Happy New (Tax) Year…Unlucky ’13?

 

The New Year’s celebrations are over.

It’s on to 2013.

Will this be unlucky 2013 for taxpayers?

We wrote earlier how there are 8 Reasons You Will Pay More Taxes in 2013…Guaranteed.

We also pointed out Why the Fiscal Cliff is Fiscally Irresponsible.

The reality is there will be tax increases.  How much they will be and who will pay them still remains to be seen.

State of Connecticut

For Connecticut taxpayers there are more clouds on the horizon. The State of Connecticut has an estimated budget deficit for the year ended June 2013 of about $415 million. It’s difficult to see how this budget deficit will be made up without a lot of pain.  Governor Malloy has indicated there will be no tax increase.  Last year’s tax increase was the largest on record. This of course doesn’t mean that more services will potentially be subject to sales tax, fees won’t go up, etc. The state employees have already cut their deal; it appears there will be no savings with them.  Will Connecticut go to the bond market again? If so, it remains to be seen how this will affect the state’s credit rating.

 

What can Taxpayers do About this?

Have a Plan. Take advantage of every tax deduction you can. Here’s a list of 50 Tax Deductions.

Meet with your estate planning attorney.  The current federal estate tax exclusion is $1 million with a rate of 55%. President Obama has proposed using the 2009 exclusion of $3.5 million and the rate of 45%. The State of Connecticut estate tax exclusion is $2 million. Either way, there’s big dollars on the table no matter what the estate tax exclusion is. Even if you aren’t subject to the estate tax, meet with an estate planning attorney. You want to be clear about who gets your assets when you pass away.

Finally, figure out how you can make more donations to charity.  I know, it sounds contradictory when taxes are going up and you may have less discretionary income. Face it; the charities need all of the help they can get. This doesn’t need to be a big change, just give some more.

Are you prepared for higher taxes?  If so, do you have a plan to deal with this?

Please leave your comments below.

Photo From Creative Commons

About the author:

Tom Scanlon, CPA, CFP®

Tom Scanlon has over twenty-five years experience in public accounting with an extensive background in the areas of financial, tax and estate planning. Find Tom on Google+

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