Presented By: Walter Deyhle, CPA, CFP

1. Year-End Tax Planning Seminar Presented By: Walter Deyhle, CPA, CFP Where Personal Attention Will Never Become Obsolete! 12/07/10

2. Tonight’s Agenda • GRF Process • Looking Ahead to 2011 • Estate & Gift Tax • Roth IRA • Energy Savings • Health Care Law • Deficit Reduction Commission Report • Questions

3. GRF’s Process • E-filing • CD copies • Portal

4. 2011

5. Rates for the “Rich”: What Could Have Been • Rich is: • $250,000 MFJ • $200,000 Single • 35% to 39.5% • 33% to 36% • Capital gains – 20% • Qualified dividend taxes like ordinary income

6. 2011 & 2012: What May Be • President Obama & GOP deal • Current tax rates stay in effect for 2011 & 2012 • 35% top tax rate • Capital gains & qualified dividends taxed at maximum of 15%

7. 2011 & 2012: What May Be (cont’d) • Reduced SS tax rate from 6.2% to 4.2% for 2011 • Full expensing of capital investments • AMT Patch for 2011 & 2012

8. Estate & Gift Tax

9. Estate Tax Basics • Unified gift & tax system • No estate tax for taxpayers dying in 2010 • Annual gifting of $13,000 • Exclusion for education and medical payments

10. Estate Tax Basics (cont’d) • Gift tax for gifts exceeding $1 M • With no change in law: 2011 – estate tax bracket for estates > $1M • Top tax rate of 45% • President Obama and GOP Deal • 2011 & 2012 – Estate tax for estates>$5M • Top tax rate of 35%

11. Roth IRA

12. Convert to a ROTH IRA?

13. When To Convert • Do not need IRA to pay tax • Expect to be in a higher tax bracket in retirement • Do not need IRA in retirement • Expect to pay estate taxes

14. When To Convert (cont’d) • No required minimum distributions • Pass to heirs • Heirs have required RMD • If conversion occurs in 2010, an election can be made to report 50% of the income in 2011 and 50% in 2012

15. Residential Energy Credit

16. Residential Energy Credit • Removes individual item caps • Increases limit to $1,500 • Increases from 10% to 30% • Prior $500 not counted • For 2009 & 2010 installations • Required energy efficiency increase

17. Health Care Law

18. Health Care Law • 0.9% increase in Medicare tax after 12/31/12 • $200,000/$250,000 • 3.8% increase in tax on investment income after 12/31/12 • $200,000/$250,000

19. Deficit Reduction Commission Report

20. Report: Tax Reform • Lower rates, broaden the bases, and cut spending in tax code • Cut rates across the board, and reduce the top rate to between 23 and 29 percent

21. Report: Tax Reform • Simplify key provisions while increasing or maintaining progressivity • Support for low-income workers and families • Mortgage interest only principal residences • Employer-provided health insurance • Charitable giving • Retirement savings and pensions

24. 1An alternative could be to exclude a portion of capital gains and dividends from income (e.g. 20%), reducing the effective top rate on investment income. To offset this while maintaining progressivity in the code, the top rate on ordinary income would need to be increased.

27. 1 Under this plan, a few tax expenditures remain, for instance no changes are made to the tax treatment of employer pensions and tax provisions under PPACA largely remain in place. Note that the payroll tax base would remain the same as under current law, though there will be secondary revenue effects on the payroll tax side.

28. Report: Social Security • Make retirement benefit formula more progressive

29. Report: Social Security • Gradually increase early and full retirement age, based on increase to life expectancy • Increasing the Normal Retirement Age (NRA) to 68 by about 2050 • Increasing the NRA to 69 by about 2075 • Increasing the Early Eligibility Age to 63 and 64 in lock step

30. Report: Social Security • Gradually increase the taxable maximum to cover 90 percent of wages by 2050

31. Questions? 4550 Montgomery Avenue, Suite 650 N Bethesda, MD 20814 301-951-9090 • wdeyhle@grfcpa.com Where Personal Attention Will Never Become Obsolete!