Much of the recent debt ceiling controversy has centered around Republicans’ desire not to increase taxes, but a simple glance at our growing debt would lead any sound-minded individual to anticipate the necessity for tax increases in the years to come.
In what’s been regarded by many as a “stealth tax hike” approach, the White House has proposed the notion that once taxpayers exceed a given level of earnings (Ex. $200,000), they would start forfeiting the value of the various deductions they currently enjoy according to existing tax law. The deductions could include IRS Form 1040 line items such as:
· Personal exemptions
· Deductions for charitable contributions
· Deductions for state taxes paid
· Possibly even deductions for spouse and children
In addition, there is talk of health insurance benefits becoming taxable on your tax return and capital gains being eliminated, forcing individuals to pay ordinary income tax on all earnings on investments. Should these possibilities come to pass and not be “enough,” many believe taxes will have to rise.
(CLICK HERE for a look at “Why Taxes Will Rise in the End” – an article published July 12, 2011 in The New York Times.)
What does all of this really mean for you and your loved ones? It means that, just as with many other financial areas during this time of volatility and uncertainty, the time to take any necessary corrective action is NOW. With proper solutions and strategy in place, you and your beneficiaries could ultimately owe significantly less in taxes – regardless of what the overall tax environment does in the future – than you are currently positioned to pay.
In retirement, perhaps more than any other stage of life, those adjustments truly matter. If it’s been more than 12 months since you last had a tax reduction analysis completed, we strongly encourage you to schedule one now. While you can’t control what taxes will do in the future, you can ensure you’re as prepared as possible for whatever is to come.
This material has been prepared for informational purposes only. It is not intended to provide accounting or tax advice. You are encouraged to consult a tax professional specializing in these areas regarding the applicability of this information to your situation. If you are not currently affiliated with a tax professional, simply contact us today as we would be happy to recommend an individual for these services.