Richard A. Lindsey, CPA

Lindsey & Waldo, LLC – Certified Public Accountants

  • Oct 25
  • Oct 18

    2012 began with great uncertainty over federal tax policy and now, with the end of the year approaching, that uncertainty appears to be far from over. A host of reduced tax rates, credits, deductions, and other incentives (collectively called the “Bush-era” tax cuts) are scheduled to expire December 31, 2012. To further complicate planning, over 50 tax extenders are up for renewal, either having expired at the end of 2011 or scheduled to expire after 2012. At the same time, the federal government will be under sequestration, which imposes across-the-board spending cuts after 2012. The combination of all these events has many referring to 2013 as “a massive fiscal cliff” or “taxmaggedon.”

    But it really shouldn’t come as any surprise. Economists like Nouriel Roubini have predicted this “perfect storm” of global weakness for quite some time.

    Known for seeing the financial crisis before it hit in 2008, Roubini said that nations like the US, European nations and others have become adept at forestalling their problems. In a June 2011 interview with CNBC, Roubini predicted the storm would hit in 2013.

    According to Roubini, “Every economy in the world [is] trying to push their problems to the future. We start with private debt, public debt, supra-national debt – we’re kicking the can down the road and eventually this is going to come to a head in 2013.” The damage will be widespread.

    Head’s up — 2013 is almost here! Have you completed your preparations? Have you done any planning?

    Congress could address some of the tax cut and extender issues in a lame duck session after the election. But who knows what the outcome will be?

    Here are a few ideas to consider in your 2012 year-end planning.

    Income tax withholding – The current two percent payroll tax holiday is scheduled to expire at the end of the year. While this won’t directly affect your income taxes it will affect your take home pay. If the rates increase, your withholding will automatically increase as well, but it may not be enough if you have income outside of your paycheck.

    Shifting income – Traditional year-end planning was to shift income into a future year. However, you may want to consider shifting income into 2012 when lower rates are going to be available.

    Harvesting losses – Now is a good time to consider tax loss harvesting strategies to offset current gains or to accumulate losses to offset future gains which would be taxed at a higher rate.

    Capturing gains – It is also a good time to consider capturing gains to be taxed at a lower rate. Remember, the wash sale rules which prohibit you from claiming a loss and then reinvesting in the same security within 30 days don’t apply to gains. YOU CAN lock in the gains, pay the tax and immediately reinvest in the same security.

    Job search expenses – Job search expenses such as un-reimbursed employment agency fees and travel expenses are deductible IF you are searching for a job in the same occupation that you held previously.

    Gifts – Don’t overlook gift giving as a year-end strategy. No gift tax is due on gifts up to $13,000 per recipient. A married couple can make combined tax-free gifts of $26,000 to each recipient.

    Charitable giving – For many people, charitable giving is also a part of their year-end tax strategy. Under current law, the so-called “Pease limitation” (named for the Congressman who sponsored the law) is scheduled to return in 2013. This limitation generally limits certain tax deductions, such as charitable giving, for higher income earners.

    If you’d like to sit down and discuss, in detail, how these issues might affect you, then call our office at 251-633-4070.

  • Oct 17
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  • Oct 5
    1. Bad Debt—Taking on debt just to achieve a boost in lifestyle. Long after the initial good feeling of owning something new has worn off, you will have the monthly payment. Think of debts as receiving a monthly “decrease” in your earnings since you will have less disposable funds available to do things that are important to you in the future.
    2. Borrowing to Meet Ongoing Expenses or to Pay Other Debt—If you find yourself falling deeper into debt just to make ends meet, it’s time you face facts, you need a budget.
    3. Stealing from Your Retirement—If you find yourself raiding your retirement while you are still working, you need to set time aside and create a budget.
    4. Not Paying Yourself First—The first payment from any paycheck or business withdrawal should be toward your personal savings or investment program. Most experts recommend saving at least 10%. While this may seem like a lot, most individuals can defer some spending in order to meet their personal objectives. Consider having a portion of your paycheck directly deposited into a separate savings or money market account that is not connected to your ATM or debit card. Automatic saving is a cornerstone to financial wealth building.
    5. Not Taking Advantage of Your Employers’ Benefit Plans—This includes not taking advantage of or not maximizing the employer’s match in your 401(k) plan. No one can afford to turn down free money. It also includes not taking advantage of other employer benefits such as a Health Savings and Flexible Spending accounts which can dramatically cut the cost of insuring and caring for your family.
    6. Hiding and Not Setting Goals—Not knowing if you have enough saved for your children’s education, your own retirement, or any other goal that you are looking to achieve. Act now and take control of your life.
    7. Not Being Happy—Our culture is pervasive with the “I will be happy when” syndrome. Surveys show that a significant portion of the population report that they would be happy if they could increase their income by 20%. This perception seems to remain true at all income levels regardless of how much income is earned. People caught in the 20% more trap can never be happy because, even if the objective is reached, there will always be another 20% more needed to remain happy. Happiness is a choice. Look and be thankful for things that make you happy everyday. Learn to change your mind about anything—it’s easier than you think.
  • Oct 3