More On Tax Planningfrom The Advisor's Professional Library
- IRAs: In General Individual Retirement Accounts are highly popular tools for contributing funds that grow on a tax deferred basis. Depending on the type of IRA, the accumulation can be tax free.
- Health Insurance: Health and Medical Savings Accounts A Health Savings Account is a trust created exclusively for the purpose of paying qualified medical expenses of an account beneficiary. Although they are popular, they are not without their pitfalls and the regulations can be complicated. Learn more about how to avoid federal taxation on the accumulation and distributions of HSA.
As year-end draws near, U.S. taxpayers face personal financial decisions amid great uncertainty about changes expected in legislation, taxes and spending in the coming months. On Thursday, Deloitte released a 2011 Essential Tax and Wealth Planning Guideto help individuals and private companies plan for future financial changes and demands.
The planning guide focuses in particular on income taxes, wealth transfer taxes, the potential effect of increasing tax rates, tax planning for those who reside in multiple states or countries, and considerations for private businesses
According to a statement from Deloitte, the new guide puts forward three key principles:
- Continue to plan; work with what you know: Although significant tax changes may be imminent, taxpayers will find that disciplined planning under present law will produce real results. This is especially important as many of the benefits under existing tax law may continue.
- Be wary of quick answers and simple advice:Tax legislation generally never ends in the way it starts. Before taking action in response to potential change, taxpayers should analyze a proposed transaction and alternative outcomes.
- Watch for opportunities and know your risks:Given the continuing uncertainty over the long-term outlook for the federal budget and its influence on the value of the dollar, taxpayers should continually inform themselves about tax and nontax reforms, and how changes could affect their portfolios.
"It is still critical that individuals plan for the potential for increased income tax rates," Eddie Gershman, a partner at Deloitte Tax LLP and a contributor to the guide, said in the statement. "By proactively exploring tax planning opportunities related to income earned and potential use of credits and deductions, individuals can better position themselves to successfully navigate the changing tax rate environment."