Paying Your Fair Share of Taxes…But No More
Each year it becomes more difficult for people and businesses to maneuver the various tax laws affecting them, as the Federal Tax Code is growing at an alarming rate. In 1939, it contained “only” about 500 pages. Prior to the passage of the landmark healthcare laws in 2010, the Tax Code was already at about 72,000 pages, including all of its many amendments that change things ever so slightly each year. If you add the regulations and court interpretations of the tax code, the pages number in the millions. This does not even include state or local taxes. By way of example, your average Bible with commentary is “only” about 2,400 pages.
At Eyestone Law Offices, PLC, we work with your accountant and other advisers to make sure your family and business pay no more than your fair share of taxes. We keep abreast of the laws that affect our clients the most and maintain close relationships with experts in other areas of the tax laws that come up less often.
Examples of Tax Savings
Estate Tax – For most people, term life insurance is the asset that puts them into the “taxable estate” category. A term life insurance policy of $1 million coupled with retirement assets and real estate valued at $500,000 could result in a Federal Estate Tax liability of $275,000 without proper estate planning, which typically costs less than 1% of the potential tax savings.
Generation Skipping Tax – Many times grandparents choose to leave a legacy directly to their grandchildren and beyond. However, to avoid a tax equal to the Estate Tax at each generational level, special steps need to be taken to ensure that the funds are properly placed in a trust for these beneficiaries. Also, our typical estate tax planning includes Generation Skipping Tax planning to provide more flexibility to your children to protect them from potential creditors as well.
Gift Taxes – A common misconception is that the person receiving the gift is responsible for the taxes. However, it is the giver of the gift who must file the return and pay any gift taxes that may arise from it. Each person can give another person up to $13,000 in gifts each year without having to file a gift tax return. Also, there is currently a $1 million lifetime gift tax exclusion amount, but using it could increase your eventual estate taxes. The Annual exemption amounts are great ways to reduce the overall gift and estate tax burden for the family, especially when using life insurance or minority interests in a family-owned business. This planning technique has literally “bought the farm” in many cases.
Real Property Taxes – Any person with business real estate, a cottage, or a second home knows that real estate taxes can become an undue burden. While some property tax increases are unavoidable, proper planning and a timely assessment appeal can result in thousands of dollars in tax savings for years to come.
Business Taxes – Your accountant is typically in the best position to help you with your business taxes from year to year; however, it makes sense to review your tax situation with your accountant and your attorney whenever you start a business, change the types of goods or services you sell, or seek to acquire depreciable real estate or equipment.
Free Initial Consultations
We know your time is valuable, but if you have over a $1 million in combined assets and life insurance, if you are in business or looking to start one, or if you have questions about your real property assessment, please call or email us to set up an appointment for a free analysis of your situation.