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Fiscal uncertainty scares taxpayers

Peering over the cliff

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With federal tax guidelines still uncertain as this year nears an end, preparing for tax season is more challenging for taxpayers in 2012 than in years past.

Francine Hughes hands donated items to Jarvis Beard at the United Way on Furys Ferry Road. In addition to cash and goods, taxpayers can donate an appreciated mutual fund or stock to charity and get a deduction equal to the value of the fund or stock.  JIM BLAYLOCK/STAFF
JIM BLAYLOCK/STAFF
Francine Hughes hands donated items to Jarvis Beard at the United Way on Furys Ferry Road. In addition to cash and goods, taxpayers can donate an appreciated mutual fund or stock to charity and get a deduction equal to the value of the fund or stock.

“There’s nothing for folks to plan around right now,” said Will Rogers, a financial adviser with Ameriprise Financial Services Inc. in Evans. “That makes it horribly, horribly difficult for businesses and individuals to do year-end tax planning, because there’s a great deal of uncertainty.”

Congress remains at a standstill in talks to avoid the “fiscal cliff,” a series of federal tax increases and spending cuts that will go into effect by Jan. 1 unless action is taken.

Despite the widespread uncertainties, Rogers said converting traditional IRAs to Roth IRAs before the end of the year makes sense for a lot of people.

“If Congress changes the rules before Oct. 15 of next year where it doesn’t make sense, you can undo or re-characterize that Roth conversion,” he said. “If it makes sense to do it, you’ve got to go ahead and do it before year end.”

Rogers also advises that people sell capital-gain items they’ll be recognizing in the next few years before Jan. 1 at a lower tax rate than what currently would be allowed in 2013.

In regard to charitable donations, Rogers said taxpayers also can receive a break by donating an appreciated mutual fund or stock – instead of cash – to charities.

“That way the taxpayer does not pay tax on those gains, but they get a full deduction for the value of that mutual fund or stock that they gave to a charity,” he said.

Because most people have unique financial situations, however, Rogers emphasized that they consult first with a personal tax adviser.

Cooper & Co. CPAs President Jaimie Cooper said people wanting elective medical procedures, such as braces or laser eye surgery, should do so before 2013.

Such medical expenses now become deductible after they pass 7.5 percent of someone’s adjusted gross income level. Under next year’s law, though, the AGI threshold will raise from 7.5 to 10 percent, with the exception of senior citizens, Cooper said.

Cooper also stressed the importance of keeping receipts, both for charitable contributions greater than $250 and for tax-deductible expenses.

“In the last two years, the IRS has hired a number of additional agents to do audits,” said Cooper, who has 46 years experience. “The emphasis I have seen on audits, here with clients, has been on documentation.

“Because of the electronic age, people tend to think that when you have a bank statement or when you have a credit card statement, that is all you need.”

With the fiscal cliff still looming, both Rogers and Cooper said they’ve fielded calls from concerned clients.

Rogers passed along the following advice: People needing money from investments within the next year or two should keep it in a safe spot.

“It might be cash,” he said. “It might be municipal bonds. It might be CDs, but whatever money that you’re going to need in the next two years, don’t have it in stocks or junk bonds or real estate or stuff that can go up and down and all over the place.”

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Riverman1
82436
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Riverman1 12/02/12 - 10:05 am
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I wonder how you can benefit

I wonder how you can benefit from this fear? There should be opportunities to buy SOMETHING.

soapy_725
43676
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soapy_725 12/02/12 - 10:08 am
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Getting calls and daily "buck slips"
Unpublished

from charities we never knew existed. Not to mention the onslaught from existing charities who see their revenue base slipping away because of government changes to tax laws.

But while donations are down, it does not keep some from building "bigger barns" and kingdom building projects that take funds from the needy and move them to non profit capital investments. Oh yea, remember non profit does not include administration costs, salaries, bonuses, capital improvement, capital investments, etc. BEWARE. Everyone that says Lord, Lord will not enter the kingdom of God.

This is the season where everyone has their hand in your pocket. Not just the retail venders.

We now have the "People's Tree", we may soon see Christmas Day, become "The People's Day".

soapy_725
43676
Points
soapy_725 12/02/12 - 10:15 am
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Give until it hurts. Remember that phrase.
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If you looked into the financial practices of most "charities" you would be hurt. Faith based (initiatives) social services blame the church and the government for their woes. The finger pointing goes round and round. And all the while someone is getting rich. And it ain't the poor and hungry.

What if the war on hunger suddenly reached the success goals? Give so that we can reach our goal. Where would the thousands of fund raisers go for a six figure job? Identifying the "at risk of being hungry" actually provides jobs. Lucrative office jobs. Serving the needy.

soapy_725
43676
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soapy_725 12/02/12 - 10:23 am
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Yes, go ahead and pay income tax
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on your tax deferred IRA so that you can line up to pay consumption tax on that same "dollars" a second time. The fed will get all of that money at some point. Just to many billions tied up in IRA's and savings by these old f___s who are no longer productive. The last generation to have any savings.

Put one of your grand children's name on your IRA and use their birth date, not yours, to avoid the 70 year old rule. It will serve to prolong your IRA ownership and distribution control. But not forever.

Snake oil salesmen come in all sizes.

soapy_725
43676
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soapy_725 12/02/12 - 10:27 am
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Buy land. The government is buying land.
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Directly and through foreclosures. There is a finite amount of land. None is being synthesized or cloned.

How much land paper does Fannie, Freddie, National Trust, Global Zones, and HUD hold?

soapy_725
43676
Points
soapy_725 12/02/12 - 10:28 am
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Panic make the super rich, super richer.
Unpublished

They will insulate themselves. The average Joe or Jane cannot.

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