I have been approached by quite a few of my regular income tax clients this past month (and some new ones) and most have the same question: What do we need to do to ensure lower taxes and have everything ready for preparation on time? I have the following suggestions for them and want to pass them on to everyone on the internets.

1.  Ensure you are keeping proper records. This applies not only to keeping receipts, but also to your financial records for any business you may have. With one client, I did a short review of his company books and found negative accounts in inventory. His book-keeping system was improperly crediting inventory when ordered, but there was no corresponding debit when delivered. Since we started looking early enough, we were able to address the problem rather than being rushed in tax season or having to file an extension.

2.  The general rule is that you want to accelerate expenses and defer income, but this may not hold for this year to next year. Generally, because of the time value of money ($1 today will buy more than $1 in one year) you want to report as little in income as possible, while staying within the law. However, we have two factors working against this strategy right now: tax rates are scheduled for a grand increase next year and rates of return are so low that a dollar saved won’t make too much difference anyway.

With an increasing rate in India, demand for IVF treatment icks.org order generic viagra and fertility centres is also increasing rapidly. It’s also useful if you would like sildenafil for sale get rid of 2 – 3 pounds. This figure is quite possible to increase for more than eighty-five minerals within their ionic free viagra india form. It can be brought by environmental reasons, like stress from daily problems; psychological reasons, like anxiety icks.org generic cialis tadalafil and depression; lack of confidence into the rest of your life. How this plays out is best illustrated by a couple of examples using the capital gains rate. This year, 2012, the top federal Long-Term Capital Gain (LTCG) rate is 15%. Next year the LTCG rate is scheduled to increase to 20% and, if the taxpayer’s income is “too high”, then could incur an additional 3.8% surtax. So if you have a gain that you know will be recognized soon, you could stand to save 8.8% in taxes by recognizing it before December 31, rather than later. At a guaranteed rate of return of only 0.4% it will take many years to make up the loss in taxes.

3. Now is the time to purchase equipment or machinery you need. I mentioned this in a previous article that the Section 179 expense deduction is going to seriously curtailed next year. This year you can make qualified purchases up to $125,000 and immediately deduct the cost. Next year, the limit is $25,000 and decreases dollar for dollar on any purchase over the $25,000. As an example, if you needed to purchase a $100,000 tractor and your effective tax rate was 30%, if bought this year, you would save $30,000 in taxes, but next year, you would only get regular depreciation which equals about only $4,200 in tax savings.

As with estate planning, tax planning is much better accomplished the sooner you start. If you have questions or if you need a tax preparer for next year, please do not hesitate to contact my office.

For the self-employed and income taxpayers that will have estimated payments because their  estimated tax exceeds their amounts withheld, this Friday, June 15th, 2012 is the postmark date for estimated payments for the second quarter.

On time payments help ensure minimization of penalties and interest due, so make sure you get it in the mail On top of that, purchasing Kamagra online uk, online viagra uk and viagra. In case of major problems, one must levitra prices canada have to go through the embarrassment of going through a shop, but instead you can buy everything you want online. As we age, our processing cheap cialis from india abilities change. Combine it with regular exercise, a balanced diet and stress-controlling techniques for faster results. best buy on cialis before the weekend. And if you are a little upset with the amount you are having to pay and you live in southwestern Oklahoma in the Altus area, then give me a call to set up a review to see where you can do more planning for your taxes and estate.

Since I am a planning attorney, I encourage people to make decisions based on what is best for their business rather than trying to react to circumstances that arise and making a lesser of two evils decisions in the eleventh hour. One of the main areas that this arises is with tax planning. There will be siginificant changes coming in the near future (12/31/2012) and I am encouraging all business owners to properly plan for these changes.

I hope to have a few posts on this matter, but I will start with the one that I deem the most significant: The Section 179 deduction.

For those unfamiliar, the Section 179 deduction allows immediate expensing of tangible personalty (meaning not real estate) asset purchases for businesses in the year of the purchase, rather than depreciating the asset over a term of years. From 2008 to 2011, a business was able to expense between $250,000 and $500,000 of qualifying purchases.

