Recently I posted a short answer about estate tax. I have had some follow-up questions. Here is a little more detail:
Estate planning remains stuck in limbo as a result. After 2012, the $5-million exemption for gift and estate taxes is scheduled to decrease to $1 million, while the maximum tax rate is slated to soar to 55%...the amounts in effect before 2001.
In addition, the portability of estate tax exemptions between spouses is set to expire after next year. This rule provides that after the death of one spouse, the survivor can lay claim to any unused exemption and make larger tax-free lifetime gifts or bequeath more assets free of estate tax.
Congress has done nothing to make the gift and estate tax rules permanent. So taxpayers and their advisers must plot their own course without a fixed set of rules.
Most experts expect Congress to extend the current system…the 35% flat tax rate, the $5-million estate and gift tax exemption and the portable estate tax exemption before they lapse. But the same experts claimed that there was no way that there would be no estate tax in 2010. So much for the experts!
For now, folks should weigh taking advantage of the higher gift tax exemption. Individuals can give away up to $5 million of assets free of gift tax now - $10 million for married couples. All the future income and appreciation on these gifts is removed from the donor’s estate, so you should give assets that you expect will soar in value.
Also, don’t ignore annual exclusion gifts. You and your spouse can each give $13,000 per year to any individual without eating away at your lifetime gift tax exemptions.
Thursday, September 22, 2011
Wednesday, September 21, 2011
MAJORITY OF ECONOMISTS SURVEYED SAY CUT FEDERAL SPENDING
From USA Today:
The majority of economists surveyed by the National Association for Business Economics believe the federal deficit should be reduced only or primarily through spending cuts.
The survey out on Monday found that 56% of NABE members feel that way, while 37% said they favor equal parts spending cuts and tax increases. The remaining 7% believe it should be done only or mostly through tax increases.
As for how to reduce the deficit, nearly 40% said the best way would be to contain Medicare and Medicaid costs.
Nearly a quarter recommended overhauling the tax system and simplifying tax rates and exemptions. About 15% said government should enact tough spending caps and cut discretionary spending.
See the full article below: USA TODAY
The majority of economists surveyed by the National Association for Business Economics believe the federal deficit should be reduced only or primarily through spending cuts.
The survey out on Monday found that 56% of NABE members feel that way, while 37% said they favor equal parts spending cuts and tax increases. The remaining 7% believe it should be done only or mostly through tax increases.
As for how to reduce the deficit, nearly 40% said the best way would be to contain Medicare and Medicaid costs.
Nearly a quarter recommended overhauling the tax system and simplifying tax rates and exemptions. About 15% said government should enact tough spending caps and cut discretionary spending.
See the full article below: USA TODAY
Tuesday, September 20, 2011
AM I A WIDOW?
Q. I had a friend of the family who does tax returns file my 2010 return. My dear husband passed away in 2009. Tony, the guy that did my return, filed me as a widow. I thought that was correct. We were married for 55 wonderful years so I thought I was a widow. I was at coffee with the girls the other day and Mable one of my friends whose husband passed away at the same time said that she was told that she was not a widow and she had to file as single. I have not been able to sleep worrying about the IRS coming to get me. Who is right.
Olive
A. First of all Olive don’t worry too much. My best guess is that you are going to owe some money to the IRS and to the state but they are not going to throw you into jail or get audited. This is a good example of why someone should use a “qualified tax professional.” The key to this is that although you are a widow the actual IRS wording is “qualified widow or widower.” In order to meet that definition you must have a child that lives with you. In addition the qualification is only for two years after the death of the spouse. For the 2010 returns this would mean that the spouse died is 2008 or 2009 and you had a child living with you during those two years.
What should you do? I would recommend that you hire a qualified professional to amend your 2010 federal and, don’t forget your state return. I would also ask them to look at your 2009 return. Even though your husband died in 2009 you can still file a joint return. Make sure that a joint return was filed.
It is a pleasure serving you.
FOLLOWUP
Thank you so much. I am now sleeping better. How much would you charge to fix my problem?
Olive
I would be happy to help. Amending your federal and state returns would cost $225. This includes looking at your 2008 and 2009 returns to see if there are any other errors.
Let me know.
Olive
A. First of all Olive don’t worry too much. My best guess is that you are going to owe some money to the IRS and to the state but they are not going to throw you into jail or get audited. This is a good example of why someone should use a “qualified tax professional.” The key to this is that although you are a widow the actual IRS wording is “qualified widow or widower.” In order to meet that definition you must have a child that lives with you. In addition the qualification is only for two years after the death of the spouse. For the 2010 returns this would mean that the spouse died is 2008 or 2009 and you had a child living with you during those two years.
What should you do? I would recommend that you hire a qualified professional to amend your 2010 federal and, don’t forget your state return. I would also ask them to look at your 2009 return. Even though your husband died in 2009 you can still file a joint return. Make sure that a joint return was filed.
It is a pleasure serving you.
FOLLOWUP
Thank you so much. I am now sleeping better. How much would you charge to fix my problem?
Olive
I would be happy to help. Amending your federal and state returns would cost $225. This includes looking at your 2008 and 2009 returns to see if there are any other errors.
Let me know.
Saturday, September 17, 2011
FEDERAL BUDGET VS. HOUSEHOLD BUDGET
This information has been running around the Internet. I thought it explains our predicament really well.
The Federal Budget
1) U.S. Tax revenue: $2,170,000,000,000
2) Fed budget $3,820,000,000,000
3) New Debt: $1,650,000,000,000
4) National debt: $14,271,000,000,000
5) Recent Budget cut: $38,500,000,000
Now remove 8 zeros and pretend it is a….
