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Steps to Lowering Your Tax Bill

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  • Description

    Wealth Health Managing Director Rich Coppa offers tax tips as the end of the year approaches.

  • Duration 5:50
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Souvenir just around the corner -- is still time to significantly lower this year's tax bill.

And only our tax changes common congress of course needs to get its act together but some deductions may soon just disappear altogether.

So here at the best year end tax tips -- -- a certified -- and managing director of welcome help.

Financial planning and wealth management payments.

It's risen or if I'm -- you look like you're really really warm place and I'm jealous so -- the what -- present I think a lot of people have right now -- All -- -- that congress is -- in over.

What does any that affect my current 2011 tax return.

Now really doesn't mean there's a lot of uncertainty right now over what's gonna happen next year -- various pieces of the tax legislation but.

Honestly I think you know in the next couple weeks we have some here and tips that we can talk about but nothing really is gonna change.

Or make you do anything different now although it does make a little bit difficult the plan if you're trying to you don't consider two years.

Which you really should do when your bridging 20112012.

For some the different tax planning ideas that makes a little bit more difficult.

Break has depending on your situation you might wanna pull money into 2011 are pushing out so let's talk about some of -- -- -- elements at -- you don't have losses in the portfolio.

Your -- -- and up and it probably is a really good time to drop -- -- losers isn't it.

I just think it's a great idea not only for this year mean we talk about this often harvesting your tax losses year to year.

To offset gain but remember they can be carried over indefinitely where I think it's particularly important this year is that.

Our capital -- rate is 15% and that will continue in 2012 but it's supposed to go up to 20% in 2013.

In addition we have this new net investment income tax which is three point 8%.

Which would also include capital gains interest.

Other items of income so right there it's almost 24% plus state taxes.

Depending upon what state -- -- and so accumulating your losses this year I think it's really important so that in the future even if you don't offset gain this year.

You have been accumulating to offset gains sometime in the future when these rates are going up.

-- using my 2013 all those fees that's from the health care plan and all that kicking in and make your capital gains they've done much bigger some work on it now.

Eat a lot of times you -- it really charitable the end of the year and mainly it's to beef up that charitable contribution but.

Start -- and checks start giving given some clothes away right.

I think so I mean here's the deal mean charitable deductions at this time of the year or -- things that we should be thinking about.

Now some people will look at you know committing over a couple of years that are charitable.

Planning that the on the uncertainty here is that next year you know there's been a lot of talk of of reducing the itemized deductions you navy -- that 20% rate.

So that's not the case this year I think it's it's good to do that terrible deductions this year also with the uncertainty as to whether or not.

Deductions will be capped moving forward and with respect to those that are seven and a half that use their IRAs for charitable donations this is the last year that you can do that unless it's extended.

So that's a really good benefit for those who want to have the charitable donation made directly from their IRA account and not have that income included.

In this year's taxable income.

That's a great point because if you're -- half you have to make -- required minimum distribution that your IRA this year.

And your point is that this is the last -- you can do it right to a charity and avoid paying tax on the income altogether.

Absolutely and then the downside of having it included in income and then taking a deduction for the charitable.

Donation is that that it extra income that increase in income caused by the required minimum distribution.

Might not allow you to take some other income related benefits are you really have to run that calculation but right now this is the last year that allowed to do -- from the -- directly to chart.

Right could even bump you into higher tax bracket depending on the distribution right.

You know one of the per well that's right and break one of the president 2010 -- you -- able to come over your diary to a -- and spread the tax -- over two years rates to -- 2011.

2012.

People might might be caught off guard with this rate -- him for the money aside.

Well that's true you need to have the money to pay the tax bill but also just to your point is that this year for those looking to convert to IRAs to Roth.

This year he could still do it there's not an income limitation on those who are allowed to do it.

But just be aware that your tax liability for those that convert to a Roth in 2011 your tax liability is due in 2012.

There's not a benefit of a two year liability period like there was in 2010.

So not only will you have the liability for -- 2010 if you did it over two years if you -- -- 2011.

Another portion of your IRA.

That's due next year with the -- of your return.

-- paid in fall.

There's a great series of people giving them and if anybody need a place to get to I will send my address.

Well you know gifting is really important area I think right now because as we know this -- five million dollar exemption amount for gift in the state tax.

Is only through 2012.

Right -- you really gotta gift giving plan.

You might want to consider -- this year -- next year you don't really using up either a portion of your exemption or for those who are ultra wealthy you know the full exemption.

And in addition to that we have the annual exclusion thirteen thousand here.

That you can give as many people as you wish the benefit -- that I think is for those people looking to maybe pre fund kids' education yes 529 -- you can do five years' worth of your annual exclusion five times thirteen at 65000 dollars mom and dad.

Times that by two you could really put -- if you have the cash a 130000 dollars into a 529 plan in one year.

Yes you know -- a big -- grandma and -- -- kids would really appreciate that.

-- cop bad for you Diego that is one beautiful shot there you have a great day -- mile -- a -- to tracing thank you.

And again if anybody needs a place to gifts on will be more than happy to send my address.

Are what you finally.

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