2011 Year-End Tax Planning for Individuals

So, just as you would shop around for the best price for food, clothing or merchandise, you want to consider opportunities to reduce or defer your annual tax obligation. This Tax Letter is intended to assist you in that effort. Also, at the end of this Tax Letter is a list of federal tax law provisions to help individuals save and pay for higher education costs.

Your 2011 year-end tax planning begins with a projection of your estimated income, deductions, and tax liability for 2011 and 2012. You should review actual amounts from 2010 to assist you with these projections. To the extent you can control the timing of income and deductions between 2011 and 2012, you should make decisions that will result in the lowest overall tax for both years. If shifting income and deductions between 2011 and 2012 does not reduce your overall tax liability, you should try to defer as much tax liability as possible from 2011 to 2012.

Tax planning for individuals also requires consideration of the tax consequences to any businesses conducted directly or indirectly by the individual owners. Accordingly, we suggest you also review our 2011 Year-End Tax Planning for Businesses.

This Tax Letter discusses planning for federal income taxes. However, state income taxes should also be considered. Please contact us regarding state tax matters.

2011 Versus 2012 Marginal Tax Rates

Whether you should defer or accelerate income and deductions between 2011 and 2012 depends to a great extent on your projected marginal (highest) tax rate for each year.

The highest marginal tax rates for 2011 and 2012 are 35% in each year. The tax brackets for 2011 are shown in the box below. Projections of your 2011 and 2012 income and deductions are necessary to estimate your marginal tax rate for each year. 

2011 Federal Income Tax Rates 

Shifting Income and Deductions Into the Most Advantageous Year

You can shift taxable income between 2011 and 2012 by controlling the receipt of income and the payment of deductions. Generally, income should be received in the year with the lower marginal tax rate, while deductible expenses should be paid in the year with the higher marginal rate. If your top tax rate is the same in 2011 and 2012, deferring income into 2012 and accelerating deductions into 2011 will generally produce a tax deferral of up to one year. On the other hand, if you expect your tax rate to be higher in 2012, you may want to accelerate income into 2011 and defer deductions to 2012.

Controlling Income

Income can be accelerated into 2011 or deferred to 2012 by controlling the receipt of various types of income depending on your situation, such as:

For Business Owners

• Year-end interest or dividend payments from closely-held corporations;
• Rents and fees for services (delay December billings to defer income); and
• Commissions (close sales in January to defer income).

Caution: Income cannot be deferred to 2012 if you constructively receive it in 2011. Constructive receipt occurs when you have the right to receive payment or have received a check for payment even though it has not been deposited. Income also cannot be deferred if you effectively receive the benefit of the income; for example, if you are allowed to pledge a deferred compensation account balance to obtain a loan.

Bonuses for work performed in a particular year can be deferred to the next year if an election is made no later than the end of the year preceding the year the work is to be performed. Accordingly, bonuses for work to be performed in 2012 can be deferred to 2013 if the required election is made before the end of 2011.

For Investors

Interest on short-term investments, such as Treasury bills (T-bills) and certain certificates of deposit that do not permit early withdrawal of the interest without a substantial penalty, is not taxable until maturity.

Interest on U.S. Series EE savings bonds

Other than not being taxable until the proceeds are received, interest on issued Series EE bonds may be exempt from tax if the proceeds of the bond are used to pay certain educational expenses for yourself or your dependents, and the requirements of “qualified United States savings bonds” are met. 

For Employees

Year-end bonuses and deferred compensation

Caution: The Service will scrutinize deferrals of income between owner-employees and their closely-held corporations. Additionally, if you own more than 50% of a taxable (C) corporation or any stock of an S corporation that reports its income on an accrual method of accounting, the corporation can deduct a year-end bonus to you only when it is paid. Also, any deferred compensation arrangements must comply with the section 409A rules discussed later in this letter. These rules may prevent a reduction of 2011 taxable income by deferral but elections can be made before December 31, 2011, that affect your 2012 taxable income.

This tax is imposed on all employee compensation and self-employed income, including vested deferred compensation, without any limitation or cap.

Similar to the Medicare tax, this tax is imposed on employee compensation and self-employed income except that this tax is imposed only to the extent of the maximum wage base set by the Social Security Administration. You can consider pulling wages into 2011 for taxpayers who could benefit from the 2% rate reduction for employees or for those who have exceeded the 2011 maximum wage base ($106,800), but may be below the 2012 maximum wage base ($110,100). The temporary reduction in this tax is scheduled to expire at the end of 2011, but Congress is currently considering an extension of the reduction (in addition to further potential temporary reductions in the rates) for another year. The expected outcome of this legislative effort is uncertain at the time this letter was published.

Distributions from retirement plans

Distributions from qualified retirement plans can be delayed.

Caution: Penalties may be imposed on early, late, or insufficient distributions.

IRA distributions

All distributions from a regular individual retirement account (IRA) are subject to ordinary income taxes. This tax liability can be delayed until age 70½ at which time the minimum required distributions must begin. However, the ten-percent early withdrawal penalty prevents distributions before age 59½ in most cases. However, if you are over 59½ you can take a penalty-free voluntary distribution if accelerating ordinary taxable income into 2011 is desirable. Penalty-free access to the funds is available prior to age 59½, to the extent the distribution is used to pay medical expenses in excess of 7½% of your adjusted gross income (AGI) or to pay any health insurance premiums, provided you have received unemployment compensation for at least 12 weeks.

If you are planning to purchase a new home, you may withdraw up to $10,000 from your IRA to pay certain qualified acquisition expenses without having to pay the ten-percent early withdrawal penalty. The distribution is still subject to the regular income tax. The $10,000 withdrawal is a lifetime cap. If a taxpayer or spouse has owned a principal residence in the previous two years, this penalty-free provision is not available. An eligible homebuyer for this purpose can be the owner of the IRA, his or her spouse, child, grandchild or any ancestor. Also, penalty-free distributions can be made from IRAs for higher education expenses of a taxpayer, spouse, child or grandchild.

Accelerated insurance benefits

Subject to certain requirements, payments received under a life insurance policy of an individual who is terminally or chronically ill are excluded from gross income. If you sell a life insurance policy to a viatical settlement provider (regularly engaged in the business of purchasing or taking assignments of life insurance policies), these payments also are excluded from gross income.

Educational expense exclusion

An exclusion for employer-provided education benefits for non-graduate and graduate courses up to $5,250 per year is available for taxable years 2011 and 2012.

