If someone is going down the wrong road, he doesn’t need motivation to speed him up. What he needs is education to turn him around.
– Jim Rohn
Well, I was holding out hope for ALL of us (my clients, myself, and, even, Congress) that we would see some action on Capitol Hill about all of the tax hikes, changes, etc. which are coming our way January 1. Turns out, they didn’t heed my warnings, and left everything unaddressed until November, at the earliest.
Last week, I called it a “Tax Armageddon”, and after reading what I wrote–it seems a bunch of people agreed, as we have been getting a LOT of phone calls and emails. There’s a rush to get accounts squared away before Dec. 31, and to have an actual plan if the worst should occur.
Because people are anxious to see Congress do *something*–or, failing that, to make their intentions more clear. Big corporations are sitting on piles of cash reserves, as are banks, until things become more clear. But this is NOT necessarily what you should do!
The point is–every person’s situation is different. It might be *exactly* the time for you to make some decisive, strong moves in your accounts, in your business career, etc. But you’ll never know, unless you take the time to plan it out with a competent guide.
So, give us a call: 952-445-8753, or shoot me a quick email. We’ll plan together for “the worst”, and be happily-surprised *together* should Congress lower rates.
But it’s time I continue on with what I started last week, and give you the complete picture of what is coming on January 1, 2011…
The Coming Tax Armageddon in 2011 (Part 2)
As I mentioned last week, I’m being completely up front about the fact that I want to prompt you into action–hence, the dramatic language. I would not be doing an excellent job as your advisor if I did anything *but* pull out all the stops to get your attention pointed to this coming train wreck for your finances.
What I covered last week:
The Personal Income Tax Increase
The Return of the Estate Tax
New, Higher Taxes On Married Couples, Families
Higher Tax Rates on Savers and Investors
Here’s what I didn’t cover…
The Tanning Tax
This went into effect on July 1st of this year. It imposes a new, 10% excise tax on getting a tan at a tanning salon. There is no exemption for tanners making less than $250,000 per year.
The “Medicine Cabinet Tax”
Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pretax dollars to purchase non-prescription, over-the-counter medicines (except insulin).
The HSA Withdrawal Tax Hike
The tax for non-medical early withdrawals from an HSA increases from 10% to 20%. IRAs and other tax-advantaged accounts remain at 10% so keep in mind from where you are pulling money.
Brand Name Drug Tax
Tax assessment imposed on name-brand drug manufacturers is an excise tax and will result in an increase in the cost of prescription medication that the manufacturers will have to pass on to you the consumers.
“The Dreaded AMT” (Alternative Minimum Tax)
The AMT will hit over 28.5 million families, up from 4 million last year as a result of the failure of Congress to index the AMT and expiring exceptions. You will be calculating your tax twice and you will pay tax on the higher of the normal income tax or the AMT.
Small Business Expensing Cut by 90% and 50% Expensing Disappears.
Tax Increases for All Types of Businesses
Charitable Contributions from IRAs no Longer Allowed.
Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA. This contribution also counts toward an annual “required minimum distribution.” This ability will no longer be there. Now is the time to accelerate your charitable planning and make the gift you want in 2010.
So, don’t be surprised at what comes down on the pike on New Year’s Day. I’m giving you plenty of warning.
But here’s where the hope comes in…
For my clients and contacts, you can rest assured that we are paying attention…and will be on top of even the procrastinating legislators. We’ll make sure you don’t make moves that you’ll regret after the fact.
And the best way to help us help YOU, is by giving us a call to talk things through this fall:
*We’ll help you take advantage of these remaining months in 2010 to have your income count during this tax year, instead of 2011 (as much as you’re able to do so).
* We’ll look over your specific information, compile a list of moves for you, and give you a clear and actionable plan!
Please contact us promptly! Our schedule has been extremely busy with savvy clients who have already seen the ‘writing on the wall’.
So, send me an email, or give us a call [952-445-8753]. We’ll make sure you (and your wallet) survive this coming Armageddon.
I’m personally dedicated to the success of your family–your peace of mind! Can other tax professionals say that?