mnarog, Author at Whalen & Company, CPAs

Have you had your annual estate plan checkup?

mnarog on January 23, 2015

[vc_row][vc_column][vc_column_text]An annual estate plan checkup is critical to the health of your estate plan. Because various exclusion, exemption and deduction amounts are adjusted for inflation, they can change from year to year, impacting your plan:

Lifetime gift and estate tax exemption

2014: $5.34 million
2015: $5.43 million

Generation-skipping transfer tax exemption

2014: $5.34 million
2015: $5.43 million

Annual gift tax exclusion

2014: $14,000
2015: $14,000

Marital deduction for gifts to noncitizen spouse

2014: $145,000
2015: $147,000

You may need to update your estate plan based on these changes. But the beginning of the year isn’t the only time for an estate plan checkup. Whenever there are significant changes in your family — such as births, deaths, marriages or divorces
— it’s a good idea to revisit your estate plan. Your plan also merits a look any time your financial situation changes significantly.

Copyright 2015 Thomson Reuters
Image courtesy of renjith krishnan at freedigitalphotos.net[/vc_column_text][/vc_column][/vc_row]

You may be able to save more for retirement in 2015

mnarog on December 31, 2014

Many retirement plan contribution limits increase slightly in 2015; thus, you may have opportunities to increase your retirement savings:

Type of limitation	2014 limit	2015 limit
Elective deferrals to 401(k), 403(b), 457(b)(2) and 457(c)(1) plans	$17,500	$18,000
Annual benefit for defined benefit plans	$210,000	$210,000
Contributions to defined contribution plans	$52,000	$53,000
Contributions to SIMPLEs	$12,000	$12,500
Contributions to IRAs	$5,500	$5,500
Catch-up contributions to 401(k), 403(b), 457(b)(2) and 457(c)(1) plans	$5,500	$6,000
Catch-up contributions to SIMPLEs	$2,500	$3,000
Catch-up contributions to IRAs	$1,000	$1,000

Other factors may affect how much you can contribute (or how much your employer can contribute on your behalf). For example, income-based limits may reduce or even eliminate your ability to take advantage of IRAs. For more information on how to make the most of your tax-advantaged retirement-saving opportunities in 2015, please contact us.

3 extended tax breaks to act on by Dec. 31

mnarog on December 23, 2014

On Dec. 16, the Senate passed the Tax Increase Prevention Act of 2014 (TIPA), which the House had passed on Dec. 3. TIPA extended many valuable tax breaks that expired at the end of 2013 — but only through Dec. 31, 2014.

Here are three types of extended tax breaks that you may want to take action on before year end:

Small business stock gains exclusion. Gains realized on the sale or exchange of qualified small business (QSB) stock acquired in 2014 will be eligible for an exclusion of 100% if the stock has been held for at least five years. So you may want to consider purchasing QSB stock by Dec. 31.
Tax-free IRA distributions to charities. Taxpayers age 70½ or older can make direct contributions from their IRA to qualified charitable organizations without incurring any income tax on the distribution, up to $100,000 for the 2014 tax year. You can even use the distribution to satisfy a required minimum distribution. But the distribution must be made by Dec. 31.
Depreciation-related breaks. Businesses can enjoy larger 2014 deductions if they invest in property that qualifies for enhanced Section 179 expensing, 50% bonus depreciation, and/or accelerated depreciation for qualified leasehold-improvement, restaurant and retail-improvement property. But the property must be placed in service by Dec. 31.

Additional rules and limits apply to these breaks, so please contact us to find out which ones you can benefit from.

Image courtesy of sdmania at freedigitalphotos.net

Why you should make annual exclusion gifts before year end

mnarog on December 17, 2014

The 2014 gift tax annual exclusion allows you to give up to $14,000 per recipient tax-free without using up any of your lifetime gift tax exemption. If you and your spouse “split” the gift, you can give $28,000 per recipient.

The gifted assets are removed from your taxable estate, which can be especially advantageous if you expect them to appreciate. That’s because the future appreciation can avoid gift and estate taxes.

The exclusion is scheduled to remain at $14,000 ($28,000 for split gifts) in 2015. But that’s not a reason to skip making annual exclusion gifts this year. You need to use your 2014 exclusion by Dec. 31 or you’ll lose it.

The exclusion doesn’t carry from one year to the next. For example, if you don’t make an annual exclusion gift to your daughter this year, you can’t add $14,000 to your 2015 exclusion to make a $28,000 tax-free gift to her next year.

We can help you determine how to make the most of your 2014 gift tax annual exclusion.

Image courtesy of freedigitalphotos.net.

How much time is left to make donations you can deduct on your 2014 return?

mnarog on December 10, 2014

To take a 2014 charitable donation deduction, the gift must be made by Dec. 31, 2014. According to the IRS, a donation generally is “made” at the time of its “unconditional delivery.” But what does this mean? Is it the date you, for example, write a check or make an online gift via your credit card? Or is it the date the charity actually receives the funds — or perhaps the date of the charity’s acknowledgment of your gift?

The delivery date depends in part on what you donate and how you donate it. Here are a few examples for common donations:

Check. The date you mail it.

Credit card. The date you make the charge.

Pay-by-phone account. The date the financial institution pays the amount.

Stock certificate. The date you mail the properly endorsed stock certificate to the charity.

Many additional rules apply to the charitable donation deduction, so please contact us if you have questions about the deductibility of a gift you’ve made or are considering making. But act soon — you don’t have much time left to make donations that will reduce your 2014 tax bill.