Tuition deduction

The 2010 Tax Relief Act extended the qualified tuition deduction through 2011. You may be eligible for a tuition deduction of up to $4,000 for higher education expenses if your AGI does not exceed $65,000 (or $130,000 if filing a joint return). If your AGI is greater than $65,000 (or $130,000 on a joint return), but does not exceed $80,000 (or $160,000 if filing a joint return), your maximum tuition and fees deduction will be $2,000. Once your AGI exceeds $80,000 (or $160,000 on a joint return), a deduction will not be allowed. The $4,000 limit must be reduced for those higher education expenses that are not subject to tax, i.e., United States Government interest used to pay higher education expenses; distributions from state tuition programs (section 529 plans); or distributions from educational IRA plans.

Educators’ out-of-pocket classroom expenses

The $250 (maximum) deduction for educator expense is available for 2011. Eligible educators can deduct $250 (subject to various limitations) of their classroom expenses as above-the-line deductions. These are expenses that would otherwise be allowable as trade or business deductions. The balance of the educators’ classroom expenses is deductible as an unreimbursed employee business expense, a miscellaneous itemized deduction subject to the two-percent-of-AGI floor. This above-the-line deduction is scheduled to expire after December 31, 2011.

Damages received for non-physical injuries and punitive damages

All amounts received as punitive damages and damages attributable to non-physical injuries are gross income in the year received. Legal fees attributable to non-business income or to employment related unlawful discrimination lawsuits are a reduction of gross income, instead of a miscellaneous itemized deduction. Damages received by a spouse, which are attributable to loss of consortium due to physical injuries of the other spouse, are excluded from income.

Controlling Deductions

The 2010 Tax Relief Act eliminated the phase-out of itemized deductions for high income taxpayers through 2012, i.e., there is no itemized deduction phase-out in 2011 or 2012. The phase-out is scheduled to return in 2013.

Deductions that may be accelerated into 2011 or deferred to 2012 include:

Charitable contributions (cash or property)

You must obtain written substantiation, in addition to a canceled check, for all charitable donations.

Charities are required to inform you of the amount of your net contribution, where you receive goods or services in excess of $75 in exchange for your contribution.

If the value of contributed property exceeds $5,000, you must obtain a qualified written appraisal (prior to the due date of your tax return, including extensions), except for publicly-traded securities and non-publicly-traded stock of $10,000 or less.

Caution: If you are contemplating the repurchase of the security in the future, you need to consider the wash sale rules.

On the other hand, if the marketable securities or other long-term capital gain property have appreciated in value, you should contribute the property in kind to the charity. By contributing the property in kind, you will avoid taxes on the appreciation and receive a charitable contribution deduction for the property’s full fair market value.

If you contribute appreciated, publicly-traded stock (with no restrictions) to a private foundation, you are entitled to a charitable contribution deduction for the full fair market value of the stock.

If you wish to make a significant gift of property to a charitable organization yet retain current income for yourself, a charitable remainder trust may fulfill your needs. A charitable remainder trust is a trust that generates a current charitable deduction for a future contribution to a charity. The trust pays you income annually on the principal in the trust for a specified term or for life. When the term of the trust ends, the trust’s assets are distributed to the designated charity. You obtain a current tax deduction when the trust is funded based on the present value of the assets that will pass to the charity when the trust terminates. This accelerates your deduction into the year the trust is funded, while you retain the income from the assets. This method of making a charitable contribution can work very well with appreciated property.

If you volunteer time to a charity, you cannot deduct the value of your time, but you can deduct your out-of-pocket expenses. If you use your automobile in connection with performing charitable work, including driving to and from the organization, you can deduct 14 cents per mile. You must keep a record of the miles.

The allowable deduction for donating an automobile (also, a boat and airplane) is significantly reduced. The deduction for a contribution made to a charity, in which the claimed value exceeds $500, will be dependent on the charity’s use of the vehicle. If the charity sells the donated property without having significantly used the vehicle in regularly conducted activities, the taxpayer’s deduction will be limited to the amount of the proceeds from the charity’s sale. In addition, greater substantiation requirements are also imposed on property contributions. For example, a deduction will be disallowed unless the taxpayer receives written acknowledgement from the charity containing detailed information regarding the vehicle donated, as well as specific information regarding a subsequent sale of the property.

Medical expenses

In addition to medical expenses for doctors, hospitals, prescription medications, and medical insurance premiums, you may be entitled to deduct certain related out-of-pocket expenses such as transportation, lodging (but not meals), and home healthcare expenses. If you use your car for trips to the doctor during 2011, you can deduct 19 cents per mile for travel in the first half of the year and 23½ cents per mile for travel in the second half. Payments for programs to help you stop smoking and prescription medications to alleviate nicotine withdrawal problems are deductible medical expenses. Uncompensated costs of weight-loss programs and diet food to treat diseases diagnosed by a physician, including obesity, are also deductible medical expenses.

Under certain conditions, if you provide more than ten percent of an individual’s support, such as a dependent parent, you can deduct the unreimbursed medical expenses you pay for that individual to the extent all medical expenses exceed 7½% of your AGI. Even if you cannot claim that individual as your dependent because his or her gross income is $3,700 or more, you are still entitled to the medical deduction. Please consult us for details.

Long-term care insurance and services

Premiums you pay on a qualified long-term care insurance policy are deductible as a medical expense. The maximum amount of your deduction is determined by your age. The following table sets forth the deductible limits for 2011:

These limitations are per person, not per return. Thus, a married couple over 70 years old has a combined maximum deduction of $8,480, subject to the normal limitation on medical expenses of 7½% of AGI.

Generally, if your employer pays these premiums, they are not taxable income to you. However, if this benefit is provided as part of a flexible spending account or cafeteria plan arrangement, the premiums are taxable to you. The deduction for health and long-term care insurance premiums paid by a self-employed individual is covered in the box “Tax Tips for the Self-Employed.”

Medical payments for qualified long-term care services prescribed by a licensed healthcare professional for a chronically ill individual are also deductible as medical expenses.

Coverage for adult children

The Affordable Care Act (ACA) provides that any plan that covers dependents must be extended to provide coverage of adult children until the day the child reaches age 26. The general exclusion from gross income to include premiums from employer-provided health benefits to any employee’s child who has not attained age 27 as of the end of the tax year is also extended under the ACA. 

