More On Tax Planningfrom The Advisor's Professional Library
- Charitable Giving Charitable giving can reduce your clients’ tax liabilities. However, the general and verification rules for the deduction of charitable gifts must be understood in order to take full tax advantage of such gifts.
- Taxation of Real Estate Real estate may be used to shelter income and may offer certain tax benefits. However, the type of real estate investment may result in different tax treatment. Learn how to use these investments to help your clients.
This is the 19th in a series of 23 tax tips thatAdvisorOne is publishing on each business day in March as part of our Tax Planning Special Report (see our Special Report calendar for a more complete list of topics to be covered and experts who will deliver their insights).
The tax tip today comes from Tim Speiss, partner and chairman, Personal Wealth Advisors, at EisnerAmper LLP. Speiss has provided comprehensive tax planning and investment, compensation, and financial planning services to executives, families and business owners for close to 30 years. Speiss holds a BS in business and MS in taxation from Widener University.
The Tip: Accelerate Deferred Compensation Income
The current ordinary income tax rate of 35% is set to expire Dec. 31, 2012. After that, Speiss (left) believes that income tax rates are going to have to increase owing to the government’s balance sheet and current budgets.
“What makes this interesting,” Speiss says, “is that the expiration is going to be right after the [presidential] elections. The rates weren’t increased in 2010, first, because leaving them where they were was seen as a stimulus effect on the economy; and second, nobody wanted to go on record for having raised the tax rate.”
With that scenario in mind, Speiss suggests that taxpayers with money in deferred compensation plans might want to look at ways to accelerate that income and pay tax at 35% “under the premise that if they wait and it’s payable sometime after 2011, it could be payable at a 39.6% rate, which is probably a fair rate to assume.”
See ourTax Planning Special Report calendar for a list of all the tax topics to be covered.