Household Budget:
1) Annual family income: $21,700
2) Money family spent: $38,200
3) New dept on credit card: $16,500
4) Outstanding balance on credit card: $142,710
5) Total budget cuts: $385
The family is not going to make it.
Now those are some numbers I can relate to!
The Federal Budget
1) U.S. Tax revenue: $2,170,000,000,000
2) Fed budget $3,820,000,000,000
3) New Debt: $1,650,000,000,000
4) National debt: $14,271,000,000,000
5) Recent Budget cut: $38,500,000,000
Now remove 8 zeros and pretend it is a….
Household Budget:
1) Annual family income: $21,700
2) Money family spent: $38,200
3) New dept on credit card: $16,500
4) Outstanding balance on credit card: $142,710
5) Total budget cuts: $385
The family is not going to make it.
Now those are some numbers I can relate to!
Thursday, September 15, 2011
LABOR BOARD ISSUES RULE REQUIRING EMPLOYERS TO POST NOTICES ON UNION RIGHTS
The National Labor Relations Board (NLRB) in Washington, D.C., has just issued an advance copy of its final rule requiring nearly every U.S. employer to post a notice in the workplace about the right to organize a union. The rule will take effect in 75 days, or on November 14th. For a fact sheet, visit: http://www.nlrb.gov/
I am on the Nebraska Chamber of Commerce board of directors and earlier this year, the Nebraska Chamber of Commerce & Industry signed onto comments regarding NLRB's proposed rule, arguing, among other things, that the notice requirement is unnecessary, biased and beyond the authority of the NLRB. It appears the NLRB did make some modest changes to its February draft. For example, it dropped the requirement that employers must "distribute the posting by e-mail, Twitter or other electronic means." NLRB member, Brian Hayes (R) voted against the final rule, while Chair Wilma Liebman (D) and members, Mark Pearce (D) and Craig Becker (D) voted to approve. With NLRB Chair Liebman's term expiring soon, some analysts believe that the NLRB may issue a flurry of decisions over the next few weeks.
I am on the Nebraska Chamber of Commerce board of directors and earlier this year, the Nebraska Chamber of Commerce & Industry signed onto comments regarding NLRB's proposed rule, arguing, among other things, that the notice requirement is unnecessary, biased and beyond the authority of the NLRB. It appears the NLRB did make some modest changes to its February draft. For example, it dropped the requirement that employers must "distribute the posting by e-mail, Twitter or other electronic means." NLRB member, Brian Hayes (R) voted against the final rule, while Chair Wilma Liebman (D) and members, Mark Pearce (D) and Craig Becker (D) voted to approve. With NLRB Chair Liebman's term expiring soon, some analysts believe that the NLRB may issue a flurry of decisions over the next few weeks.
Wednesday, September 14, 2011
ACCOUNTANTS IN THE MOVIES
In Hollywood, accounting can seem like a pretty glamorous profession, or not.Cher won an Academy Award playing accountant Loretta Castorini in the 1987 romantic comedy "Moonstruck." She works as an accountant for several Brooklyn businesses, including her uncle's deli, and is engaged to be married to Danny Aiello, until she falls for his younger brother, played by Nicolas Cage. When the moon hits your eye like a big pizza pie, that's amore!
Tuesday, September 13, 2011
FEDERAL REGULATIONS MULTIPLY AT RECORD PACE
With working with small businesses, I know first-hand the impact of federal and state regulations. The regulations are there to serve a useful purpose, but sometimes enough is enough. It seems like a vicious circle. The more regulations we have, the more bureaucrats we need, and more bureaucrats sit in their office and create more regulations…which create more bureaucrats.
The U.S. Chamber of Commerce reports that the administration last week "released version 2.0 of its regulatory review, which looks back at existing regulations to determine which regulations it can streamline or eliminate." In his commentary at http://www.chamberpost.com/, the U.S. Chamber's regulatory expert, Bill Kovacs writes that while the administration is to be commended for taking the initiative, "results of this look-back will not have a material impact on the real regulatory burdens facing businesses today." In 2007, there were around 110,000 federal regulations. Today, those rules are proliferating at a rate of about 4,000 additional regulations annually. There are currently more than 22,580 pages of federal regulations on environmental protection; 15,700 pages of tax code; 10,800 pages to regulate agriculture; 6,555 pages for the transportation sector; 5,575 pages on banking regulation; and 4,955 pages of labor law. Still, the rules keep coming. According to reports, the federal agencies added $9.5 billion in new regulatory costs in July alone by proposing 229 new rules and finalizing another 379 rule changes.
The U.S. Chamber of Commerce reports that the administration last week "released version 2.0 of its regulatory review, which looks back at existing regulations to determine which regulations it can streamline or eliminate." In his commentary at http://www.chamberpost.com/, the U.S. Chamber's regulatory expert, Bill Kovacs writes that while the administration is to be commended for taking the initiative, "results of this look-back will not have a material impact on the real regulatory burdens facing businesses today." In 2007, there were around 110,000 federal regulations. Today, those rules are proliferating at a rate of about 4,000 additional regulations annually. There are currently more than 22,580 pages of federal regulations on environmental protection; 15,700 pages of tax code; 10,800 pages to regulate agriculture; 6,555 pages for the transportation sector; 5,575 pages on banking regulation; and 4,955 pages of labor law. Still, the rules keep coming. According to reports, the federal agencies added $9.5 billion in new regulatory costs in July alone by proposing 229 new rules and finalizing another 379 rule changes.
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