NEW YORK,, Nov. 17 NY-Deloitte-Tax-Guide
Guide Provides Savings Strategies Around Income Tax, Investments, Insurance and Wealth Transfer
NEW YORK, Nov. 17 /PRNewswire/ -- The end of the year is not the only time to think about taxes or your financial situation. According to Deloitte's Essential Tax and Wealth Planning Guide for 2009, year-round consideration of taxes - income, wealth transfer, and gift - as well as investments and insurance - is crucial for taxpayers to make smart decisions about where to put their money.
"Almost any decision you make about where to put your money affects the taxes you pay, whether it's giving a financial gift, making an investment, planning your estate, or buying insurance," said Julia Cloud, partner and national leader of the Private Client Advisors Practice at Deloitte Tax LLP. "That's why it's important to meet with your financial advisor on at least a quarterly basis to make sure you're being smart with your money in terms of your tax liability so that you can increase your wealth as much as possible."
Changes in tax laws are another reason to engage in year-round tax planning. As an example, the Economic Stimulus Act of 2008 increases the maximum amount that taxpayers may expense of the cost of qualifying property from $128,000 to $250,000 under Internal Revenue Code Section 179. Additionally, the Emergency Economic Stabilization Act of 2008 extends relief from the Alternative Minimum Tax. Failing to consider both could result in missed tax savings opportunities.
"Many of the measures the government is taking to shore up the economy have short- and long-term effects on taxes," said John Battaglia, a director in the Private Client Advisors practice at Deloitte Tax LLP. "The changes to the income tax codes this year alone provide benefits to millions of taxpayers."
The Deloitte guide is broken into four sections: Income Tax, Investments, Insurance, and Wealth Transfer Tax, with tips on each topic. Two sample tips are:
Income Tax: Tax Planning Tip on Capital Gains and Capital Losses
If you believe that capital gains rates will be higher when you would otherwise sell an asset, make a complete analysis of your potential savings and costs before selling the asset and repurchasing it or a similar asset to refresh your basis. It is possible that by, incurring multiple transaction costs and losing the use of funds that go to pay taxes early that you may more than offset the savings from a lower rate. Another opportunity is to donate appreciated long term securities to a charitable organization. You will receive a charitable deduction for the fair market value of the security and increase your basis at the same time by repurchasing the security. Lastly, if you realized capital gains during the year and taking capital losses makes "investment" sense, you can offset net short-term capital gains, which are taxed at ordinary rates ,by incurring short-term losses or even long-term losses if you are in a net long-term loss position. In utilizing this strategy be aware of the wash sales rules.
Wealth Transfer Tax: Tax Planning Tip on the Gift Tax
An annual gifting program can shift significant wealth down generational lines. This is especially true if the asset being transferred appreciates and/or generates income that will be excluded from the donor's estate. If you are interested in a gifting program, consider a trust as the recipient for these gifts. Certain types of trusts are tax-efficient vehicles for transferring wealth.
"Taxpayers often think of their various financial activities as being discrete from one another," said Cloud. "When they want to make an investment, they talk to an investment advisor, and when they think about life insurance, they call an insurance broker. Then, at the end of the year, they take all of this activity to a tax preparer in order to take advantage of various tax benefits. Without proper planning, however, those tax benefits may not exist and the taxpayer could be exposed to additional taxes. Instead of waiting until the end of the year, people should consider the tax implications of financial decisions as they make them in order to get the most favorable tax treatment possible."
About Deloitte
As used in this document, "Deloitte" means Deloitte Tax LLP and Deloitte Services LP, separate subsidiaries of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.
SOURCE Deloitte
