Some Financial Thoughts As You Enter 2012
1. For the first time since 2009, the Social Security wage base rose $3,300 to $110,100 for 2012
2. For beneficiaries who are working, there is a loss of benefits as follows:
a. Between ages 62-66: lose $1 in benefits for every $2 earned above $14, 640
b. Turning 66 in 2012, no loss of benefits up to $38,880
c. No earnings cap after reaching full retirement age.
2012 Taxes Affect You??
The $5 million estate exemption expires 12/31/12 and reverts to $1 million if Congress does not act
Top Federal estate tax rate is 35%
Annual gift tax exclusion remains at $13,000 ($26,000 for married couples)
Morningstar released its annual ratings for 529 college-savings plans. To review, go to
Nearly half of respondents in a recent survey incorrectly thought that health insurance,
Medicare or disability insurance will cover long term care costs.
Required Minimum Distribution (RMD):
Taxpayers 70-1/2 and older must take an IRA required minimum distributions. Check with your IRA
custodian for calculations. Remember, you do not need to take an RMD from a Roth IRA (you
already paid the taxes) unless it’s an inherited Roth.
You cannot deduct the value of your time but you can take a write-off for office supplies, postage and
transportation (14 cents a mile – if drive your own car) costs to the place where you volunteer.
Donating cash is always welcome here at CC. However, consider donating those appreciated securities
in your taxable accounts. In addition to the deduction for the gift, you avoid paying the capital-gains
tax and CC gets the full value of your gift, not the amount after your capital gains reduction. You can
then repurchase the shares so your portfolio would remain nearly neutral.
Should one require a steady income, charitable deductions, and potentially lower tax rates, a charitable
remainder trust or charitable gift annuity might be something to consider. As with all financial
decisions, check with your tax attorney/financial advisor before taking action.