Category: Proposed Business and Tax Legislation

Client Letter – Critical Tax Planning Deadline

Dear Client:

We are currently contacting our clients so that we can conduct a final review in the 4th quarter to ensure they are proactively prepared for all the tax law changes that will happen January 1.

I wanted to reach out to you because this will be the last chance to proactively incorporate planning ideas to reduce your business and personal taxes.  2012 presents historically unique planning opportunities that will be lost if you do not capitalize on them in 2012.  It doesn’t matter when you file your 2012 tax return; it will be about what is incorporated during the final months of this year.  You will be “grandfathered” out of opportunities to reduce your taxes and increase your income.

Please call me if you have any questions.

As way of background and summary:

The Tax Policy Center, a nonpartisan, non political group that routinely releases factual findings based on current and upcoming legislation or in this case legislation about to expire in 2013.  The tax increases will have a dramatic impact on the business owners that we talk to.  Unfortunately, very few people seem to read these type of articles and depend on the media’s interpretation.  The NY Times and other sources only grab a few pieces and seem reluctant to report negatively on the current administration.

To review, in a nutshell, this is what January will bring to business owners:

1.  Increased Income tax rates

2.  Increased payroll taxes for yourself, and what you pay for each employee

3.  Increased taxes on capital gains

4.  Increased taxes on dividends

5.  Eliminated and reduced tax deductions and tax credits

6.  Reduced itemized deductions

7.  New taxes from Healthcare legislation

8.  Reduced child tax credits

Business owners are likely to see taxes increase substantially in 2013. Overall, they will pay higher tax rates on more income because there will be less offsets (credits and deductions) to reduce the amount subject to tax.  The dollars that ultimately end up in their pocket will be DRAMATICALLY reduced.

S-Corporation business owners will be especially hard hit because their taxes are based on corporate profits, that because of a lack of tax planning, is higher than what they actually take as income. So they will be paying even more taxes on money that they never see.

This is by far the worst time in our history to be a procrastinator!  That’s what needs to be reported.  Compared to 2013, 2012 will seem like tax paradise.  Business owners that aren’t taking advantage of 2012 are making a huge mistake.

I have attached the Tax Policy Center report

Call us for help or with questions!

The Business Wealth Preservation Group is a professional services firm dedicated to providing superior individualized and custom service to individuals and their businesses in the areas of asset protection, tax planning, exit strategies, and wealth building. Simply put – we want to educate you on all relevant opportunities to put more dollars into your pocket, your business and your future.

We focus on leading edge, sophisticated, and safe business strategies that will help business owners structure, operate and maintain their business to take advantage of business and tax laws rather than being encumbered by them. We partner with the business, the accountant, and the attorney to ensure the business owners are capturing all available benefits that align with their business and personal goals.

www.BusinessWealthPreservation.com
Call Us Toll Free: (888) 938-2975 (888-WE-TAX PLAN)
Email:
tfoster@wetaxplan.com

Surprise! You and Your Business Need to Pay More Taxes – This Year!

Surprise!  You and Your Business Need to Pay More Taxes – This Year!

April 15, 2012

If you’re a business owner, welcome, once again to Washington’s Target Zone.  Reports released by the nonpartisan Congressional Research Service (“CRS”) in February and March, suggest that Washington needs to further target businesses that are operated as LLCs, S-Corporations, Partnerships, and Sole Proprietorships for higher taxes.  These business structures, also referred to as Pass-Throughs, don’t pay corporate level taxes, but instead pay taxes on business income at the personal level.   Washington believes LLCs, S-Corporations, Partnerships, and Sole Proprietorships are unfairly escaping corporate level tax.

The Congressional Research Service’s Report from February seems to indicate tax increases for business owners in 2012 are imminent:

A number of proposed and scheduled tax changes would result in pass-throughs paying higher taxes. Several lawmakers and the Obama Administration, for example, have expressed interest in taxing large pass-throughs as corporations, which would subject some pass-throughs to an additional layer of taxation. Pass-through taxation could also increase if a tax reform that includes lower corporate tax rates that are paid for by the elimination or reduction of certain business tax benefits is enacted. Additionally, the scheduled expiration of the 2001/2003 tax cuts at the end of this year could increase taxes on pass-throughs by increasing individual tax rates. Lastly, a new 3.8% tax on passive income that was enacted as part of the Health Care and Education Reconciliation Act of 2010 (HCERA, P.L. 111-152) is set to take effect in 2013.

