Presentation is loading. Please wait.

Presentation is loading. Please wait.

Material prepared by Raymond James for use by its advisors. 2012 Tax Update & Year End Planning Independent Registered Investment Advisor Raymond James.

Similar presentations


Presentation on theme: "Material prepared by Raymond James for use by its advisors. 2012 Tax Update & Year End Planning Independent Registered Investment Advisor Raymond James."— Presentation transcript:

1 Material prepared by Raymond James for use by its advisors Tax Update & Year End Planning Independent Registered Investment Advisor Raymond James Financial Services, Inc.

2 Health Care Reform (ruled constitutional by the Supreme Court) In effect now: Children cant be denied coverage because of pre-existing conditions Coverage required under parents plan for dependent children under age 26 Insurers cant impose lifetime caps on coverage and cant cancel or deny coverage if you are sick Key provisions effective January 1, 2013: Medical expense deduction threshold increases to 10% of adjusted gross income for those under age 65 (from 7.5%) Increasing the self-employment tax rate by 0.9% on higher-income individuals (MAGI of $200K single, $250K married) New 3.8% tax on some or all of the net investment income of these higher-income individuals Interest, dividends, capital gains, royalties, rents, annuities, passive income from partnership/S corporation Distributions from qualified retirement plans and IRAs would NOT count Key provisions effective January 1, 2014: All Americans must carry health insurance or face a penalty of up to 2.5% of household income Employers with more than 50 employees must offer health insurance or be fined per employee States must establish an exchange that facilitates the purchase of qualified health plans Adults with pre-existing conditions cant be denied coverage or have their insurance cancelled Tax credits will be available to qualifying families Doctors and hospitals will receive less compensation from government sources Taxes or fees imposed on health insurance providers and drug companies Note: The above list of items is not intended to be all inclusive TAX UPDATEHealth Care Reform…

3 Federal income, dividend, & capital gains tax rates Itemized deductions & personal exemption phase-outs AMT exemption amounts Social Security payroll tax reduction for employees Qualified charitable IRA distribution exclusion State and local sales tax deduction Education credits & deductions eliminated or reduced Earned income and child tax credits reduced Estate & gift tax exemption amounts Portability of estate tax exemption for surviving spousal Note: The above list of items is not intended to be all inclusive TAX UPDATEExpiring Tax Provisions…

4 The following are changes set to occur without further congressional action… Tax Bracket Changes set to sunset January 1, % and 15% set to adjust to 15% 25% set to go back up to 28% 28% set to go back up to 31% 33% set to go back up to 36% 35% set to go back up to 39.6% Long term capital gain rate set to go back to 20% (or 10% depending on income) on January 1, 2013 Qualified dividend rate will rise to match standard income tax rates on January 1, 2013 Estate & Gift tax exemption amounts sunset on January 1, 2013 Top rate scheduled to increase to 60% Exemption amount scheduled to shrink to $1 million Note: The above list of items is not intended to be all inclusive TAX UPDATEScheduled Changes for 2013…

5 TAX PLANNING Tax BracketSingle Married Filing Jointly Married Filing Separately Head of Household 10%$0 - $8,700$0 - $17,400$0 - $8,700$0 - $12,400 15%$8,700 - $35,350$17,400 - $70,700$8,700 - $35,350$12,400 - $47,350 25%$35,350 - $85,650$70,700 - $142,700$35,350 - $71,350$47,350 - $122,300 28%$85,650 - $178,650$142,700 - $217,450$71,350 - $108,725$122,300 - $198,050 33%$178,650 - $388,350$217,450 - $388,350$108,725 - $194,175$198,050 - $388,350 35%$388,350 + $194,175 +$388, Individual Tax Brackets 2012 TAX UPDATEIncome Tax Brackets…

