Q: Do you have any last minute tax advice?
A: For most taxpayers in business, I would recommend making payments a little early in order to reduce taxable income. For those looking to take capital gains or dividends, quickly take the gains and dividends before the low rates disappear. For others, opening an IRA or other retirement account and contributing the maximum is advisable.
Q: What will be the limits for an IRA in 2011?
A: Unfortunately, the contribution limits to IRA accounts do not change for 2011. They remain at $5000, unless you are over the age of 50. Those 50 and older may make additional $1000 contributions for a total of $6000. If the taxpayer has both a traditional IRA and a Roth IRA, the total between the two accounts is limited to $5000 for those under 50 and $6000 for those 50 and over.
Q: New Years is coming. What is happening with estate planning?
A: The Estate Tax Exemption will in all likelihood go back down to $1,000,000 until Congress lifts the limit back to its 2009 level of $3,500,000. The consensus is that the exemption will be retroactive to January 1, 2011. Therefore, for those passing at any point during 2011, their estates will likely be taxed at more beneficial rates than under the $1,000,000 exemption. The gift tax exemption of $13,000 will remain in place.
By: Basi & Basi at the Center for Financial, Legal and Tax Planning for Transworld M&A Advisors