Tax

Under the recently enacted Jobs and Growth Tax Relief Reconciliation Act of 2003, generating long term capital gains or acquiring dividend income could be two of your big opportunities to save on taxes. Be aware that the Act of 2003 created “sunset provisions”, however, meaning that the tax rates on both capital gains and dividends may go up again unless congress acts to extend the rates. The lower rates are currently only legislated through 2010.

Consumer Finance

Many home buyers search for a home they want, then apply for a mortgage and hope for the best. A better approach is to find out how much mortgage you can qualify for, then look at homes that you know are within your price range.

You will probably save time, aggravation and money by having your lender tell you the size of mortgage you qualify for and the likelihood that you will be approved. Pre-qualification may also give you added bargaining power with the seller if he knows there will be no delays in closing the deal.

Business

Internal Revenue Code 125 allows an employer to implement an employee benefit plan which allows employees to select the benefit programs they prefer.

Retirement

There is a wide variety of tax-advantaged ways for individuals to save for retirement. Because of their income tax benefits and because IRAs are so easily established, they have become one of the most often used retirement savings vehicles available today. Recent tax laws, however, have created three very unique types of IRAs the Traditional IRA, the Non-Deductible IRA and the newer Roth IRA.

Insurance


If you purchased your home paying less than 20% down, chances are you had to purchase “mortgage insurance” in order to qualify for your loan. A mortgage insurance policy protects the bank in the event they are forced to repossess your house and sell it at a loss. As with most other types of insurance, you pay a monthly premium on top of your monthly mortgage payment for this policy. A mortgage insurance policy provides the means for purchasing a house you may otherwise be unable to afford, due to a limited down payment.

Retirement

If you have existing retirement assets in a traditional IRA, you may want to consider converting those assets to a Roth IRA. Possible benefits of converting include tax-free distributions at retirement, no required minimum distributions at age 70 ½, and leaving income tax-free assets to your heirs in the event of your death.

Retirement

In addition to providing qualified plans to employees, many business owners implement nonqualified alternatives in order to supplement retirement benefits. These selective benefit plans are generally offered to key employees and owners. One popular nonqualified benefit is deferred compensation.

Tax

The federal government imposes a substantial tax on gifts of money or property above certain levels. Without such a tax someone with a sizable estate could give away a large portion of their property before death and escape death taxes altogether. For this reason, the gift tax acts more or less as a backstop to the estate tax. And yet, few people actually pay a gift tax during their lifetime. A gift program can substantially reduce overall transfer taxes; however, it requires good planning and a commitment to proceed with the gifts.

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