Mortgage interest and points

Interest as well as points paid on a loan to purchase or improve a principal residence is generally deductible in the year paid. The mortgage loan must be secured by your principal residence. Points paid in connection with refinancing an existing mortgage are not deductible currently but rather must be amortized over the life of the new mortgage. However, if the mortgage is refinanced again, the unamortized points on the old mortgage can be deducted in full.

Interest paid on qualified education loans

An “above-the-line” deduction (a deduction to arrive at AGI) is allowed for interest paid on qualified education loans. All student loan interest up to the $2,500 annual limit is deductible. However, in 2011 this deduction is phased out for single individuals with modified AGI of $60,000 to $75,000 ($120,000 to $150,000 for joint returns).

Caution: Interest paid to a relative or to an entity (such as a corporation or trust) controlled by you or a relative does not qualify for the deduction.

Non-business bad debts

Non-business bad debts are treated as short-term capital losses when they become totally worthless. To establish worthlessness, you must demonstrate there is no reasonable prospect of recovering the debt. This might include documenting the efforts you made to collect the debt, including correspondence to the debtor to demand payment.

401(k) plan contributions

If your employer (including a tax-exempt organization) has a section 401(k) plan, consider making elective contributions up to the maximum amount of $16,500 or $22,000 if over age 50, especially if you are unable to make contributions to an IRA. You should also consider making after-tax, nondeductible contributions to a 401(k) plan if the plan allows, as future earnings on those contributions will grow tax-deferred. A nondeductible contribution to a Roth IRA can also be considered.

 IRA deductions

The total allowable annual deduction for IRAs is $5,000, subject to certain AGI limitations if you are an “active participant” in a qualified retirement plan. A non-working spouse may also make an IRA contribution based upon the earned income of his or her spouse. A catch-up provision for individuals age 50 or older applies to increase the deductible limit for IRAs to $6,000.

Caution: If you choose to accelerate income into 2011 or defer deductions to 2012, make sure your estimated tax payments and withheld taxes are sufficient to avoid 2011 estimated tax penalties.

Deferred Compensation

Since the creation of section 409A by the American Jobs Creation Act of 2004, the deferral or change to a deferral of compensation has become more challenging. Section 409A restricts the timing of distributions from and contributions to, deferred compensation plans requiring most individuals to:

1. Make an election to defer compensation in the year prior to the year in which the services related to the compensation are performed.
2. Limit the timing of distributions based on one (or more) of six prescribed times or events as follows:
    a. separation from service;
    b. disability;
    c. death;
    d. a specified time (or pursuant to a fixed schedule);
    e. change in ownership of the company; or
    f. an unforeseeable emergency.

Plans that may be affected by these rules include salary deferral plans, incentive bonus plans, severance plans, discounted stock options, stock appreciation rights, phantom stock plans, restricted stock unit plans and salary continuation agreements included in employment contracts.

A violation of these rules requires not only a payment of normal income taxes on all amounts deferred up to the time of the violation (or vesting if later), but an additional 20% tax as well. This punitive tax makes it challenging to accelerate properly deferred compensation into a current taxable year. However, if you wish to delay income taxes on compensation that you will earn in 2012 to a later taxable year, the agreement to defer generally must be executed before December 31, 2011.

Plans and arrangements that defer compensation should be in full operational compliance in 2011, but the Service has established a correction program for some section 409A failures.

Capital Gains and Losses

For taxable years through 2012, investment strategies that produce long-term capital gain instead of ordinary income can generate significant tax savings because the maximum tax rate on long-term capital gains is 15%. Also through 2012, if a taxpayer has a net long-term capital gain, a zero tax rate will apply to adjusted net capital gain that otherwise would be taxed at a rate below 25% if taxed as ordinary income. The 2010 Tax Relief Act extended this opportunity to earn tax-free capital gains and qualified dividends through 2012. Thereafter, these rate reductions are scheduled to sunset and the older higher rates for dividend income and long-term capital gains are scheduled to return.

Caution: The tax law contains rules to prevent converting ordinary income into long-term capital gains. For instance, net long-term capital gains on investment property are excluded in computing the amount of investment interest expense that can be deducted, unless the taxpayer elects to subject those gains to ordinary income tax rates. Additionally, if long-term real property is sold at a gain, the portion of the gain represented by prior depreciation is taxed at a 25-percent rate.

Capital losses are offset against capital gains. Net capital losses of up to $3,000 can be deducted against ordinary income. Unused capital losses may be carried forward indefinitely and offset against capital gains, and up to $3,000 of ordinary income, in future years. 

Caution: Do not sell a security simply to generate a gain or loss to offset other realized gains or losses. The investment merits of selling any security must also be considered.

Note: Capital gains and losses are recognized on the trade date, not the settlement date. For instance, gains and losses on trades executed on December 31, 2011, are taken into account in computing your 2011 taxable income.

If a security is sold at a loss and substantially the same security is acquired within 30 days before or after the sale, the loss is considered a “wash sale” and is not currently deductible. However, this nondeductible loss is added to the cost of the purchased security that caused the “wash sale.” This basis adjustment will reduce gain, or increase loss, later when that security is sold.

Although present tax law significantly limits a taxpayer’s ability to lock in capital gains without realizing the gains for tax purposes, there are still methods by which this can be accomplished. Please consult us for further guidance.

Qualified Small Business Stock

A non-corporate taxpayer can exclude specified percentages of any gain realized from the sale of “qualified small business stock” (QSBS). To be eligible, the stock must be issued after August 10, 1993, and must have been held for more than five years. The gain eligible for this exclusion cannot exceed the greater of ten times the taxpayer’s basis in the stock or $10 million. A non-corporate taxpayer may also elect to exclude the entire gain from the sale of “qualified small business stock” held for more than six months if, within the 60-day period beginning on the date of sale, the taxpayer purchases QSBS having a cost at least equal to the amount realized from the sale. The changes in the long-term capital gain rates did not affect the tax treatment of QSBS sales.

As originally enacted, the allowable exclusion percentage was 50%. Legislation enacted in 2009 increased the percentage from 50% to 75% for QSBS acquired after February 17, 2009, and before September 28, 2010. Whether the exclusion percentage was 50% or 75%, the includible portion of the gain was subject to a maximum tax rate of 28%, and a portion of the excluded gain was included as a tax preference in determining the taxpayer’s liability (if any) for the alternative minimum tax (AMT).

