As you all know, the “Fiscal Cliff” was avoided when President Obama signed the American Taxpayer Relief Act of 2012 on January 3, 2013. Here are some highlights of the key elements from the Act.
With a little planning, you can make sure the life insurance benefits your family will receive after your death avoid the federal estate tax.
Under the estate tax rules, insurance on your life will be included in your taxable estate if either: (1) Your estate is the beneficiary of the insurance proceeds, or (2) You possessed certain economic ownership rights (“incidents of ownership”) in the policy at your death (or within three years of your death).
Avoiding the first situation is easy- just make sure your estate is not designated as beneficiary of the policy.
Say what you will, there was certainly a compromise on Capitol Hill regarding the estate tax signed into law December 17, 2010.
If you died in 2010 (although I suspect you didn’t, perhaps you know someone who did), the executors and tax preparers of the decedent’s estate have impressively been given a “choice” of estate taxation; follow the new estate tax laws effective December 17, 2010, or opt out and go with the previous law, the estate tax repeal.
Although generous, for practitioners who have seen a decade of complicated estate taxation problems this has simply created more planning headaches. Fortunately, practitioners have until September 19, 2011 to make the best determination for their clients and file the 2010 estate tax return (unless extended further by the IRS).
The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, which was signed into law on December 17, 2010 by President Obama, has dominated the headlines in recent weeks. The Act is a sweeping tax package that includes, among many other items, an extension of the Bush-era tax cuts for two years, estate tax relief, a two-year “patch” of the alternative minimum tax (AMT), a two-percentage-point cut in employee-paid payroll taxes and in self-employment tax for 2011, new incentives to invest in machinery and equipment, and a host of retroactively resuscitated and extended tax breaks for individuals and businesses.
Recently, you may have heard discussions in the news about politicians arguing about the future of taxes. President Obama and a bipartisan group from Congress met and agreed to some of the major issues, however many House Democrats have rebuffed the proposal. Here is a quick synopsis of some of the key features of the proposed policy.
