Are Your Clients Ready for the Coming Taxpocalypse?
Once again, we’re playing a waiting game with Washington in regards to changes to the tax code. But with the right planning in place, your clients can be protected from what can be justifiably called a “taxpocalypse.”
If Congress fails to act before year’s end, tax rates on income, interest, capital gains, dividends, gifts and estates are expected to jump. The top rate on estates and gifts is expected to rise from 35 to 55 percent.
Are Your Clients Protected?
The Wall Street Journal published a recap on August 31st that addressed what’s at stake (tinyurl.com/9asdhqz). The article’s key point: Taxpayers need to make important decisions now and be ready to act quickly in the months ahead.
The House of Representatives has set only 16 work days between Aug. 31 and its adjournment date on Dec. 14. The Senate has more days in session, but the article said that Senators have little incentive to act if House members aren’t around.
What Might Happen?
After the Nov. 6th election, Congress might extend the current rules for another year — allowing members time to make basic changes to the tax code.
Or, the election could change the balance of power in Washington. Democrats could block a tax-rate extension, allowing current rules to automatically expire and put off significant tax decisions until 2013. It may take months before Congress reaches a new agreement and makes changes retroactive to the beginning of the year.
There are no easy answers to give clients. Our best advice for you is to help them understand the risks of taking no action and to bring planning documents up-to-date. Remind them of the necessity of creating a strong tax-protection strategy.
Hope for the Best, Prepare for the Worst
1) Educating clients and adapting their plans?
2) Confused — doing nothing?
3) Educating clients, but advising to “wait and see”?
At a minimum, figure out which clients are at the most risk when tax rates increase on Jan. 1 and prioritize them. Call, write or invite them to an educational workshop. Communicate with them in some way.
Even if Congress reinstates the existing tax rates retroactive to Jan. 1, there will still be a lot of confusion out there.
To get more information regarding this or any related topic, please visit our website www.TEPLG.com or call us at 630-871-8778.