Under the Small Business Jobs Act of 2010, qualified small business stock acquired after September 27, 2010, and before January 1, 2011, qualifies for a 100% exclusion from gross income of capital gain if the stock is held for more than five years. Moreover, for such stock, the excluded gain is not a preference for purposes of AMT. As a result, gain from such stock is fully tax-exempt. Because of the five-year holding period requirement, the earliest a taxpayer can benefit from the 100% exclusion would be the calendar year 2015. The 2010 Tax Relief Act extended the full exclusion to QSBS acquired during the calendar year 2011 and held for the requisite five-year period. An exclusion percent of 50% will be applicable to sales of QSBS acquired after December 31, 2011.

Dividend Income

Qualified dividend income from domestic corporations and qualified foreign corporations is taxed at the same reduced rate as long-term capital gains for regular tax and AMT purposes. The rate reduction for dividend income applies to qualified dividends received in taxable years through 2012. Thereafter, these rate reductions are scheduled to sunset and the older higher rates for dividend income and long-term capital gains are scheduled to return.

Tax-Free Rollover Into Specialized Small Business Investment Companies

An individual may elect to avoid tax on gains from sales of publicly traded securities to the extent the sales proceeds are used to purchase common stock or a partnership interest in a specialized small business investment company licensed by the Small Business Administration under the 1958 Small Business Investment Act. The rollover of sale proceeds must occur within 60 days of the sale. The maximum gain that may be avoided annually for a single individual or a married couple filing jointly is the lesser of $50,000 or $500,000 reduced by any gain avoided in previous years. The limits are one-half of these amounts for married individuals filing separate returns.

Sale of Principal Residence

For sales of a principal residence, up to $500,000 of gain on a joint return ($250,000 on a single or separate return) can be excluded. To be eligible for the exclusion, the residence must have been owned and occupied as your principal residence for at least two of the five years preceding the sale. The exclusion is available each time a principal residence is sold, but only once every two years. Special rules apply in the case of sales of a principal residence after a divorce and sales due to certain unforeseen circumstances. If a taxpayer satisfies only a portion of the two-year ownership and use requirement, the exclusion amount is reduced on a pro rata basis.

Legislation enacted in 2008 modified the provisions affecting the exclusion of the gain. For sales or exchanges after December 31, 2008, a portion of the gain attributable to a period when the residence is not used as a principal residence will not be eligible for the exclusion. Periods of ineligible use prior to January 1, 2009, will not be considered.

If you own appreciated rental property that you wish to sell in the future, you should consider moving into the property to convert it to your principal residence. You will need to live in the property for two of the five years preceding the sale of the property. As long as you haven’t sold another principal residence for the two years prior to the sale, a portion of the gain is excluded. Any gain attributable to prior depreciation claimed will be taxed at a 25% rate.

The sale of a principal residence does not qualify for the exclusion if during the five-year period prior to the sale the property was acquired in a tax-free like-kind exchange.

Installment Sales of Depreciable Property by Non-Dealers

A sale of depreciable property at a gain generates ordinary income to the extent of any depreciation recapture. This ordinary income is fully taxable in the year of sale even if no sales proceeds are received in that year.

T must pay tax of $280,000 (35 percent of $800,000) for 2011, even though the note proceeds will not be received until 2012.

Retirement Plan Distributions

Retirement plans have many requirements regarding distributions, but taxpayers can exercise some authority over plan distributions that might facilitate income tax planning.

For instance, funds in a regular IRA can be accessed without additional early distribution penalties anytime after obtaining age 59½.

Therefore, anyone who would benefit from increased ordinary income in 2011 can take a distribution from regular IRAs. Once the IRA owner reaches age 70½, a minimum must be distributed from regular IRAs (Roth IRAs are not subject to any minimum distribution requirements) each year. The law allows, but does not require, a small delay of the first required minimum distribution until April 1 of the year after the attainment of age 70½. Therefore, if you reached age 70½ in 2011, you should evaluate the benefit of delayed tax liability on your first distribution compared with the spike in your 2012 taxable income that two distributions in 2012 could cause. Any failure to take the minimum required distributions before the annual deadline causes the IRA owner to owe a 50% excise tax on the amount that should have been distributed.    

Another way to utilize IRA funds in a tax-efficient manner is to donate to charity directly from your IRA. Doing so avoids an increase in the adjusted gross income that might have a negative effect on the taxation of social security benefits and allowable deductions. The 2010 Tax Relief Act extended this income exclusion for funds transferred directly from an IRA to a charity through 2011.

The provision allows up to $100,000 of qualifying IRA distributions to be excluded from taxable income. In order to qualify, the distributions must be:

• Made after the IRA owner attains age 70½;
• Made directly to a qualifying charitable organization (public charity); 
• Entirely deductible as a charitable contribution and not reduced by any benefit received; and
• Sufficiently substantiated.

In addition, a qualifying distribution to charity in 2011 can be used to satisfy the owner’s minimum required distribution for the year.

Participants in qualified pension plans, who are not five-percent or more owners of the employer, can delay taking distributions out of the plan beyond the minimum required distribution age of 70½ as long as they are still actively employed by the plan sponsor. If you are already receiving benefits but have not yet retired, your plan may (but is not required to) allow you to stop receiving distributions until you retire.

If you received a taxable qualified retirement plan distribution that is not a part of a series of substantially equal payments over a specified period of ten years or more, over the life expectancy of the employee, over the joint life expectancies of the employee and the employee’s beneficiary, or does not satisfy the minimum required distribution rules, you can generally avoid immediate taxation by “rolling” the money into a regular IRA or other qualified plan. The rollover rules are utilized most often to move retirement funds between IRAs inasmuch as qualified plans are required to allow participants to elect a direct trustee-to-trustee transfer of distributions and to withhold a 20% income tax on distributions made directly to participants. Participants who elect to receive a plan distribution net of the required withholding will have to restore the funds from other sources in order to complete a tax-free rollover of 100% of the distribution. If 100% of the distribution is indeed rolled over within the 60-day timeframe required by law, the distribution is nontaxable but any overpayment of income taxes will be refunded only as a result of filing a Form 1040 for the year.

E will have $20,000 of gross income, unless he obtains $20,000 from another source and transfers it to the IRA by March 11, 2011 (within 60 days of receiving the distribution). The $20,000 will be refunded only after taking into account of all items reported on E’s Form 1040 for 2011. In addition, if E fails to transfer the additional $20,000 to an IRA, E will be liable for the ten-percent early withdrawal penalty on the $20,000 because E was under age 55 (the minimum age for receiving penalty-free distributions upon a separation from service).

