Archive for November, 2012|Monthly archive page

Thanksgiving

Originally published in the Cedar Street Times

November 16, 2012

With less than a week to go before Thanksgiving, I would like to take the opportunity to give some gratitude.  I am of course grateful for my family – my wife of 13 years, Joy, who has been my best friend since we were freshmen in college together.  She is sure and steady, she is efficient, she forgives me for being an accountant and working crazy hours for a third of the year, and she is well…full of joy!  I am grateful for my seven-month old son, Elijah, who brings such happiness, activity, and wonder to our lives.  It’s awesome being a dad!

I am grateful for my in-laws that make us dinner or pick up milk and juice at the store, or help with projects when we need an extra hand.  I am grateful for my brother, Justin, even though he lives in Washington D.C. and hasn’t set up a Skype account yet to visit with his nephew!  He is the most ethical and moral person I know, and he is always there to help me think through issues critically using his attorney mind.  I am grateful for the understanding, qualities, and grounding I received from my parents – there is no greater inheritance than that.

I am also grateful to be living in the beautiful town of Pacific Grove.  Growing up in Atlanta, I never really thought I would live near an ocean – what an opportunity!  We are blessed to have such wonder friends and neighbors, a great church community, and organizations that help us find ways to give back to our community.

I am also grateful to be living in the United States of America.  Although it is easy to point out all the faults we seem to have with politics, race issues, gender issues, health systems, national debt and tax systems, our military presence around the world, or whatever you feel is unfair, this country is still a beacon of light and hope for people all over the world that are struggling with far greater issues.  What other country are people clamoring to get into like the United States?  What country would you rather live in, and why are you here?  We do have some big challenges ahead, and it is going to take right action, as a result of our gratitude to solve these challenges.  If we are truly grateful for what we have, then we will take responsibility for preserving the good for ourselves and others, even when it seems we may have to sacrifice.

I think this passage from President Kennedy’s Inaugural Address from 1961 rings true for us as well: “I do not believe that any of us would exchange places with any other people or any other generation. The energy, the faith, the devotion which we bring to this endeavor will light our country and all who serve it — and the glow from that fire can truly light the world.  And so, my fellow Americans: ask not what your country can do for you — ask what you can do for your country.”

God bless you and your family and God bless America.

Prior articles are republished on my website at www.tlongcpa.com/blog.

IRS Circular 230 Notice: To the extent this article concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law.

Travis H. Long, CPA is located at 706-B Forest Avenue, PG, 93950 and focuses on trust, estate, individual, and business taxation. He can be reached at 831-333-1041.

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Your Future Tax Return: Romney Versus Obama

Originally published in the Cedar Street Times

November 2, 2012

If tax positions would sway your Tuesday vote, here is what Obama and Romney would like to see.  Keep in mind, however, you don’t always get what you want!

Tax brackets: Romney reduce to 80% of current levels. Obama keep the same as 2012 except allow top bracket to split into two higher brackets like pre-2001. (Romney, Current 2012 Rates, Obama, 2013 rates if no congressional action ) (8%, 10%, 10%, 15%), (12%, 15%, 15%, 15%), (20%, 25%, 25%, 28%), (22.4%, 28%, 28%, 31%), (26.4%, 33%, 33%, 36%), (28%, 35%, 36% and 39.6%, 39.6%)

Capital gains, interest, dividends: Romney reduce tax rate to zero for AGI below $200K.  15% max if AGI above $200K. Obama increase long-term capital gains rate to 20% max and up to 39.6% on dividends – leave interest taxed at ordinary bracket rates.

2013 3.8% Medicare surtax on net investment income and existing 0.9% medicare surtax for married filers over $250K AGI and others over $200K: Romney repeal.  Obama keep.

Itemized deductions: Romney cap itemized deductions (maybe $17,000-$50,000 cap) and maybe eliminate completely for high income.  Obama reduce your itemized deductions by 3% of your AGI in excess of $250K married, $225K HOH, $200K single, and $125K MFS (up to 80% reduction of itemized deductions) and limit the effective tax savings to 28% even if you are in a higher bracket.

Income exclusions: Romney keep as is. Obama cap the effective tax savings to 28% on exclusions from income for contributions to retirement plans,  health insurance premiums paid by employers, employees, or self-employed taxpayers, moving expenses, student loan interest and certain education expenses, contributions to HSAs and Archer MSAs, tax-exempt state and local bond interest, certain business deductions for employees, and domestic production activities deduction.

AMT: Romney repeal. Obama keep but set exclusion to current levels and index for inflation.

2009 expanded Child Tax Credit, increased Earned Income Credit, and American Opportunity Credit: Romney – Allow to expire as scheduled 12/31/12.  Obama – Make permanent.

Buffett Rule: Romney “Not gonna do it.” Obama households making over $1 million should not pay a smaller percentage of tax than middle income families.  This is accomplished by raising the rates on capital gains and dividends as discussed earlier.

Temporary two percent FICA cut you have been enjoying in 2011 and 2012: Both candidates favor allowing to expire at 12/31/12.

Estate tax: Romney repeal.  Obama set at $3.5 million and index for inflation with top rate of 45% on excess.

Top corporate tax rates: Romney 25%. Obama – keep at 35% for 2013 but maybe reduce to 28% in the future.

Corporate international tax: Romney don’t tax U.S. companies on income earned in foreign countries. Obama discourage income shifting to foreign countries.

Corporate tax preferences: Romney extend section 179 expensing another year, create temporary tax credit, expand research and experimentation credit. Obama increase domestic manufacturing incentives, impose additional fees on insurance and financial industries, reduce fossil fuel preferences.

Prior articles are republished on my website at www.tlongcpa.com/blog.

IRS Circular 230 Notice: To the extent this article concerns tax matters, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by law.

Travis H. Long, CPA is located at 706-B Forest Avenue, PG, 93950 and focuses on trust, estate, individual, and business taxation. He can be reached at 831-333-1041.