Tax Planning

April 15 is our annual “anti-holiday”—the date we love to hate. Many Americans dread that day each year because of the misconception that individual tax returns must be filed by then. Actually, only a rough estimate of what you owe… Read More

Everyone knows the story of the Titanic. The “unsinkable” ocean liner struck an iceberg at 11:40 p.m. on April 14, 1912, and sank before dawn on the next day, resulting in the deaths of 1,517 people in one of the… Read More

This article is a potpourri of tax changes that are affecting many of our clients. We’ve divided the changes into two main categories: 1) those affecting retired clients; and 2) those affecting our young accumulators. Some of these changes occur… Read More

Starting with stock sales made this year, there will be a change in the way that brokers (such as TD Ameritrade) are required to report the transactions. Investors will receive more information, which will make recordkeeping and tax accounting easier…. Read More

It’s about time. Beginning in 2011, all paid tax preparers will need to register with the IRS and will be subject to a standardized set of educational, training, and ethical requirements. As an Enrolled Agent, I support the higher standards… Read More

Lower mortgage interest rates are good news for homeowners who are seeking to refinance and for those who are looking to purchase a home. Lower rates add flexibility to the negotiation of loan terms, mortgage interest, points, financed amount, and… Read More

Alert to college and high school students working a summer job. If your total income goes over $5,700 for the year, you’ll need to file a tax return for 2010. If you earn less than $5,700 but also have investment… Read More

Many people who live in the Mid-Atlantic region consider moving to lower-cost areas when they retire. BWFA has clients who have done so. These days, with the financial pressures on individual states, it is worth considering both the tax burden… Read More

In December 2009, U.S. Sen. Tom Harkin (D-Iowa) introduced legislation that would create a financial transaction tax on purchases and sales of securities in the U.S. markets. U.S. Rep. Peter DeFazio (D-Oregon) proposed similar legislation in the House. Mutual funds… Read More

Most of us think we pay a lot of taxes, probably too much, but what does your total tax burden look like? Of course there is state and federal income tax, calculated and paid now at tax time, but there… Read More

Last week, our client, Early Retiree, heard that estate tax laws were changing in 2010, and she called S. Tate Planner, to discuss the new law. The following is a transcript of the conversation. Is it true that there is… Read More

One of the “hot” tax topics for 2010 is the Roth Conversion. Beginning in 2010, Congress will permit anyone, regardless of income level, to convert money from retirement accounts and traditional IRAs to a Roth IRA. Much has already been… Read More

Personal Data Social Security Numbers (including spouse and children) Child care provider: name, address, and tax ID or social security number Alimony paid: name and social security number of former spouse     Employment & Income Data W-2 forms for… Read More

Over the years, many of our clients have started small businesses. This may have come about as a result of an offer through the company they worked for, or it may have been the realization of a long-time personal goal…. Read More

In all well-run households, we make decisions about what we can afford and what we cannot afford. When we overspend at home, we live with the consequences. But when our elected officials overspend public money, they gain votes. This is… Read More

What is your largest expense in retirement? Is it the one you thought it would be? Our newsletter editor brought to our attention a survey done by the Spectrem Group in August 2008 for retirees age 70-75 who have about… Read More

We have always told our clients that they benefit most when they use all three of our services: Retirement and Estate Planning, Investment Management, and Tax Services. Here is an example of how our services work together. Meet Mary Client…. Read More

Personal Data Social Security Numbers (including spouse and children) Child care provider: name, address, and tax ID or social security number Alimony paid: name and social security number of former spouse     Employment & Income Data W-2 forms for… Read More

We often see eye-catching e-mail advertisements that promise to divulge strategies that will help us (and our clients) reduce our taxes. Often, the e-mails are scams or propose illegal schemes. However, there is an opportunity created by the Jobs and… Read More

We thought it would be interesting to look at the presidential candidates’ positions on taxes. As you might expect, Senators Obama and McCain propose very different solutions. Looking at the table below, which we obtained from the non-partisan Tax Policy… Read More

We’ve written several articles on the subject of estimated taxes. These tax payments are required when you do not have enough taxes withheld from your salary, self-employed income, or retirement payments. By making these payments on time, you avoid the… Read More

As you think about your estate and the assets that your heirs will inherit, it is very important to understand that different items will be taxed differently after they are inherited. One of our jobs at BWFA is to help… Read More

Every once in a while we hear something from one of our clients that we just have to pass along to all of our newsletter readers. Thanks to the Energy Policy Act of 2005 (EPACT) and incentives offered by Maryland… Read More

Nobody likes to pay income taxes. The tax bite seems even more painful if you are writing the checks instead of having taxes withheld from each paycheck. However, retirees and the self-employed who ignore quarterly tax payments will wind up… Read More

Every time Congress changes federal tax law, Baltimore-Washington Financial Advisors analyzes how the new rules might affect our clients. The Pension Protection Act of 2006, signed into law in December, is the latest such tax law change that provides new… Read More

The tax deferral you enjoy in your IRA or 401(k) cannot go on forever. The IRS ensures this money will eventually get taxed by requiring you to make withdrawals over your lifetime, beginning at age 70½. Making the withdrawals is… Read More

Employee stock options are a very valuable form of employee compensation. They are also one of the most complicated. To develop a strategy for cashing them in, you must consider many factors, including the tax consequences of exercising, the outlook… Read More

There are three primary goals in estate planning, 1) to promote family harmony, 2) to ensure that your estate passes according to your wishes, and 3) to avoid estate taxes. Trusts are often used to meet one or more of these goals. However, trusts can make… Read More

The shift from company-provided pensions to self-funded retirement plans has created a unique estate planning problem. When people retired with pensions, there was little estate planning necessary because the pension died with you. Today, people accumulating large pre-tax balances for… Read More

We often get questions from our clients about buying real estate in their IRAs, such as: Can we help our children buy a home using IRA money? Can we buy a vacation home in an IRA? Can we buy an… Read More

Our planning article in this issue addresses options you face when you consider moving into a retirement community. But first you have to sell your home. What are the tax consequences of that sale? Yes, you may have taxes to… Read More

With the incredible appreciation in real estate values over the past few years, many people are wondering about the tax consequences of selling their homes. Yes, you may have taxes to pay. But, due to a very generous tax law… Read More

It is certainly not clear whether privatization of Social Security will become a reality. It is also not clear how this privatization will affect your overall tax bill. However, from the proposals currently being considered, it appears that changes to… Read More

As a result of the Economic and Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), our federal estate tax system has changed greatly. As we noted in our Spring 2004 newsletter, changes in federal estate taxes caused an unexpected… Read More

Individuals who wish to make a commitment to philanthropy often consider establishing a private foundation. But Donor-Advised Funds offer significant advantages with no start-up costs, higher tax deduction limits, and less paperwork and expense. These funds are charitable organizations set… Read More

In filing your taxes this year, you may have been hit with a nasty surprise — Alternative Minimum Tax (AMT). That’s because more and more people are being affected by this once esoteric tax. The AMT is a parallel tax… Read More