion
The American Taxpayer Relief Act of 2012
extended many of the tax provisions and credits
that we have become accustomed to, but not
all of them. If you would like assistance in
examining how the American Taxpayer Relief
Act will affect you and your estate plan, please
call any of the estate planning attorneys at
Gislason & Hunter.
3. 6
Minnesota recently passed the Governor’s
controversial Ommibus Tax Bill aimed at
combating the state budget deficit. This
bill contains a wide variety of changes
to the existing tax laws of Minnesota.
It increases taxes on virtually every
Minnesotan in one way or another
through increases in income taxes, sales
taxes, property taxes, and a variety of
other taxes.
Tucked into Section 7 of the bill are
provisions, which will be codified as
Minnesota Statutes §§ 292.16 to 292.21,
relating to the imposition of a stand-
alone gift tax. The stand-alone gift tax
will become effective June 30, 2013. The
imposition of a stand-alone gift tax is
causing a great deal of confusion as well as
some strong adverse reactions.
Minnesota Statute § 292.17 imposes a
tax “on the transfer of property by gift by
any individual resident or nonresident in
an amount equal to ten percent [10%]
of the amount of the taxable gift.” This
is a stand-alone tax and is not based on
the timing of the death of the donor. The
only other state that imposes such a stand-
alone gift tax is Connecticut.
Upon first blush it appears that the
new gift tax provides good reason to
immediately begin gifting. However,
upon closer inspection of the language of
the new law, there may not be need for
immediate action after all.
Minnesota’s New Stand-Alone GiftTax
By Andrew A. Willaert, Jr.
507-387-1115
awillaert@gislason.com
By Abbie S. Olson
(507) 387-1115
aolson@gislason.com
4. 7
Section 292.17 includes a lifetime credit against the
gift tax equal to $100,000. The “credit applies to the
cumulative amount of taxable gifts made by the donor
during the donor’s lifetime.” While the statute itself is not
clear on this point, the House Conference Committee
Report indicates that this lifetime credit is intended to be
the equivalent of the $1,000,000 exemption amount used
in the estate tax provisions. This means that no gift taxes
will be payable until the total gifts exceed $1,000,000.
Another important aspect of the new gift tax is contained
in Section 292.16. This section defines taxable gifts as
“transfers by gift which are included in taxable gifts
for federal gift tax purposes…” The House Conference
Committee Report clarifies that because taxable gifts are
defined by reference to the federal gift tax
provisions, gifts below the annual
exemption amount are excluded
from taxation. This amount is
currently set at $14,000 per
recipient for 2013. Gifts to
spouses and to charities
also remain exempt from
this gift tax.
An additional aspect
of the new statute to
consider is that gifts of
real property located
outside of the state,
tangible personal property
that was normally kept
outside of the state, and
intangible personal property
gifted by a non-resident are
specifically excluded from the
imposition of the gift tax.
If the stand-alone gift tax is payable, Section 292.18
requires the filing of a gift tax return to report each gift,
its fair market value, any deductions claimed, and the
donee’s personal information. These gift tax returns will
be due on April 15 for the prior year’s gifts during the
donor’s life or on the due date of the federal estate tax
return following the donor’s death.
While a closer reading of the new statutes may indicate
that the reach of the stand-alone gift tax is limited, it may
still be prudent for some to effectuate large gift transfers
prior to the statute’s enactment. If you need help deciding
whether or not it is advisable for you to gift prior to
June 30, please contact any one of the estate planning
attorneys at Gislason & Hunter.
Planning ConsiderationsIf you plan to gift over the annual
exemption of $14,000 or the lifetime
exemption of $1,000,000, it would be
good planning to effectuate the
gift by June 30 to avoid the newly
imposed gift tax.
5. Minneapolis Office
Golden Hills Office Center
701 Xenia Avenue S, Suite 500
Minneapolis, MN 55416
763–225–6000
Des Moines Office
Bank of America Building
317 Sixth Avenue, Suite 1400
Des Moines, IA 50309
515–244–6199
Mankato Office
Landkamer Building
124 E Walnut Street, Suite 200
Mankato, MN 56001
507–387–1115
New Ulm Office
2700 South Broadway
New Ulm, MN 56073
507–354–3111
Hutchinson Office
16 Washington Avenue, Suite 104
Hutchinson, MN 55350
320–234–0757
www.gislason.com
LOCATIONS
Common Questions in Regard to
Estate Planning
Question: When should I update my Will?
Answer: You should consider updating your Will whenever you
experience a major life change. You should consider changing your
Will if you marry or divorce, if there is a birth or death in the
family, if a named guardian for your children dies or is no longer
available, if the value or type of your property changes significantly,
or if you move to another state.
We recommend, however, that you periodically review your Will
to ensure that it provides for your family as you originally planned,
or to take into account new or changed circumstances, including
changes in the law.
Gislason & Hunter Wills, Trusts, Estate
Planning & Probate Practice Group:
Daniel A. Beckman dbeckman@gislason.com
Reed H. Glawe rglawe@gislason.com
Marlin R. Kunard mkunard@gislason.com
Kaitlin M. Pals kpals@gislason.com
Wade R. Wacholz wwacholz@gislason.com
Andrew A. Willaert awillaert@gislason.com
C. Thomas Wilson twilson@gislason.com
Sara N. Wilson swilson@gislason.com
This publication is not intended to be responsive to any individual situation or concerns as
the content of this newsletter is intended for general informational purposes only. Readers are
urged not to act upon the information contained in this publication without first consulting
competent legal advice regarding implications of a particular factual situation. Questions and
additional information can be submitted to your Gislason & Hunter Attorney.