On January 1, 2011 nearly all of the Bush era tax cuts will expire. Thus taxes will automatically increase in 2011 without any action being required by congress. All of the marginal tax rates will be increased, with the highest income tax bracket going from being taxed at a marginal rate of 35% to a rate of 39.6%.

Knowing this, there are significant planning opportunities to save taxes by deferring certain deductions which could be taken in 2010 into 2011. One major deduction which can be shifted into future years is the deduction for pension contributions.
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Congress has approved and the President quickly signed a multi-billion dollar tax cut package, the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (2010 Tax Relief Act) (H.R. 4853). The new law follows through on the framework agreed to on December 6 by President Obama and GOP leaders in Congress. The 2010 Tax Relief Act extends the Bush-era individual and capital gains/ dividend tax cuts for all taxpayers for two years.
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Home Buyer Tax Credits

The National Association of Home Builders has set up a website to find answers to your questions about the $8,000 tax credit for first time home buyers and $6,500 tax credit for qualified repeat home buyers.

The “new” tax credit is available for qualified purchases with a binding sales contract in place on or before 4/30/2010 and closed by 6/30/2010. For qualified military, Foreign Service or employees of the intelligence community, these dates are extended one year.
Continue reading “Tax Planning Part I – Divorce-Home Buyer” →

Higher Education Costs

The deduction for higher education costs expires at the end of 2009. In addition the American Opportunity Credit replaces the Hope Credit with an increase in the maximum tax credit from $1,800 to $2,500 for 2009 and 2010. Income phase-out levels are raised to $160,000 of adjusted gross income (AGI) for joint filers and $80,000 of AGI for single filers. Also new is the change to make 40% of the tax credit refundable which should enable lower income taxpayers to get a tax refund for 2009 and 2010.
Continue reading “Tax Planning Part II” →

Proper Planning of Investments In Start-Up Businesses May Eliminate Tax on Gains.

Investors in new start-up businesses should consider the benefits of a provision in the Small Business Jobs act of 2010 which eliminates the tax on gains on the sale of Qualified Small Business (QSB) stock issued between September 27, 2010 and December 31, 2010 and held for more than 5 years.

The act modifies Section 1202, which is a tax provision intended to stimulate cash flow into new start-up companies by reducing the taxes on future gains. The provision was originally enacted in 1993 and excluded 50% of gains on Qualified Small business Stock. The exclusion was increased to 75% for stock acquired after February 17, 2009 and was increased to 100% for stock issued between September 27, 2010 and December 31, 2010.
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Bill Hesch Named “Leading Lawyer” for Ninth Consecutive Year

William E. Hesch, Esq., CPA, PFS, was recently recognized as a “Leading Lawyer” in the Trust and Estate area by Cincy Magazine for 2012. This is the Ninth consecutive year Bill Hesch has received the coveted distinction, which is determined by the ballot of local attorneys.

“This designation reflects excellence in estate planning,” Bill comments. “My background as both an attorney and a CPA makes me an integral professional who is able to address complex legal matters from accounting, financial, and tax perspectives.”
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Cincinnati Estate Tax Rules Relating to Debt Discharged in Connection With Your Personal Residence

The Mortgage Forgiveness Debt Relief Act of 2007 and subsequent amendments allow taxpayers to exclude up to $2 million of income from the discharge of indebtedness as a result of debt discharge on their principal residence. This applies to debt forgiven in calendar years 2007 through 2012. This applies to foreclosures as well as short sales, so it is not required that the taxpayers stay in the home until the foreclosure.
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 How to Manage Money More Effectively

 

I. The problem – Money is the #1 problem in relationships today

A.

Since 2005 our country has been in a negative savings mode nationally.

 

Debts have increased and household budgets are getting stretched to the limit.

B.

Higher gas and medical costs are now forcing the average person to cut their personal living expenses deeper and deeper.

C.

The average person at all income levels $15,000/50,000/100,000 is spending more than they make in take home pay and the solutions are not easy.

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American households are struggling to make ends meet with higher gas prices and the trickledown effect on the cost of our day to day household expenditures. Now more than ever, households are living paycheck to paycheck. An ominous sign of the times are “middle income” families beginning to seek help from the food pantries.

One solution is putting together and managing your personal budget.

1. Review current spending habits.
Continue reading “How To Set Up And Manage Your Personal Budget” →

Pay itemized deductions before December 31, 2010 to save 2010 taxes:

• 2010 income taxes
• 2010 real estate taxes
• January, 2011 mortgage payment
• Charitable donations – donate appreciated stock to your charities and deduct the fair market value of the stock and no tax is due on the appreciation of the stock

Continue reading “Tax Savings Tips – Cincinnati Capital Gains Tax” →