Roth IRAs and Education IRAs

Roth IRAs

In taxable years beginning after December 31, 2009, the AGI limitation that prevented many taxpayers from converting traditional IRAs to Roth IRAs is eliminated.

Prior to discussing conversions of regular IRAs and eligible employer plans we will first discuss regular annual contributions to Roth IRAs and the characteristics of a Roth IRA. Taxpayers with income under certain income limits are permitted to make contributions to a Roth IRA. Unlike regular IRAs, where contributions are deductible and later distributions are taxable, contributions to Roth IRAs are not deductible and later “qualified” distributions are not taxable. Qualified distributions are distributions made five or more years after the Roth IRA is established, provided the distribution is made after the account owner is at least age 59½, has died or become disabled, or uses the money for a first-time home purchase, subject to a $10,000 lifetime cap. If the distribution is not qualified, a portion of the distribution may be included in gross income and may be subject to the ten-percent early withdrawal penalty. The penalty applies on the amount of the distribution that exceeds the taxpayer’s contributions to the Roth IRA. Roth IRAs are not subject to the minimum distribution rules that apply to regular IRAs when the owner reaches age 70½.

For 2011, taxpayers can contribute up to $5,000 to a Roth IRA (as long as you have compensation for the year at least equal to the contributed amount). Taxpayers age 50 or older can make additional contributions of $1,000. Thus, the limit is $6,000 a year for people who will be age 50 (or older) during 2011. However, the maximum contribution allowance must be reduced by any contributions (deductible or nondeductible) the taxpayer makes to “regular” IRAs.

For single taxpayers, if modified adjusted gross income is between $107,000 and $122,000, the $5,000 maximum contribution is phased out. Modified AGI in excess of $122,000 prevents a contribution to a Roth IRA for a single taxpayer. For married taxpayers filing jointly, no contribution can be made if AGI is $179,000 or more, and the $5,000 maximum (per spouse) is phased out for AGIs between $169,000 and $179,000. For married taxpayers filing separately, the allowable contribution is phased out for AGIs between $0 and $10,000.

As with regular IRAs, contributions to a Roth IRA may be made as late as the due date for filing your income tax return, excluding extensions. Thus, Roth IRA contributions may be made by most individuals for 2011 until April 15, 2012. Unlike regular IRAs, contributions to a Roth IRA may be made even if the taxpayer is over age 70½, and the taxpayer or spouse has earned income at least equal to the amount of the contribution.

If a taxpayer converts a regular IRA or eligible employer plan into a Roth IRA, the amount that must be included in the distributee’s gross income is the amount that would have been includible in gross income had the distribution not been part of a qualified rollover contribution. The entire taxable amount from a 2011 conversion must be recognized on the taxpayer’s 2011 income tax return. The converted amount is not subject to the ten-percent early withdrawal penalty, provided no distributions are made from the account during the five-year period after the initial conversion.

Caution: Assuming that you do not have an NOL or other tax attribute to completely wipe out the income on the conversion, you are going to need cash outside the IRA to pay tax on the conversion.

These rules are complicated but may provide tax-planning opportunities if securities held in IRAs fluctuate significantly within short periods of time. We can help you with your Roth IRA questions.

Coverdell Education Savings Accounts (Education IRAs)

Education IRAs may be established to help meet the cost of education for certain individuals. For 2011 and 2012, annual, nondeductible contributions to an education IRA are limited to $2,000 per beneficiary and may not be made after the beneficiary reaches age 18. Contributions cannot be made prior to the child’s birth. Contributions must be made by the due date of the return without extension. Only eligible donors within certain income limits can make contributions to education IRAs. Eligibility is phased out for single donors with AGI between $95,000 and $110,000, and married donors filing jointly with AGI between $190,000 and $220,000. The contribution limit is scheduled to drop to $500 per beneficiary for taxable years beginning after December 31, 2012.

Distributions from an education IRA are not subject to tax to the extent the distributions do not exceed qualified education expenses. Qualified education expenses include elementary and secondary school expenses. In the year amounts are distributed from an education IRA, the beneficiary is also eligible for an American Opportunity Tax (Hope) Credit or Lifetime Learning Credit, provided the same expenses are not used for each. Education IRAs can be rolled over, before the beneficiary reaches age 30, to benefit another person in the same family. If the beneficiary does not use the funds for qualified education expenses by age 30, the money must be withdrawn and will be subject to tax and penalty on the earnings portion.

Tax Tips for The Self-Employed

Tax Tips For The Self-Employed

Establish a Simplified Employee Pension (SEP) Plan by the due date of your 2011 return, including extensions. The contribution to the plan must be made by that due date. For 2011, the maximum allowable contribution to a SEP an employee can make independently of an employer is $5,000 ($6,000 if a catch-up contribution). However, the maximum combined deduction for an active participant’s elective deferrals and other SEP contributions increased to $49,000. Alternatively, establish a Keogh Plan in 2011, before December 31. The full contribution to the plan need not be made until the due date of your 2011 return, including extensions. Consider placing business assets in service in 2011. The Small Business Jobs Act of 2010 (SBJA) increases the section 179 expense limit to $500,000 and the phase out threshold amount to $2 million for tax years beginning in 2010 and 2011. If qualified, section 179 expense allows you to deduct the full cost of depreciable assets in the taxable year they are placed in service. The expense limit and the phase out threshold amount are scheduled to drop to $139,000 and $560,000, respectively, for 2012. Through December 31, 2011, qualified real property is eligible for section 179 treatment with a maximum allowable deduction of $250,000. The 2010 Tax Relief Act extended the bonus depreciation provision through December 31, 2012, and increased the percentage to 100% for property placed in service after September 8, 2010, and before January 1, 2012. The percentage will revert to 50% for property placed in service after December 31, 2011. For taxable year 2011, a taxpayer can deduct start-up expenditures up to $5,000 with the phase-out threshold at $50,000. A self-employed individual generally may deduct 50% of his self-employment tax as a business expense. This deduction may be claimed in addition to itemized deductions or the standard deduction. For 2011, 100% of medical and long-term care insurance premiums, subject to the limitations set forth, paid by a self-employed person are deductible from gross income to arrive at AGI. Effective for payments made on or after March 30, 2010, the Affordable Care Act allows the self-employed health insurance deduction to include an adult child who does not attain the age of 27 during the taxpayer’s taxable year.

