How Expiring Bush Tax Cuts Affect Your Clients

[HV Ken]

There is an article posted on smartmoney.com on 7/7 entitled "How the Expiring Bush Tax Cuts Affect You" written by The Tax Guy by Bill Bischoff. You can see the article here: SmartMoney.com Article

Here are the hilights:

• Higher tax rates for all
  
• Higher capital gains and dividends taxes for all
  
• Return of the marriage penalty
  
• Return of phase-out rule for itemized deductions
  
• Return of phase-out rule for personal exemptions
  

I am curious how you communicate information like this to your clients ?

What advice are you giving them before year end to plan for these changes ?

There are going to be a lot of very unhappy campers sitting across the tables from us next tax season the way things look right now!

And please - this is not intended to be a political discussion - merely tax implications....

[rfassett]

Communication is paramount to the success of your practice. I email most of my clients on a weekly basis in an effort to keep them apprised abbout tax changes. The other thing I have done - I have been telling anybody that would listen, that taxes are going up. Most of our clients do not care about the nuances in detail, they just want the bottom line. I point to all of the money the government is spending - federal, state and local - and say, "where do you suppose that money comes from?" Bottom line, I keep my clients informed on an on-going basis. Yes there will be some unhappy campers - those who chose to not listen - but none of them will be able to say that they were not told. Because, as a last ditch effort, we recap the year's changes in a letter that goes out to each tax return client with the organizer.

[jainen]

>>merely tax implications<<

I've pretty much given up on tax planning engagements. I remember a lot of concern that euthanasia might increase because dying in 2010 was expected to have tax advantages, but now we see that eliminating the estate tax for a few people has raised capital gains tax for everybody. The so-called marriage penalty has always been a terrific tax break for many families. All the hype about capital gains tax rates pales to almost nothing in the face of actual market performance, not to mention other economic factors such as unemployment.

In my opinion, it is not possible to discuss tax implications without political viewpoints.

[OldJack]

I don't know what is going to happen, but it looks to me like it will get worse for quite a while before it gets better.