Our first speaker today was Anna Kay Roche, Certified Public Accountant in Wheat Ridge, Colorado. Anna wanted to talk to us today about tax planning for the future when the Bush tax cuts will expire. At this point we are all wondering what the tax rates will be in 2013, while that may seem to be a long ways away, it will be here before you know it. Here are some things that Anna would like us to take a look at in our own tax situation:
- Leverage your standard deductions by bunching deductible expenditures – are your 2011 itemized deductions going to wind up just below or just above the standard deduction? If so – you may want to consider the strategy of bunching together expenditures for your itemized deduction items every other year, while claiming the standard deduction in the intervening years. Examples of items that can be bunched together every other year to lower your Federal income taxes are charitable deductions, state income taxes and property tax payments.
- Consider deferring income – it may also pay to defer some of your taxable income from this year into next year, especially if you expect to be in a lower tax bracket in 2012. If you are in business for yourself and a cash-method taxpayer, you can postpone taxable income by waiting until late in the year to send out some client invoices. That way, you won’t receive payment until early 2012. You can also postpone taxable income by accelerating some deductible business expenditures into this year.
- Time your Investment gains and losses, consider being bold about it – Evaluate your investments held in your taxable brokerage firm accounts, consider the impact of selling appreciated securities this year. The maximum federal income tax rate on long term capital gains realized from the 2011 sales of securities held for over a year is only 15%. Therefore, it often makes sense to hold appreciated securities for at least a year and a day before selling. Biting the bullet and selling some loser securities (currently worth less than you bought them for) before year end can be a good idea. The resulting capital losses will offset the capital gains from other sales this year, including short term gains from securities owned for one year or less, which would otherwise be taxed at higher ordinary income tax rates.
- Take advantage of the generous but temporary business tax breaks – several favorable business tax provisions have a limited shelf life that may dictate taking action between now and the year end. They include the following:
Bigger Section 179 Deduction – under the Section 179 deduction privilege, an eligible business can often claim first year depreciation write offs for the entire cost of new and used equipment and software additions. For tax years beginning in 2011 – the maximum Section 179 deduction is $500,000 (same as tax years 2010). Or tax years beginning in 2012, however, the maximum deduction is scheduled to drop back to $125,000. One note on this – if your business is already expected to have a tax loss for this year before considering any Section179 deduction as you cannot claim a Section 179 write off that would create or increase an overall business tax loss.
Section 179 deduction for Real Estate – Real property improvement costs are generally ineligible for the Section 179 deduction privilege. However, an exception applies to the tax years 2010-2011. Under this exception, your business can deduct up to $250,000 of qualified improvement costs for the following types of real property – interiors of leased non-residential buildings, restaurant buildings and interiors of retail buildings. This $250,000 of Section 179 allowance for real estate improvements are part of the $500,000 allowance. This temporary real estate break will not be available for tax years 2012 unless Congress extends it.
100% First-year Bonus Depreciation – above and beyond the bumped up Section 179 deduction, your business can also claim a first year bonus depreciation equal to 100% of the cost of most new (not used) equipment and software placed in service before Dec. 31st of 2011.
Don’t overlook estate planning – For tax years 2011 and 2012, the unified federal gift and estate tax is a relatively generous $5 million. However, the exemption will drop back to $1 million in 2013 unless Congress takes action. In addition the federal estate tax rate is 35% through 2012 but will rise to a painfully high 55% in 2013. Therefore, you should have a plan to avoid or minimize the federal estate tax – now.
If you need help understanding or implementing any of these or other tax strategies for the unsure tax future – give Anna Kay Roche a call and let her help you through this unsure time.
Anna Kay Roche * Certified Public Accountant * 303.403.0775
Ruthie Williams of Mary Kay Cosmetics in Golden, Colorado was today’s second speaker. Ruthie wanted to let us know about the new limited editions items that Mary Kay have out for the fall season. The first item Ruthie discussed was the Redefining Elegance Collection – this collection the Mary Kay Filigree Eye and Cheek Powder which includes 2 compact groups – Stunning – a bronzing palette group and Splendid – a bright palette group. These sets include 3 eye colors and a blush; all are enhanced with flecks of gold. Next is the Mary Kay Luxury Liner – with the ease of a pen type application in 3 fabulous shades – black velvet, classic sable and rich plum – and is smudge proof. The last of this limited edition collection is the May Kay Lip Suede – this long wearing formula comes in 2 colors Polished Pink and Luscious Plum – perfect for any holiday party. Another limited edition item is the release of the new nail lacquers – this year’s limited edition colors are gold leaf, lavish sable & plush plum. These colors will make you stand out in any crowd! Ruthie wanted to bring our attention to a new item that she has come to love. The New Mary Kay Timewise Night Restore and Recover Complex along will help with firmer skin, reduce the appearance of laugh lines and crow feet, reduce environmental damage and signs of early aging. It starts with it’s 5 ingredients – Palmitoyl Tetrapeptide-7 – known to activate collagen production, Cotton Seed Extract – a peptide rich ingredient that has been shown to speed up the skin’s recovery from daily damage, Acai Berry Extract – helping to replenish the antioxidants lost during your day, Pomegranate Sterols – the lipid rich extract that helps strengthen and stabilize the skin barrier and Chestnut Seed Extract – will help to promote cell turnover – which slows down as we age – this extract will enhance this process that produces younger looking skin. This is a night time product that works because of the combination of the 5 ingredients and how they work with your body temperature to protect the skin and retain the moisture that would normally escape at night. This is a product that will target the skin matrix – a mesh like framework that holds the skin together and makes you look younger, The weaker the dermal matrix is the older we look. The Palmitoyl Tetrapeptide-7 is the main ingredient that supports the collagen production that will strengthen the dermal matrix and lead to younger looking skin. Combine that with the other ingredients to reduce damage from your daily environment – ie. sun damage, smoke and free radicals – this is the perfect product to improve your skin and get that more youthful look! Give Ruthie Williams a call to consult with all of your skin care needs!
Ruthie Williams * Mary Kay Cosmetics * 303.916.3857 * marykay.com/ruthiewilliams