Moving Expenses

Deductible moving expenses are limited to the cost of moving household goods and personal effects, plus traveling (including lodging but not meals) from your old residence to your new residence. To be deductible, a taxpayer must satisfy a distance test, a length-of-employment test and a commencement-of-work test.

Moving expenses can be deducted in arriving at AGI instead of as miscellaneous itemized deductions. Thus, these expenses are not subject to the various limitations applicable to itemized deductions and can be deducted in addition to itemized deductions or the standard deduction. Also, deductible moving expenses reduce AGI for purposes of calculating the various AGI-based limitations.

Interest Expense

Personal Interest

Interest is not deductible on tax deficiencies, car loans, personal credit card balances, student loans (except for taxpayers eligible for the above-the-line deduction for interest paid on qualified education loans) and other personal debts.

Home Mortgage Interest

A full deduction is allowed for:

• Interest on debt used to acquire, construct, or improve a principal or secondary residence to the extent this debt does not exceed $1 million.
• Other mortgage interest on a principal or secondary residence to the extent the mortgage does not exceed $100,000. The loan proceeds may be used for any purpose, except to purchase tax-exempt obligations.

These $1 million and $100,000 limits are cut in half for a married taxpayer filing a separate return.

Caution: These debts must be secured by the principal or secondary residence. Thus, your home is at risk if the loan is not repaid.

Through the end of 2011, the cost of premiums paid or accrued for mortgage insurance on a qualified personal residence is treated as deductible home mortgage interest, provided that the mortgage insurance contract was entered into after December 31, 2006. The amount allowable as a deduction begins to phase out for married taxpayers filing jointly with an AGI of more than $100,000 ($50,000 for separate filers). This deduction is scheduled to expire at the end of 2011.

A residence includes a house, condominium, mobile home, house trailer or boat containing sleeping space, commode and cooking facilities. If you own more than two residences, you can annually elect which one will be your secondary residence.

These rules apply to interest on debt incurred after October 13, 1987. Interest on mortgages established prior to October 14, 1987 is generally subject to less restrictive rules.

Investment Interest Expense

If you want to add to your investment portfolio through borrowing, consider borrowing from your stockbroker through a margin loan. The interest paid is investment interest expense and will be deductible to the extent of your net investment income (dividends, interest, etc.). Investment interest expense in excess of investment income may be carried forward indefinitely.

You should consider switching your investments to those types of investments generating taxable investment income to absorb any excess investment interest expense.

Interest expense, to the extent that it is related to tax-exempt income, is not deductible. Interest expense relating to a passive activity, such as a limited partnership investment, is subject to the passive loss limitations on deductibility. 

Allocation Rules

Interest payments are generally allocated among the various categories–personal interest, home mortgage interest, investment interest, etc.–based on the ultimate use of the loan proceeds.

The Service has issued complex regulations for determining how these allocations are made, which may require maintaining separate bank accounts or other records. We can help you maximize tax deductions for your interest payments.

Miscellaneous Deductions

Unreimbursed employee business expenses, investment expenses, personal tax advice and preparation fees, and most other miscellaneous itemized deductions, are deductible only if they exceed two percent of AGI.

Business Meals and Entertainment

Only 50 percent of an employee’s unreimbursed cost of business meals and entertainment qualifies as a miscellaneous deduction. Club dues generally are not deductible; however, dues paid to the following types of organizations generally continue to be deductible:

• Professional associations;
• Civic or public service organizations, such as Kiwanis, Lions, Rotary, or Civitan; and
• Business leagues, trade associations, chambers of commerce, boards of trade, and real estate boards.

Leased Automobiles

In prior years, the Service permitted salaried employees with unreimbursed business expenses as well as self-employed sole proprietors, partners, and S corporation shareholders to deduct only actual expenses incurred with respect to leased automobiles. Now, the Service allows taxpayers, beginning in the first year a leased automobile is placed in service, to use the standard mileage rate for business activity (51 cents per mile for travel in the first half of 2011 and 55½ cents per mile for travel in the second half).

Changes to the Foreign Earned Income Exclusion and Housing Allowance

For United States citizens working abroad, beginning in 2006, there are three changes made to the foreign earned income exclusion and housing allowance. They are as follows:

• The income exclusion is indexed for inflation starting in 2006 (rather than 2011).
• The base housing amount used in calculating the foreign housing cost exclusion is 16% of the amount of the foreign earned income exclusion limitation. Reasonable foreign housing expenses in excess of the base housing amount remain excluded from gross income, but the amount of the exclusion is limited to 30% of the taxpayer’s foreign earned income exclusion.
• Income excluded as either foreign earned income or as a housing allowance is included for purposes of determining the marginal tax rates applicable to non-excluded income.

Standard Deduction

An additional $1,150 standard deduction may be claimed by a married taxpayer ($1,450 by a single taxpayer) who is at least 65 years old or blind. A further $2,300 ($2,900 by a single taxpayer) standard deduction can be claimed if the taxpayer is at least 65 years old and blind.

Personal Exemptions

For 2011, a $3,700 deduction is allowed for each personal exemption. For recent taxable years through 2012, the rules phasing out personal exemptions of higher income taxpayer no longer apply.

A child cannot claim an exemption on his or her return or qualify for a higher education credit if the child’s parents claim a dependency exemption for the child on their return.

Uniform Definition of “Child”

There is a uniform definition of qualifying child for the purposes of determining the dependency exemption, the child credit, the earned income credit, the dependent care credit, and head of household filing status for 2004 and later. A child is determined to be a qualifying child of a taxpayer if a residency test, a relationship test, and an age test are met. Pre-2004 law regarding support and gross income tests in determining qualification as a dependent generally does not apply if the child satisfies the uniform definition.

Energy Tax Credits

Individual taxpayers are allowed a nonrefundable income tax credit known as the non-business energy property credit, for certain energy efficient property placed in service in 2011 in the taxpayer’s principal residence. The credit equals ten percent of the sum of: (i) the amount paid or incurred by the taxpayer during the tax year for qualified energy efficiency improvements (i.e., building envelope components meeting certain requirements) installed during the taxable year, and (ii) the amount of residential energy property expenditures paid or incurred by the taxpayer during the taxable year. There is a lifetime credit limitation of $500 with certain dollar limitations on residential energy property expenditures. This lifetime limitation includes credits taken in all years. A full discussion of the credit is beyond the scope of this letter.

