Tax strategists like Robert Gordon of Twenty-First Securities in New York see this year as a lucky reprieve for those who didn't get around to planning for higher taxes earlier, especially on investments with long-term gains and stock options. "It's not a question of whether investment tax rates are going up, but when," he says. He already is meeting with clients who escaped a 2011 increase but are determined to get ready for 2013.
Federal Income Tax Rates for 2011
|
Single |
Married Filing Jointly |
Marginal Rate |
|
Taxable income |
Taxable income |
|
|
Up to $8,500 |
Up to $17,000 |
10% |
|
$34,500 |
$69,000 |
15% |
|
$83,600 |
$139,350 |
25% |
|
$174,400 |
$212,300 |
28% |
|
$379,150 |
$379,150 |
33% |
|
Above $379,150 |
Above $379,150 |
35% |
'Stealth' Income Taxes- Expires: end of 2012
Affluent taxpayers won't have deductions clipped by the so-called Pease and PEP limitations. The Pease limit cut 3% of itemized deductions and PEP eroded the personal exemption, which is $3,700 for 2011.
Investment Taxes- Expires: end of 2012
Rates continue at historic lows for both long-term capital gains and dividends. For taxpayers in the 15% income tax bracket and below, the rate is zero. For those in the 25% bracket and above, the rate is 15%.
Estate and Gift Taxes- Expires: end of 2012
The system has been overhauled, with a top rate of 35% and one exemption of $5 million per individual for estate, gift and generation-skipping taxes alike. For those who can stand to part with assets, it's now possible to shift large amounts of wealth.
The annual exclusion for tax-free gifts remains $13,000 per donor. A giver may make an unlimited number of $13,000 gifts, as long as they are to different individuals. Gifts of tuition and payments for medical care also are exempt.
Payroll Taxes- Expires: end of 2011
Last year's big surprise was a temporary two-percentage-point cut in the employee's share of Social Security taxes, saving a maximum of $2,136 per worker. There is no phase-out, and each partner of a married couple can get the rebate.
Summary
Everyone's personal tax situation is different but these changes and future changes should be taken in to consideration when contemplating an exit plan from your company. Due to the rebounding economy in 2010 we are seeing a lot more activity by sellers ready to plan for their future exit. This year may be a good time to consider such an exit if your revenue and profit has rebounded from the 2009 turndown and you are ready to move on to other aspects of your life.
Call us to discuss your exit plan goals and we'll let you know what the market looks like for you this year.
Contact Sam or Bob, who have successfully completed over 120 staffing industry transactions, if you'd like to discuss M & A matters related to your staffing firm.
http://www.racohenconsulting.com/contact.html
