"Surprises Are for Birthdays, not Tax Time" Is Message of Mid-Year Tax Savings Report from Gerber & Co. CPAs

In the Mid-Year Tax Savings Report, Gerber & Co. CPA's principals stress the importance of taxpayers reviewing their 2012/2013 tax situation now to avoid paying unnecessary taxes due to the ever-changing tax code. End Quote

New tax rules every year has become a given, but 2012 will be more complex as the expiration date for Bush-era tax cuts is December 31.

(1888PressRelease) June 22, 2012 - Los Angeles - In Gerber & Co. CPAs' recently released Mid-Year Tax Savings Report, the firm's principals stress the importance of taxpayers reviewing their 2012/2013 tax situation now to avoid paying unnecessary taxes due to the ever-changing tax code.

"'Surprises are for birthdays, not tax time' encapsulates our advice to our clients as we approach the mid-point of 2012," said Jonathan Gerber, managing director of Gerber & Co. CPAs. "New tax rules every year has become a given, but 2012 will be more complex as the expiration date for Bush-era tax cuts is December 31."

Taxpayers who review their tax situation six months before the end of the year will have the time to plan for various scenarios, which is especially important with an economy struggling to recover as well as uncertainty about what Congress will do and the outcome of the 2012 elections. A vital element of such planning is to look at 2012 and 2013 together if taxpayers expect to reduce the tax they'll owe for both years to the very minimum.

According to the Mid-Year Tax Savings Report from Gerber & Co., three review strategies to be considered are controlling taxes on investments, managing the tax bracket and timing deductions for maximum benefit. For example, taxpayers may want to be prepared for the scenario of the Bush-era tax cuts not being renewed, which would increase capital gains from 15 percent to 20 percent. In that case, taking any possible gains before the end of 2012 may be prudent since the tax rate would be lower.

Gerber says taxpayers can have some control over their tax bracket by making maximum contributions to their retirement plans with pre-tax dollars. He adds that a very good reason for reviewing 2012 and 2013 taxes now is the opportunity to "bunch" expenses. State income taxes, routine health care and charitable contributions are just three of the many expenses that could be advantageous to pay during 2012, or conversely delay until 2013. It all depends on each individual taxpayer's unique situation.

Gerber & Co.'s Mid-Year Tax Savings Report also arms taxpayers with an overview of the major tax changes for 2012, including the potential expiration of the Bush-era tax cuts. For example, the top tax bracket will increase from 35 percent to 39.6 percent; the marriage penalty will increase; and the estate tax exemption will be cut from $5,120,000 to $1 million.

Other significant tax changes include the end of the two-percent payroll tax cut for employees. Of the various tax extenders that will also expire, businesses will lose the R&D tax credit, students/families will no longer be able to deduct as much as $4,000 for higher-education expenses, and contributions to charities from IRAs will no longer be tax-free.

"We also address the tax situation of businesses in our Mid-Year Tax Savings Report," said Michael Stone, founding director of Gerber & Co. CPAs. "Business owners also deserve to experience 'surprises on their birthdays, and not at tax time.' Many business owners may be surprised to learn that reducing their business income tax may have a more beneficial financial impact than increasing sales or lowering costs."

Stone further explained that a business retains the total amount of taxes saved. Whether a business generates more profits or cuts overhead, some portion of it will be paid in taxes. This business tax-savings strategy is even more significant for companies with a low-profit margin, compared to those operating at a higher margin.

Another important element of mid-year tax planning for business owners and families in general is their children's summer jobs. Most teenagers will become employees and have taxes withheld from their pay; however, some may choose to mow lawns or offer similar services that would categorize them as self-employed. Parents can provide their teens with an excellent financial lesson by discussing the differences and making the right choices together.

Hiring children to work in family-owned businesses may be a tax-savings advantage for parents. Their child's income is tax-deductible to the business, as with any wages, and income the parents may have had to pay at a higher tax bracket is now paid to the child who will be at a lower tax bracket. The same strategy could reduce or even eliminate the kiddie tax, as it relates to college-aged children.

"The wisdom of mid-year tax planning can't be overemphasized," said Gerber. "Taxpayers will gain greater peace of mind for the remainder of the year, won't be harried and hurried at the end of the year and will have tax plans in place. After 12/31 it's all post-mortem and almost all planning options are off the table. In addition, cash needs for taxes can be anticipated and planned for in advance."

Visit www.GerberCo.com for more information.

The suggestions in this press release and the Gerber & Co. CPAs Mid-Year Tax Savings Report are for general information purposes. Taxpayers should seek the advice of a certified CPA to determine the best tax planning for their unique situation.

About Gerber & Co. CPAs: Opened in 1986, Gerber & Co. CPAs serves the financial needs of family businesses and high-net-worth individuals with tax, family office, audit, attest and forensic accounting services. The firm has grown to become an Independent Alliance Member of BDO Seidman, the 5th largest CPA group in the world. The Los Angeles Business Journal named Gerber & Co. one of the top LA accounting firms in 2012. Visit www.GerberCo.com for more information.

###

Visit Gerber And Co. Cpas Website

space