Tax Planning Tips & Tricks

TIMONIUM, MD     •     COLUMBIA, MD     •     BEL AIR, MD

Steven A. Gershman, CPA, PFS, CFELori L. Kirk, CPA

James F. Eaton, CPA, MBA

Ideas

Documentation

Timing

Questions

1. Children

2. Non-Children

3. Tax Minimization – Credits, etc

1. Bonuses / Timinga. Income deferralb. “Catch-up” withholding @ year-end

2. 401(k) / 403(b)a. Limitsb. Strategies – Regular vs. Roth

Qualified dividends

Municipal interest

Long term capital gain distributions

NIIT tax

1. Timing – Cash basisa. Accelerate expenseb. Defer income

2. Depreciationa. Section 179b. Tangible personal property regulations

Auto and travel

Entertainment

Business gifts

Office in home

Timing

Wash rule

3k limit

Tax brackets, 0%, 15%, and 20%, plus NIIT

1. Required minimum distributions (RMD’s)

a. 70 ½ years of age

b. First year deferral

c. Roth considerations

Cash, timing, risk tolerances, asset allocation

Tax brackets

Strategies

Recharacterization

1. Passive activity treatment – Default

2. Do you manage property? – Real Estate Professionals

3. Vacation rentals

Planning program

Timing

Deferral / Suspend

Spousal benefit

Maximum limits 2014/2015

Single $3,300/$3,350

Married $6,550/$6,650

Over 55, extra $1,000

Qualified distributions

AGI Floors

Items to consider

State income taxes

Real estate taxes

Bunch & AMT considerations

Form(s) 1098

Settlement sheets / Points

Investment interest: Optional treatment

Receipts

Non cash

5k appraisal rule

Appreciated stock

Out of pocket expenses

Transportation

$100 and 10% AGI floor

”Event”

2% floor

Tax prep fees

Employee unreimbursed business expenses

Investment fees

All gains are taxable

Losses allowed are limited to gains

Documentation

Amounts of gains/losses

Calendar of “events”

Document source of funds

1. .9% Additional Medicare tax

2. 3.8% Net Investment Income Tax (NIIT)

3. ACA “Shared Responsibility” payments

TRY to plan around it/ for it

Safe harbor

Based on actual per quarter

TIMONIUM, MD     •     COLUMBIA, MD     •     BEL AIR, MD

LIFETIME EXEMPTION 2014 - $5,340,000 2015 - $5,420,000

GIFT TAX ANNUAL EXCLUSION $14,000 Will remain the same in 2015

NEED TO FILE A FEDERAL ESTATE TAX TO MAKE THE ELECTION TO CARRYOVER THE DECEASED SPOUSE’S UNUSED EXEMPTION AMOUNT

The Maryland estate tax exemption will remain $1 million for decedents dying in 2014; thereafter, it will increase as follows:$1,500,000 for a decedent dying in 2015;$2,000,000 for a decedent dying in 2016;$3,000,000 for a decedent dying in 2017;$4,000,000 for a decedent dying in 2018;

and For a decedent dying in 2019, the Maryland

exemption will be equal to the federal exemption amount ($5,000,000, indexed for inflation from 2011).

Once the phase-in period is complete, Maryland’s estate tax will have effectively incorporated “portability,” a rule allowing a married person to give any unused estate tax exemption at death to his or her spouse.

Must file a return to elect portability

Further, a bill has been introduced in the Maryland Senate to make portability available immediately; if passed, that bill would be applicable to decedents dying after December 31, 2013.

Maryland’s top estate tax rate of 16% remains unchanged.

Additionally, the new law does not affect Maryland’s inheritance tax.

INHERITED IRAS SUBJECT TO BANKRUPTCY CLAIMS

PROTECT ASSETS WITH TRUSTS

REMEDIES MAY BE AVAILABLE TO FIX PROBLEMS EVEN AFTER DEATH THROUGH: REFORMATION

MODIFICATION

DIVISION

DECANTING

DISCLAIMERS

Review your estate planning documents and update if necessary

Review titling on accounts

Review beneficiary designations

Review gifting strategies

Who gets what? – Fair vs. Equal Satisfy the Cash flow Needs of the Owner Satisfy the Owner’s desire for

Control Who is entitled to equity in

the business? Who is entitled to Employment

in the business? Should the Company be Retained or Sold?

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Steve Gershman, CPA, PFS, CFE410.290.3288

[email protected]

James Eaton, CPA, MBA410.307.2248

[email protected]

Lori Kirk, CPA410.307.6416

[email protected]