AKM 2009-2010 Tax Planning Guide [AKM Forbes Featured Institution]

Unlike the economy, taxes are controllable

You can’t do much about economic ups and downs, but you can take steps to minimize your tax burden, no matter which way the market moves. The key is to continually adjust your tax plan in light of economic swings and changes in tax laws or your personal situation.

This guide points out the importance of starting before year end and discusses tax-planning strategies for a variety of purposes and types of income. You’ll find information about ways to save tax on executive compensation, investments and real estate, as well as tax-smart ideas for funding education, saving for retirement and transferring wealth to your heirs.

But you’ll also see how complicated tax planning has become, and realize that there are many other regulations and strategies we simply can’t cover in the pages that follow. So be sure to check with an advisor to find out the best ways to keep your taxes under control.

Content and Excerpt –

Year-to-Date Review [Page 2] – To minimize income tax, you need to look at your income, deductible expenses and potential tax before year end. You may be able to time additional income and expenses to your advantage. But if your marginal tax rate — the rate that applies to your next dollar of ordinary income — is all you have in mind when formulating your strategy, you may be wasting your time.

Executive Compensation [Page 6] – If you’re an executive with a larger company, you likely receive stock options, restricted stock or nonqualified deferred compensation. But these special rewards come with complicated tax consequences that require special planning.

Investing [Page 8] – In a typical market, investment planning focuses on managing capital
gains and balancing your portfolio. In a down market, planning is largely a matter of determining how you can make losses work for you. The trick is to use losses to offset gains over the short- and long-term.

Real Estate [Page 12] – Even though property values in many areas have fallen, investing in a home or other real estate can be a very smart move. In addition to providing various
deductions, your investment may enable you to defer gains on a property sale or exchange while improving your portfolio. But to get the most for your money, you’ll need to know the rules and plan carefully.

Business Ownership [Page 14] – If you own a business, it’s likely your biggest investment. Unfortunately, it may be facing many of the same economic challenges as investments in
the stock market and real estate. You may simply be trying to survive these challenges. But it’s critical to think about long-term considerations as well.

Charitable Giving [Page 16] – In the current economy, you may be focused on holding on to what you have. But continuing to give to charity may still be a good move because of the substantial tax savings you’ll get. Plus many charities are in desperate need of support. In determining your giving strategy, consider what to give, as well as how to give it.

Children & Education [Page 18] – Being tax-smart when it comes to your kids or grandkids benefits you both: You reduce income taxes and perhaps your taxable estate, and they benefit from an education funded by tax-advantaged programs. But remember that additional rules and limits apply to most of the strategies discussed, so consult your tax advisor before implementing them.

Retirement [Page 20] – For those who plan and save, retirement truly can be the best time of life. But even if you’ve been able to put away a tidy sum for your later years, don’t drop your guard. Shifts in the economy, tax laws and your personal situation can suddenly leave you with a lot less than you anticipated. So make it a point to never retire from retirement planning.

Estate Planning [Page 22] – Yes, death and taxes are inevitable. But that doesn’t mean they have to go together. By taking advantage of all the exemptions, deductions and
estate planning strategies available, you can leave the legacy you desire to your loved ones, not Uncle Sam.

Tax Rates [Page 24] – A chart consisting 2009 individual income tax rate schedules.

Download AKM 2009-2010 Tax Planning Guide (pdf)

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