Passive Activities, Rental and Vacation Homes

Losses from passive activities (which, as discussed below, generally include the rental of real estate) are deductible only against passive income. Passive losses cannot be used to reduce non-passive income, such as compensation, dividends, or interest. Similarly, credits from passive activities can be used only to offset the regular tax liability allocable to passive activities. Unused passive losses are carried over to future years and can be used to offset future passive income. Any remaining loss is deductible when the activity, which gave rise to the passive loss, is disposed of in a transaction in which gain or loss is recognized.

A passive activity is one in which the taxpayer does not materially participate. Material participation is involvement in operations on a regular, continuous, and substantial basis. You are considered to materially participate in an activity if, for example:

• You participate in the activity for more than 500 hours in the taxable year.
• Your participation for the taxable year was substantially all of the participation in the activity.
• You participated for more than 100 hours during the taxable year, and you participated at least as much as any other individual for that year.

In determining material participation, a spouse’s participation can be taken into account. Limited partners are conclusively presumed not to materially participate in the partnership’s activity.

Rental activities are generally considered passive. However, there are two significant exceptions to this rule (see “Rental Real Estate” below).

A working interest in an oil or gas property is not treated as a passive activity, regardless of whether the owner materially participates, unless liability is limited (such as in the case of a limited partner or S corporation shareholder).

Rental Real Estate

For real estate professionals, rental real estate activities are not subject to the passive loss rules if, during a taxable year:

• More than 50% of the taxpayer’s personal services are performed in real property businesses, and
• More than 750 hours are spent in real property businesses.

For both of these tests, the taxpayer must materially participate in the real property businesses. If a joint return is filed, these two tests must be satisfied by the same spouse.

Services performed as an employee are ignored unless the employee owns more than five percent of the employer.

A closely-held C corporation that is generally subject to the passive loss rules will satisfy these tests if more than 50% of its gross receipts are derived from real property businesses in which the corporation materially participates. Real property businesses are those involving real property development, redevelopment, construction, reconstruction, acquisition, conversion, rental, operation, management, leasing, or brokerage.

For non-real estate professionals, another exception to the passive loss limitations exists for rental real estate activities in which the taxpayer “actively” participates. This requires the taxpayer to own at least a ten-percent interest in the activity. If the taxpayer actively participates in the activity, the taxpayer can offset up to $25,000 of losses and credits from the activity against non-passive income.

Active participation does not require regular, continuous, and substantial involvement in operations as long as the taxpayer participates in a significant and bona fide way by, for example:

• Arranging for others to provide services such as cleaning; or
• Making management decisions, which include approving new tenants, deciding rental terms, and approving repairs and capital expenditures.

The $25,000 allowance begins to phase out when the taxpayer’s AGI exceeds $100,000 and is completely eliminated when AGI reaches $150,000. In that event, the regular passive loss rules determine the amount of any deductible loss. The $25,000 allowance and AGI thresholds are cut in half for a married taxpayer who files separately and does not live with his or her spouse. However, there is no $25,000 allowance if a married individual files separately and lives with his or her spouse at any time during the taxable year.

If you think you may be affected by the passive loss rules, you should speak with us. In certain cases with proper planning, the adverse effect of these rules may be minimized.

Vacation Homes

Expenses of a rental property are deductible, even if they exceed gross rents and produce a loss. However, the current deduction of such a loss may be restricted due to the passive activity rules discussed above. A vacation home is treated as rental property if personal use during the year does not exceed the greater of:

• 14 days, or
• Ten percent of the number of days the home is rented at a fair rental value.

If personal use exceeds these limits, the property is considered to be a residence. In that event, the deductibility of expenses is limited, although property taxes, mortgage interest, and casualty losses can generally be deducted currently.

Disposition of Leasehold Improvements

When a lessor disposes of leasehold improvements upon termination of a lease, the lessor can generally write off the adjusted basis of those improvements.

Alternative Minimum Tax (AMT)

A taxpayer must pay either the regular income tax or the AMT, whichever is higher. The AMT tax system is parallel to the regular tax, but treating some items of income and deduction differently.

There are applicable exemptions for the AMT. The AMT exemption amounts have, for the last several years, been established annually by legislative “patches.” They are not tied to inflation, but the amounts determined periodically by the Congress seek to prevent increasing numbers of individual taxpayers from being subjected to the AMT from year to year. The established exemption amounts for 2011 are $48,450 for unmarried individuals and individuals claiming the head of household status, $74,450 for married individuals filing jointly and surviving spouses, and $37,225 for married individuals filing separately. Unless Congress acts further in 2011 or 2012, the AMT exemption amounts will revert to historically lower levels for 2012.

AMT paid on “timing” preferences and adjustments (such as accelerated depreciation) for prior years is allowed as a credit against a later year’s regular income tax to the extent it exceeds the later year’s tentative AMT. Therefore, this AMT credit cannot reduce the regular income tax below the AMT for that later year.

A full discussion of the AMT is beyond the scope of this letter. AMT considerations are exceedingly complex and require careful planning. Please consult us prior to year-end to discuss how the AMT might affect you.

Stock Options

Incentive Stock Options

An incentive stock option (ISO) is an option issued to an employee that allows all increase in value to be subject to long-term capital gain treatment (15% maximum federal tax rate through the end of 2012) if the taxpayer disposes of the option shares more than two years after the date the option is granted and more than one year after the date the option shares are purchased. Also, the employee must continue to be an employee until at least three months before the option is exercised. If these rules are not met, the gains from ISOs are ordinary income subject to federal tax rates as high as 35%.

However, there is a hidden cost to obtaining long-term capital gain treatment from an ISO. The “spread” (the difference between the fair market value of the shares on the purchase date and the option price paid for the shares) must be added into the taxpayer’s AMT calculation for the year the options are exercised. Any AMT attributable to the ISO spread generally is allowed as an AMT credit carryforward to offset regular taxes owed in future years. Thus, any AMT attributable to the ISO is effectively a prepayment of tax, not additional tax.

If you have exercised an ISO in 2011 and the value of the stock has decreased, consider a sale before the end of 2011. This action should reduce the AMT effect. The sale must be made to a non-family member (or to an entity not considered to be related to the taxpayer under applicable rules) and the stock cannot be repurchased (even through an exercise of a different option or new compensatory award) for at least 30 days.