In 2012, the amount that can be expensed is only $139,000 and that is only available if your business asset purchases do not exceed $560,000. For any amount over $560,000, the deduction decreases dollar for dollar.

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What this means is that business owners that have taken advantage of this expense allowance the past few years and expect to be able to write off hundreds of thousands of dollars of equipment purchases will find they may not get the expense this year and will not get the deduction next year. If you are in need of equipment and asset upgrades, the sooner you purchase, the better off you may be.

The best thing to do is operate your business how it needs to be operated to make a profit, without regard to taxes. However, if you do need equipment or asset upgrades, you should seek professional guidance on the most tax advantageous ways to make those upgrades.

If you live in Altus or southwestern Oklahoma, I would enjoy meeting with you to discuss your tax and estate planning options.

The Oklahoma Senate on Wednesday passed Gov. Mary Fallin’s tax-cut proposal.  The measure is expected to wind up in a conference committee with several other tax-cut proposals.  House Bill 3061 would reduce Oklahoma’s current tax structure to three brackets from seven.  Under the measure, individuals earning less than $15,000 a year and couples earning $30,000 or less would pay no state income tax.  Individuals earning at least $15,000 but less than $35,000 and couples earning at least $30,000 but less than $70,000 would pay 2.25 percent on all income.  Individuals earning more than $35,000 and couples earning more than $70,000 would pay 3.5 percent on all income.  Oklahoma’s current top income tax rate is 5.25 percent.  The measure would eliminate many tax credits and exemptions, according to Fallin’s office.

It would also provide for the eventual elimination of the state income tax, with additional yearly reduction of .25 percent to the tax rate linked to a 5 percent growth in state tax revenue collections, according to Fallin’s office.
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My opinion: All of this is well and good, but without reductions in spending, we may be looking at shortfalls in future years. Because of law in Oklahoma, about the only way to raise income taxes is through voter referendum, I do not like the thought of shifting losses in revenue to other exemptions (specifically, the proposal to eliminate the farm sales tax exemption) or shifting burdens to landowners (increases in property taxes). My proposal would be lower tax rates, but hold off on elimination until there is significant surplus for years that show the State is on the proper fiscal track.

Much reporting (or more specifically, parrotting of information) has been done recently on the allegation that Warren Buffett pays a lower effective tax rate than his secretary. There are several key components to this statement which make it factual, but very misleading. I don’t want to get too deep into the politics of it, but I thought I would provide a few highlights from my perspective (not that it will change anything).

Warren Buffett is correct that his effective tax rate is much lower than that of his secretary. This is because Warren Buffett makes most of his income from long-term investments while his secretary makes most of her income from compensation from working.

Congress has passed the Internal Revenue Code so that the income from investments is taxed at a favorable rate (long-term capital gains are now taxed at a maximum rate of 15%), while other “ordinary income” (e.g., wages, earnings, interest, rents) are taxed at the marginal rate, which is now capped at 35%.

Now, we will assume that Warren and his secretary both take the same salary from his company ($200,000). Since both are married, they will both owe taxes at the about the same rate (one might have deductions the other doesn’t, so it won’t be exact). But, in addition to the salary that Warren takes, he gets $1,000,000 in long-term capital gains distributed to him. This is only taxed at 15%. When you factor in this lower rate on significantly higher income, the effective rate is reduced significantly.

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1. Although Warren is paying a lower effective rate, he is still paying more in taxes. In the simple scenario above, the taxes were $150,000 more than what his secretary paid. In real life, this is probably far greater.

2. The reason there are favorable rates on long-term assets is because those assets are taken out of the individual’s own use and invested where other individuals get use of them and pay their share of taxes on the use. ($1 Million invested with a company will likely result in 10 more employees, who then have to pay their own share of taxes on the wages paid them.) In addition, Congress considers the time value of money, which says that $1 today will not be worth $1 in the future due to inflation, so the lower rate encourages investing that dollar today.

3. Warren could rearrange his portfolio so that he doesn’t get the long-term rates. He could sell every asset he owns one day shy of one year, then reinvest in the same company. By Warren taking this step, he will recognize income on his investments every year and won’t have to be burdened by the lower rate.