ILNews

IBA: Tax time is closer than you think — are you prepared?

Back to TopCommentsE-mailPrintBookmark and Share

December 31st is right around the corner, and with it comes important considerations for year-end tax planning. Special breaks are still available for 2012, and taking action before December 31 could reduce taxes for 2013 and beyond. Plus, planning now for tomorrow’s tax changes could have a significant impact on your —a nd your clients’ — bottom line.

Get important tips and information on action to take before the end of the year and discover what new tax regulations may be on the horizon, including changes in tax rates, accelerated depreciation, and estate valuation, when the IndyBar hosts Bill Owen, Director of Tax Services at BGBC, on Thursday, November 29 for “Year End Tax Planning Tips for Solo/Small Firm Businesses for 2012 and Beyond.” This program, which includes 2.0 general CLE credits, will be held at the IndyBar Education Center from 3 to 5 p.m. Registration and additional information is available online at www.indybar.org.

In advance of the program, Owen shared with the IndyBar two items that every legal practice and small business should consider between now and the end of the year:

“First, if they are planning on making a significant investment in new equipment in the near future, consider doing so before December 31, 2012. The reason is that currently we have ‘50% Bonus Depreciation’ for any new equipment purchased and placed into service during 2012. That means that 50% of the cost of that equipment can be written off in 2012, and the balance can either be expensed under IRC Sec. 179, or depreciated over its normal depreciable life.

For example, if there is $250,000 of new equipment purchased that has a five year depreciable life, the first $125,000 would be expensed as Bonus Depreciation. The $125,000 balance could either be expensed under Section 179 or depreciated with 20% being depreciation expense for the first year. That means the $250,000 purchase could result in a 2012 depreciation deduction of between $150,000 including regular depreciation and $250,000 if Section 179 is elected.

In 2013, under current law, bonus depreciation goes away and Section 179 drops to $25,000. So acting in 2012 can result in a significant acceleration of deductions for new equipment purchases. However, the equipment must not only be purchased, but also placed in service to be eligible for the current deductions.

Second, everyone should do some income tax planning that looks at both 2012 and 2013. In 2013, the top ordinary income tax rate will climb from 35% in 2012 to 39.6% in 2013. In addition, there will be a .9% Health Insurance Surtax on earned income in 2013 and a 3.8% Medicare Surtax on investment income for those with Adjusted Gross Income above $250,000. That means in 2013, those in the upper income tax brackets could be paying as much as 43.4% on investment income and as much as 40.5% for earned income…and that is just for federal income taxes! This may be a time to consider accelerating income into 2012 to reduce the overall income tax exposure for the combined tax years of 2012 and 2013.”

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. Can I get this form on line,if not where can I obtain one. I am eligible.

  2. What a fine example of the best of the Hoosier tradition! How sad that the AP has to include partisan snark in the obit for this great American patriot and adventurer.

  3. Why are all these lawyers yakking to the media about pending matters? Trial by media? What the devil happened to not making extrajudicial statements? The system is falling apart.

  4. It is a sad story indeed as this couple has been only in survival mode, NOT found guilty with Ponzi, shaken down for 5 years and pursued by prosecution that has been ignited by a civil suit with very deep pockets wrenched in their bitterness...It has been said that many of us are breaking an average of 300 federal laws a day without even knowing it. Structuring laws, & civilForfeiture laws are among the scariest that need to be restructured or repealed . These laws were initially created for drug Lords and laundering money and now reach over that line. Here you have a couple that took out their own money, not drug money, not laundering. Yes...Many upset that they lost money...but how much did they make before it all fell apart? No one ask that question? A civil suit against Williams was awarded because he has no more money to fight...they pushed for a break in order...they took all his belongings...even underwear, shoes and clothes? who does that? What allows that? Maybe if you had the picture of him purchasing a jacket at the Goodwill just to go to court the next day...his enemy may be satisfied? But not likely...bitterness is a master. For happy ending lovers, you will be happy to know they have a faith that has changed their world and a solid love that many of us can only dream about. They will spend their time in federal jail for taking their money from their account, but at the end of the day they have loyal friends, a true love and a hope of a new life in time...and none of that can be bought or taken That is the real story.

  5. Could be his email did something especially heinous, really over the top like questioning Ind S.Ct. officials or accusing JLAP of being the political correctness police.

ADVERTISEMENT