Nonqualified Stock Options

When a taxpayer exercises a non-qualified stock option (NQSO) that does not have a readily ascertainable fair market value at the time of issuance (generally the case where the option or the option stock is not publicly traded), the spread (the difference between the stock’s fair market value and option price) is taxed as compensation income. When the taxpayer sells the NQSO stock, any subsequent appreciation is taxed as long- or short-term capital gain depending upon the stock’s holding period. Because the spread is taxed as ordinary income, taxpayers in the highest marginal federal tax bracket are taxed at 35% on the spread.

Children’s Taxes

Unearned income of a child under age 18, exceeding $1,900 for 2011, is taxed at the parents’ top rate rather than at the child’s rate (“kiddie tax”). Earned (compensation) income received by a child under age 18 is taxed at the child’s rate.

For 2011, the kiddie tax will also apply to full-time students who have not attained the age of 24 by the end of the taxable year and non-full-time students who have not attained the age of 19 by the end of the taxable year, but in either case, only if the child’s earned income does not exceed one-half of the amount of the child’s support.

A child with earned income may claim a standard deduction up to $5,800 and may be eligible for the $5,000 deductible IRA contribution. Therefore, the child may earn $10,800 without paying federal income tax. The child should also consider a contribution to a nondeductible Roth IRA.

If the child is 18 or over, this compensation will be subject to social security tax. It will also be subject to federal unemployment insurance tax if the child is 21 or older. The child’s compensation could also be subject to state and local income and payroll taxes.

A child under age 18 is not required to file a tax return if the child only has interest and dividend income up to $950, has not made estimated payments and is not subject to backup withholding. However, the parents must include the child’s income exceeding $1,900 on their tax return.

Caution: A child under 18 who has capital gains or earned income must file his or her own tax return. Estimated taxes may have to be paid during the year if withholding taxes are not sufficient to cover the child’s tax liability.

A child who can be claimed as a dependent on his or her parents’ return cannot claim an exemption on his or her own return. However, the child is allowed a standard deduction equal to $950 or the amount of the child’s earned income up to $5,800, whichever is greater.

If the child is age 18 or older (24 or older if a full-time student, but only if the child’s earned income does not exceed one-half of the child’s support), income exceeding the standard deduction or itemized deductions will be taxed at the child’s rates.

Reminder: Your income tax return must report social security numbers for all children whom you claim as dependents. A social security number can be obtained by filing an application on Form SS-5 with your local Social Security Administration office.

If you claim a dependent care credit, you must report the service provider’s social security or employer identification number on your tax return. You should use IRS Form W-10 to obtain this number from the provider.

Adoption Expenses

Up to $13,360 for 2011 of eligible adoption expenses are allowed to be claimed as a refundable credit. The credit limitation is the same for special-needs children (children that cannot or should not be returned to the home of the birth parents because of specific factors, or who could not otherwise be adopted because of certain conditions). The credit is per adoption, not per year. Thus, if a person adopts two children in 2011 and incurs $30,000 of qualified expenses, the credit limitation is $26,720. The adoption credit is phased out for higher income individuals with modified AGI between $185,210 and $225,210. The credit is allowed against AMT.

Nanny Tax Reporting

If you paid $1,700 or more to a person 18 or over for household services during 2011, you are required to report his or her social security and federal unemployment taxes on your personal tax return. These amounts are reported on Schedule H.

These employment taxes must be paid by the due date of the return, April 15, 2012, without extensions. Inasmuch as these taxes are part of your income tax liability, your estimated taxes or withholding must be sufficient to cover them.

Caution: Payments to household employees may also be subject to state unemployment and other state taxes.

Estimated Taxes

Generally, all individuals must make quarterly estimated tax payments if they have income that is not subject to withholding. This includes individuals who are self-employed or retired or who have investment income, such as interest, dividends, and capital gains. It also includes partners and S corporation shareholders.

The law provides several safe harbors for determining the minimum estimated tax that must be paid to avoid penalties. In 2011, the safe harbor percentage remains at 100% of the 2010 tax for individuals with 2010 AGI under $150,000 ($75,000 for married filing separately), but increases to 110% of the 2010 tax liability for individuals with 2010 AGI over those amounts. In the converse situation where an individual expects 2011 income to be lower than 2010 income, the individual can avoid penalties by paying estimated taxes for 2011 in an amount equal to at least 90% of projected 2011 tax liability.

Two other safe harbor exceptions are available to eliminate penalties for insufficient payments of estimated taxes. No penalty will be imposed for underpayment of estimated taxes if the unpaid tax liability for the year (after taking into account any withholding) is less than $1,000. In addition, if your income varies throughout the year, you may use an annualized installment method to reduce or eliminate potential penalties.

The same rules apply to certain estates and trusts.

Note: Voluntary withholding of income taxes from social security payments and certain other federal payments is permitted. This withholding may eliminate the need to file quarterly estimated payments for certain retired persons.

Year-End Gifts

The end of the year is the traditional time for making gifts. For 2011, you may give up to $13,000 to a person without incurring any federal gift tax liability. The $13,000 annual limit applies to each donee. Thus, you may make $13,000 gifts to as many people as you like. If you are married, you and your spouse can give $26,000 to each person, if your spouse consents to splitting the gift or if you give community property. To qualify for this annual exclusion, the property must be given outright to the donee or put into a trust that meets certain conditions.

In addition to the annual exclusion, the lifetime exemption (made available in the form of a credit against tax based on an exemption-equivalent amount) allows each person to transfer $5 million for 2011 by gift without incurring any gift tax liability (reduced by the amount of any lifetime exemption that may have been used in a prior year). Using this credit now will keep future appreciation on the transferred property out of your estate. However, using the lifetime credit against 2011 gifts reduces the credit available for future years.

In addition to gifts subject to the annual exclusion and the lifetime credit, direct payments of tuition made on another person’s behalf to a university or other qualified educational organization are also excluded from gift tax, as are direct payments of medical expenses to a medical care provider.

Note: You should consider using appreciated property in making gifts. If the recipients are in lower income tax brackets than you, income from the transferred property, including any gain on sale, will be taxed at lower rates. 

All outright gifts to a spouse (who is a United States citizen) are free of federal gift tax. However, only the first $136,000 of gifts to a spouse who is not a United States citizen are excluded in the total amount of taxable gifts for 2011.

You should coordinate your year-end gift giving with your overall estate planning. We can assist you with these matters.

Conclusion

An annual physical examination is important for maintaining good health. Likewise, an annual financial examination that includes year-end tax planning can enhance your financial well-being. We are available to help you achieve your tax and financial objectives.