Scheduled tax changes that could potentially affect pass-throughs include the expiration of the 2001/2003 tax cuts, later extended in 2010, that is set to occur at the end of 2012. Specifically, barring congressional action, the current individual tax rate structure of 10%, 15% 25%, 28%, 33%, and 35% will revert to 15%, 28%, 31%, 36%, and 39.6%. Since ordinary pass-through income is taxed according to individual rates, some owners of pass-through businesses would likely experience an increase in taxes owed.

The March report continues the recommendations for higher taxes and provides an easy three step “How To” process to significantly increase your taxes.  Believe it or not, the Report suggested that by you paying more taxes, the amount of taxes paid by large, publically held corporations can be lowered.

What Industries are the CRS tax increase advocates targeting?

The CRS is not targeting the hedge fund companies or the big law firms, but companies in the manufacturing, wholesale/retail, mining and minerals, transportation, construction, and construction service industries.

What can you do?

Other than closing your doors, you have two options.  If you’re proactive, you’ll get a strategic tax plan in place to finally get out of Washington’s Target Zone.  A strategic tax plan will reduce your taxes now and provide options when the tax increases come.   If you are reactive and sit back and do nothing, your options will be limited.   If you like complaining versus action, just sit back and you’ll soon have a lot more to complain about.

Call us for help or with questions!

The Business Wealth Preservation Group is a professional services firm dedicated to providing superior individualized and custom service to individuals and their businesses in the areas of asset protection, tax planning, exit strategies, and wealth building. Simply put – we want to educate you on all relevant opportunities to put more dollars into your pocket, your business and your future.

We focus on leading edge, sophisticated, and safe business strategies that will help business owners structure, operate and maintain their business to take advantage of business and tax laws rather than being encumbered by them. We partner with the business, the accountant, and the attorney to ensure the business owners are capturing all available benefits that align with their business and personal goals.

www.BusinessWealthPreservation.com
Call Us Toll Free: (888) 938-2975 (888-WE-TAX PLAN)
Email: tfoster@wetaxplan.com

Legislative Update: The Impact of Tax Law Changes for Business Owners – Income Taxes

Legislative Update:  The Impact of Tax Law Changes for Business Owners – Income Taxes

Unless action is taken by Congress, the tax cuts enacted in 2001 and 2003 meant to help business owners, families, and investors will expire January 1, 2011.  Everyday it seems more likely that Congress’ inaction will result in much higher taxes for business owners, especially S-Corporation and sole proprietorships.  It seems to be an easy way out for the current Congress and administration to raise taxes by “default” or perhaps with a built in excuse to say “It’s not my fault.”

What will change January 1, 2011:

Personal Income Tax Rates:

10%  now becomes  15%

25%  now becomes  28%

28%  now becomes  31%

33%  now becomes  36%

35%  now becomes  39.6%

And with additional phase outs of itemized deductions, personal exemptions, and child credits, the “real” effective tax rate as compared to prior tax years will seem even higher.  Essentially, you as a business owner will have MORE income exposed to HIGHER tax rates!!  Result? Much higher TAXES!!

The time to engage in PROACTIVE, INFORMED, and SAFE tax planning is now.  With these and other “proposed” and “recommended” changes to the taxing structure for businesses, it will become more challenging to put money from your business into your pocket!

Call us for help!

The Business Wealth Preservation Group is a professional services firm dedicated to providing superior individualized and custom service to individuals and their businesses in the areas of asset protection, tax planning, exit strategies, and wealth building. Simply put – we want to educate you on all relevant opportunities to put more dollars into your pocket, your business and your future.

We focus on leading edge, sophisticated, and safe business strategies that will help business owners structure, operate and maintain their business to take advantage of business and tax laws rather than being encumbered by them. We partner with the business, the accountant, and the attorney to ensure the business owners are capturing all available benefits that align with their business and personal goals.

www.BusinessWealthPreservation.com
Call Us Toll Free: (888) 938-2975 (888-WE-TAX PLAN)
Email: tfoster@wetaxplan.com


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