In a webinar, advisors were provided a chance to explore changes in tax law that included provisions that end at the year’s close, as well as changes made during the course of the year and how to provide advice to clients on tax planning measures.
The webinar, titled “2012 Tax Law Update—Changes and Opportunities for Individual and Business Clients,” was offered by CCH, a Wolters Kluwer business, and given by CPA and attorney Mark Luscombe, CCH’s principal analyst. It was an extensive and wide-ranging seminar that dealt with everything from the ramifications of the 2001 and 2003 Tax Act sunsets to tax provisions of health care reform and tax proposals by both presidential candidates.
Luscombe called the scenario awaiting tax planners “Taxmageddon,” because of the numerous factors involved and the uncertainty surrounding any elements of tax law that might or might not change thanks to congressional inaction and the upcoming election. He pointed out that there are nearly 70 tax provisions that expired at the end of 2011 alone, with varying chances for extension.
That, of course, is not the only dilemma—or group of dilemmas—facing advisors as they seek to prepare their clients for the upcoming tax season and days to come. Other factors at play include the approaching sunset of the Bush tax cuts and other tax laws, the phasing in of health care reform’s tax provisions, the fiscal cliff and the impact of any potential new policies, and interpretations of old policies, on clients’ taxes.
The sunset of tax cuts and the move to higher tax brackets and lower exemptions, suggested Luscombe, might make it advisable for clients—both individuals and business owners—to accelerate income and get payments this year, if possible, rather than holding them till 2013. The reverse is true about deductions; postponing them till 2013 could help shield income against the higher brackets.