God Must Be a Yankee Fan!

With President Obama's signing of the Tax Relief Unemployment Insurance Reauthorization and Job Creation Act of 2010 on December 17th, one thing became clearer: most estates for those who died in 2010 would not be subject to the Federal Estate Tax. For example, the billion dollar estate of form Yankees owner George Steinbrenner will only be subject to New York State estate tax, which tops out at about 16% and not the Federal Estate Tax, which will help the Steinbrenner family to continue to pay the highest dollar for young baseball talent and free agents (some overpriced I may add).

Why is planning so important? The reason is that the future is somewhat grey as to what the Federal Estate Tax is going to be. The Act passed on December 17th only bridged the estate tax issue until December 31, 2012, after that there are concerns that the estate that could return to its 2009 thresholds or even worse, its 2001 thresholds. When we talk about thresholds it is easy to see why this could have a major impact on many estates and that is why it is difficult to determine currently if your estate will be subject to tax in the future. Currently under the new legislation the Federal Estate Tax is for estates greater than $5,000,000 and they would be taxed at 35%, but that could all change. For example, if the government reverts back to the 2001 thresholds, then estates greater than $1,000,000 could be subject to a 55% tax; if they revert back to the 2009 levels, then estates greater than $3,500,000 could be subject to a 45% tax; therefore you can see why estate planning is so important because it is very hard to plan the death side of this equation.

The other part of this that people take for granted is the assumption that they will never have to worry about this because they will never achieve any of these thresholds. This may be the case if the limits stay between $3,500,000 and $5,000,000, but if the levels drop down to approximately $1,000,000 this would effect many more people because of what gets included in your estate. If you consider when you start adding up your investments, house and retirement accounts it might be very easy to get close to that $1,000,000 threshold.

No one ever enjoys talking about dying and planning for one's death but that planning may be able to save your estate thousands of dollars. You should be reviewing your will timely with your attorney and accountant to make sure that you and your heirs will receive that largest benefit from your estate. This may mean establishing gifting timelines or setting up trusts, which may come at a cost, but if it ends up saving your estate and heirs money, wouldn't it be worth it?

Where is my refund?

I get this question all the time and the attached is a great article that provides dates as to if you file your return by a certain date when you can expect to get your refund. Notice the dates are about a week to two weeks earlier for direct deposit so keep that in mind when you are filing.

http://www.efile.com/tax-refund/where-is-my-refund/

Also remember for those of you that have to file a Schedule A for your itemized deductions with your 1040 that you are not able to file your return until mid-February because the IRS's site is not ready yet due the legislation being passed so late in 2010.

Everyone loves the IRS (which spells "theirs", ironically)

Thank you all for taking the time to join my blog. My goal is to keep hot tax topics in front of you either at the Federal or state level. I am involved in personal and corporate tax as well as head of our non-profit tax department here at Marvin and Company, so hopefully you will be able to find part or all of my blog useful. As with every other professional though I do have to issue a disclaimer. So much of tax is specific to its situation, so these blogs are to get you thinking about your own personal situation and then take your new found information to your accountant or your attorney to discuss action steps further. Please do not use this information as the end-of-all-ends because without knowing your every detail it would be almost impossible to give you advise over a blog.

If at anytime you would like any more information on a particular blog or would like some clarification please do not hesitate to contact me through my email address.

The title of this blog "Robin Hood" relates to taxes and every one's issue with them. Don't worry I have no plans on wearing any tights or shooting any arrows but I hope that some of this information will assist you in your tax planning and if you can save a $1 for doing something a little differently well that sounds like a good start to me. I hope you enjoy reading my blog and my goal is to stay as current as possible with this.

If any of you would like to join my free webinar tomorrow on personal and corporate tax update from noon to one please go to the link and sign up.

https://www2.gotomeeting.com/register/459328226