6 Governor Rick Snyder signed legislation on May 25, 2011 Changes for 2012 and thereafter include: Repealed the annual 0.1% rate reduction scheduled 2012 tax rate is 4.33% annualized (reduction from 4.35% to 4.25% on 10/1/12) 2013 and thereafter tax rate is 4.25% Phases out personal exemption for higher income taxpayers Phases out certain pension and retirement income subtractions based on birthdate Repeals various tax credits previous available: Donations to homeless/food bank, community foundations, and public charities City income taxes paid College tuition and fees Changes the homestead property tax credit Available only for homes with taxable value less than $135,000 Phase-out based on total household resources from $41,000 - $50,000 Repeals certain deductions (including political contribution & the $600 child 18 and under) Repeals certain special exemptions (including for seniors) Note: The above list of items is not intended to be all inclusive TAX UPDATEMichigan Tax Changes…

7 2012 TAX UPDATE2013 and beyond…

8 The following are changes that have been discussed… Obama/Boehner Items Likely to be Discussed Further Tax Rate Hike? (Those with MAGI > $250,000, $500,000, $1,000,000?) Limitations for those above 28% Tax Bracket? (ie., up to 11.6% decrease in benefit) Limitation on itemized deductions Tax exemption on municipal bond interest Tax exemption on employer provided health insurance Limitation on deductibility of retirement account contributions Joint Committee on Taxation Study Items Taxation of state and local bonds Elimination of certain itemized deductions Mortgage Interest Expense Charitable Contributions Medical Expense State and local income and property taxes Cutback in personal exemptions Repeal of alternative minimum tax (AMT) Elimination of exclusion for retirement plan contributions Elimination of exclusion of employer provided health insurance Note: The above list of items is not intended to be all inclusive TAX UPDATETax Changes Discussed…

9 Dont miss the opportunity to invest for retirement while minimizing taxes. YEAR END PLANNINGRetirement & Gifting Limits…

10 Federal government requires minimum distribution for IRA participant upon age 70½ Capital Gains (or losses) Sales of stock or mutual funds Capital loss carryovers; allowable net loss of $3,000 per year Capital gain distributions Internal fund carryovers Cost Basis Reporting to IRS Stocks transactions posted on or after January 1, 2011 Mutual Funds and dividend reinvestment plans on or after January 1, 2012 Debt securities, options on or after January 1, 2013 (now postponed until January 1, 2014) Cost Basis Reporting Alternatives Raymond James default will be FIFO (First-in, First-out) Other Options – Average Cost, Specific Identification, High-Cost First-out (HIFO) Required Minimum Distributions (RMDs) YEAR END PLANNINGOther Considerations…

11 10) Make any last minute itemized deductions or other deductible payments. YEAR END PLANNINGFinal Thoughts… TOP TEN LIST 9) Contribute to 529 plans or other education accounts ($10,000 MI tax deduction). 8) Consider donation of appreciated securities for charitable desires. 7) Consider Roth IRA conversions in effort of maximizing tax exemption on earnings. 6) Estate planning considerations including annual gifting ($13,000 annual exclusion). 5) Consider municipal bonds for tax exempt income. 4) Explore tax-loss AND/OR tax-gain harvesting. 3) Max out retirement plan contributions and contribute early for ) Review, rebalance, and reallocate portfolio holdings. 1) Work with your financial advisor and tax professional.

12 Disclosure The information contained in this presentation has been obtained from sources considered reliable, but we do not guarantee that the material is accurate or complete. This material is for discussion purposes only and does not constitute tax or investment advice. Investors should consult a tax professional before making any tax planning decisions Unless certain criteria are met, Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. Additionally, each converted amount may be subject to its own five- year holding period. Converting a traditional IRA into a Roth IRA has tax implications. Municipal bond interest is not subject to federal income tax but may be subject to AMT, state or local taxes. Income from taxable municipal bonds is subject to federal income taxation; and it may be subject to state and local taxes. Investments in municipal securities may not be appropriate for all investors, particularly those who do not stand to benefit from the tax status of the investment.

13 Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. THANK YOU FOR ATTENDING! QUESTIONS ? Independent Registered Investment Advisor Raymond James Financial Services, Inc. McFawn Financial Services Group, LLC 340 E. Big Beaver, Ste. 140 Troy, MI


Download ppt "Material prepared by Raymond James for use by its advisors. 2012 Tax Update & Year End Planning Independent Registered Investment Advisor Raymond James."

Similar presentations


Ads by Google