Phew! The ‘fiscal crisis’ was averted … sort of. And your prize? It will take up to six weeks longer for the IRS to configure their systems to accept tax fillings and process refunds. If your clients were expecting the cash to use for a down payment on a house, or some other useful purpose, they will have to wait. But they don’t have to wait for good advice … from you! Take advantage of this uncertain time to pass along key information to your clients.
The tax implications of the ‘fiscal cliff’ are a great way to inform your clients and add value to the services you provide as a financial advisor. One of AUM in a Box’s strengths is leveraging and aggregating information to provide you with the most useful information on sales, process, operations and financial planning. Typically, we generate our own content and reference top-notch resources around the web. But, we know ourselves too well to venture into the unknown, particularly when it comes to taxes. That said, below are our top content choices from other sources who have a grasp on the repercussions of the recent ‘fiscal cliff’ solutions.
- The stock market certainly was happy about the ‘fiscal cliff’ deal; however, most employees are losers. Plus, the overall economy, by most accounts, will lose half a percent of growth due to higher Social Security taxes. Read more in “Winners and Losers From the Fiscal Cliff Deal.”
- Upper income earners (individuals earning more than $400k and joint filers over $450k) face a permanent hike in their marginal tax rate to 39.6%. Additionally, for those same definitions of upper income earners, taxes permanently rise on capital gains and dividends from 15% to 20%. More details can be found in “The Winners and Losers in the Fiscal Cliff Deal.”
- There are changes on tap for 401(k) taxes. Financial advisors can take advantage of this insight and plot a course for clients to maximize current and retirement cash flow. Read more in, “Fiscal cliff bill would reduce 401(k) taxes, ease fund transfers.”
- Last, but certainly not least, for a dry but comprehensive read of all the tax changes, read “Congress passes fiscal cliff act.”
The ‘fiscal cliff’ is hardly over. The $110 billion in the spending cuts that were slated for January 1, 2013 were just kicked down the road. That next deadline of March 1, 2013 is on the horizon and who knows what the future will bring. Markets will face similar returns in just two months as the deal that was just signed fails to address the spending and borrowing sides of the picture. While we wait for the inevitable, do your research and be prepared to offer insights for your clients.
Homework: Read the above links and let us know if there are others you find useful. We welcome the feedback!