Don’t Let Your Workforce Fall Off Their Own Fiscal Cliff This January

January 08, 2013

Now that Congress has mostly averted falling off the fiscal cliff by penning The American Taxpayer Relief Act of 2012, some employees may have a false sense of confidence that the Act only will impact the wealthy.  The message we are hearing is that the middle class has been spared from a tax increase, but that’s not necessarily true.  Your employees will have an unpleasant surprise with their first paycheck of the New Year in 2013 since the temporary reduction of 2% on the employee portion of the Social Security tax that we’ve had for the past two years was allowed to expire.  As of January 1st, the tax increases back to 6.2% on the first $113,700 of earned income.  Continue reading “Don’t Let Your Workforce Fall Off Their Own Fiscal Cliff This January”

Investments That Survived the Fiscal Cliff

January 07, 2013

We are still here.  The Mayan calendar ended December 21, 2012 but fortunately we didn’t.  The fiscal cliff hung over into the wee hours on New Year’s Eve but was averted so taxpayers making less than $400k are breathing a sigh of relief that their income taxes aren’t going up — only the payroll taxes are going back to 6.2% (an increase of 2%). This is certainly good news for most Americans but it gets better. Dividends and capital gains tax rates were also saved from the fiscal cliff – they stayed the same for most Americans. Continue reading “Investments That Survived the Fiscal Cliff”

Preparing For the Next “Fiscal Cliff”

January 02, 2013

The fiscal cliff may be resolved but the deal only makes our “national debt cliff” even bigger. While we all hope our politicians can find a way to implement the necessary changes to reduce our national deficit AND national debt, we all must be prepared for how these changes will affect our lives.  It’s been said that if we don’t learn from history, then we are destined to repeat it.  We should not let the valuable lessons of our most recent recession and now current financial pickle go unlearned.  These are some steps I encourage you to consider taking as a way to prepare for what lies ahead, no matter how things unfold: Continue reading “Preparing For the Next “Fiscal Cliff””

Should You Do a Roth Conversion to Protect Yourself From the Fiscal Cliff?

December 13, 2012

If you’re like many Americans, you may be worried that an ability of the politicians in Washington to cut a deal could lead us over the so-called “fiscal cliff,” in which the Bush tax cuts would expire for everyone. While you can’t do much about the taxes on your income, you can at least protect your retirement accounts from higher tax rates in the future by converting them into tax-free Roth accounts by the end of the year. (In addition, many employers are allowing employees to convert pre-tax money in their current retirement plans into Roth accounts.) This conversion would allow you to pay taxes on the money at today’s relatively low rates and avoid the higher future rates. But does it make sense for you? Continue reading “Should You Do a Roth Conversion to Protect Yourself From the Fiscal Cliff?”

Year End Tax Tips You Can Share With Your Employees

December 11, 2012

Talk of the fiscal cliff is everywhere these days, so many of your employees may be concerned right now about what will happen to their tax rates.  While no one knows what Congress will ultimately decide regarding next year’s income tax rates, there is one cold, hard fact that isn’t getting much press – the Medicare surcharge.  I wrote about this new surcharge tax last month, which increases the Medicare tax rate from 1.45% to 2.35% on amounts of earned income over $200,000 for single filers and over $250,000 for married filers.  Here are 2 tips you can share with your high income employees who may be in danger of this surcharge: Continue reading “Year End Tax Tips You Can Share With Your Employees”