Skip to content

November 28, 2011

A new meaning to tax planning>

The Wall Street Journal published “The Tax Mess Deepens” in the Weekend Investor Section of the Saturday/Sunday, November 26-27, 2011 edition.  The article highlights “What’s Expiring at the End of 2011” and “What’s Expiring at the End of 2012”.  After stating that this is the 3rd year that there are major tax issues that have not been resolved.  The article then discusses “Smart Moves to Make Before” 2012.
The article is a non sequitur.  How can you determine what to do in 2011 if there are major uncertainties about the 2012 tax laws?  The situation is the result of the current political situation.  If tax changes are proposed that are known to not be acceptable to the other party, nothing will get done.  This makes it even more difficult to know what changes will be made in the tax laws.
The first  step for your 2011 tax planning is to determine where you are now.  Then look at what alternatives might improve your 2011 tax situation.  Next review what you know will change in your situation.  Based on what you do know determine if you think your income or deductions will change in 2012.  Again what strategies would you follow on your expectations of 2012.  
Any attempt to modify your planning based on your forecast of the future changes in the tax laws will depend on how confident you are in knowing the future.  Even if you are certain you know what changes will be made, do you know what the effective date (s) of the changes will be?  Do you know what the transition rules are going to be?  Do you know what the dollar impact will be of the changes?  Yes, for most people,  the challenges to tax planning will be more difficult that in the past.  You should review your situation with your tax advisor now.  You need to allow time before December 31, to evaluate your alternatives and implement your strategy.
READ MORE 

Back to Top

Read more from Income Tax, etc.

Share your thoughts, post a comment.

You must be logged in to post a comment.