Thoughts for Year-End Actions in 2012

Some things will change come next year, and there may just be enough time to do something yet in 2012 to address them.

Largely, the effect will be on our personal income taxes, and on death taxes our estates might pay in 2013 and beyond.

What are the Changes?

Income Taxes

  • Capital Gains Taxes will rise from 15% to 20%.
  • Taxes on Dividends will rise from 15% to > 43%.

Federal Estate Taxes

  • Estate Tax Exemption will decrease from $5 Million to $1 Million.

What can be done?

Income Taxes

  • Capital Gains – sell things before December 31, 2012 to capture lower rate.
  • Switch to tax-free investment vehicles.
  • Make gifts – gains will be taxed to recipient.
  • Maximize contributions to your 401(k), 403(b), or Traditional IRA.
  • Convert your taxable Traditional IRA to a Roth IRA.

Estate Taxes

  • Make annual gifts to reduce the size of your estate.
  • Make one-time gifts to reduce the size of your estate, and capture part of the $5 Million lifetime exclusion.
  • Make a charitable gift to reduce the size of your estate.
  • Name a charity as your IRA Beneficiary to reduce the size of your estate.

Remember, some of these actions need to be done yet this year – by December 31, 2012! Contact our partner, Ambassador Advisors, at (717) 560-8300, to see how they may help.

Investment advisory services offered through Ambassador Advisors, LLC. Securities offered through American Portfolios Financial Services, Inc. (Holbrook, New York, 631.439.4600), member FINRA, SIPC. Ambassador Advisors is not owned or operated by American Portfolios Financial Services.

PLEASE NOTE: This information is prepared for the information of friends and donors of New Hope Ministries. Its purpose is to offer helpful tax and financial planning information. Donors should consult with their professional advisor as to the applicability of any ideas to their own situation.