Tax Planning at best is a shot in the dark this year. Many items have yet to be addressed just for the 2012 year. The only thing for sure is that it will not be addressed until after November 6. Even then, Congress may put it off until after January 1, 2013.
Assuming that, donating directly from one’s IRA would be irrelevant, since Required Minimum Distributions must be made by year-end 2012. Also, most of us are generally cash basis taxpayers. This means what we pay in and what we receive in a given year is what is addressed for the current tax year.
For those who receive paychecks, you can be nearly assured that with the turn of the year, your social security will again be withheld at a rate of 6.2%. That represents $20 more withheld for every $1000 you make. In addition, the base for social security has risen from $106,800 to $110,100. This may be the fastest rising tax we have.
Two uncertainties: discussion is that the current cap of $110,100 will be taken off and be without a cap like Medicare is, and the percentage to be withheld will be raised.
Plan Contributions. What has been finalized for the coming year – Pension Plan Contributions. If you take the full amount allowed, you need to be addressing that with your HR person by year-end. For 401 (k), 403 (b) and most 457 plans, the contribution limit has been raised to $17,500. The catch-up for those 50 and over is $5,500.
As always, www.irs.gov has a world of information available to you.
Fran Needham is an Enrolled Agent and Tax Manager who owned a tax and accounting practice prior to joining Raskob Kambourian. Experience as a retail business owner and in a wide variety of industries, including manufacturing and restaurants, adds an enhanced level of expertise she brings to the firm.
Raskob Kambourian Financial Advisors is an independent, fee-only comprehensive financial advisory firm registered with the Securities and Exchange Commission. We offer expertise, competitive pricing, and personalized financial services to meet your “Life Planning” needs.s.