Mountain Views News     Logo: MVNews     Saturday, December 15, 2012

MVNews this week:  Page 15



 Mountain Views News Saturday, December 15, 2012 


By Carl Davis, CIMA


A review of your finances before the end of the year 
is always a good practice, and often assessing tax-
saving strategies is part of the process. This year is 
a particularly challenging year to do this because 
of the last-minute negotiations taking place 
around the “fiscal cliff.” This is the combination of 
tax increases and spending cuts at the federal level 
set to kick in on January 1, 2013.

We usually know how tax laws will change as 
we conduct year-end planning, but this year is 
different since many believe that laws currently 
scheduled to go into effect at the start of 2013 will, 
in fact, be altered before or soon after they take 

Changes that could happen

Here is a broad overview of some of the key tax 
changes that are set to take effect at the start of 
2013 unless policymakers in Washington agree to 
a different approach:

• Higher income tax rates will apply to all 
taxpayers (other than corporations). 

• The employee’s share of payroll taxes (in 
this case, the Social Security tax) will return to the 
standard 6.2 percent rate from the 4.2 percent rate 
that applied in 2011 and 2012.1

• Investment income such as capital gains 
and dividends will be subject to higher tax rates, 
and for certain higher-income taxpayers, will be 
subject to a new 3.8 percent tax on net investment 

• Some tax credits and deductions will 
disappear or be limited.

• Estate and gift taxes will rise and apply to 
far more taxpayers.

Consider that the higher your income, the more 
significant the tax changes are likely to be. There 
is speculation that Congress and the President will 
agree on a plan to scale back or postpone many of 
these tax hikes, but it isn’t clear when or if such an 
agreement will occur. 

Timely opportunities to consider now

Making tax-efficient moves before the end of 
the year is particularly challenging given the 
question mark surrounding the tax landscape. 
But uncertainty doesn’t preclude the importance 
of considering steps that can help you be as 
prepared as possible regardless of what comes 
out of Washington. Keep in mind that the “fiscal 
cliff” situation may not be limited to 2012 – the 
following action steps to consider apply to most 
economic landscapes in which consumers are 
anticipating a rise in taxes the following calendar 

Though you should never make financial decisions 
based only on tax efficiency, here are five potential 
moves to consider making now if they fit into your 
overall short-term financial plan:

#1 – Convert retirement savings to a Roth IRA

You can convert some or all of your workplace 
savings plan dollars, if the plan allows, or 
traditional IRA assets to a Roth IRA. Dollars in 
a Roth IRA grow on a tax-deferred basis, and 
withdrawals can qualify for tax-free treatment if 
holding period requirements are met. Since a Roth 
conversion is a taxable event, 2012 may be the best 
opportunity for those who are considering it since 
tax rates for many people are likely to be lower 
in 2012 than they will be in the coming years. 
Another advantage of converting to a Roth is that 
you can change your mind, and “re-characterize” 
the dollars converted back to a traditional IRA 
before October 15, 2013. In short, any decision 
made to convert today is not final, but waiting 
until after the New Year will make the conversion 
subject to potentially higher tax rates.

#2 – Accelerate income

In most years, individuals try to find ways to 
reduce taxable income and accelerate deductible 
expenses. This time, it may make sense to 
accelerate income as much as possible into 2012 
and defer deductible expenses to reduce your 
2013 income, if you have the flexibility to do so. 
One note – higher income people may not want 
to overdo it on deferring deductible expenses as 
new tax policies being considered could limit 
deductions in 2013 and beyond for those reaching 
certain income thresholds.

#3 – Sell appreciated assets

As the law stands today, the tax rate on long-
term capital gains realized when an asset is sold 
(such as a stock or mutual fund) will rise to a 
top rate of 20 percent in 2013. In 2012, the top 
long-term capital gains tax rate is just 15 percent. 
Investment income could also be subject to an 
additional 3.8 percent net investment income 
surtax in 2013 (related to the Affordable Care Act) 
if you reach certain income thresholds, adding to 
the tax burden. There is an important caveat to 
mention – don’t sell an asset simply for purposes 
of potentially reducing the tax impact of the sale. 
You must first determine whether selling the asset 
is a beneficial move for you and makes sense as 
part of your overall financial plan regardless of the 
tax consequences.

#4 – Take advantage of gift tax savings

In 2012, the lifetime gift tax exclusion amounts 
are $5.12 million for individuals or $10.24 million 
for a couple. These rules have not been extended 
beyond 2012, so this may be the best opportunity 
for those with accumulated wealth to reduce 
their estates in such a tax-favorable environment. 
Be sure any gifting is consistent with plans you 
already have and is not done simply due to 2012’s 
more favorable tax environment.

#5 – Accelerate medical expenses into 2012

If you anticipate costly medical procedures and 
can get them completed and fully paid for in 
2012, there may be a better chance for tax savings. 
In 2012, taxpayers who itemize deductions can 
claim unreimbursed medical expenses that exceed 
7.5% of adjusted gross income (AGI). Only those 
expenses that exceed 10 percent of AGI in 2013 
will be deductible. 

As always, any tax-related decisions should be 
made only after consulting with your tax advisor. 
Meeting with a financial professional can help you 
assess financial strategies that are most suitable 
for the uncertain tax environment that exists as 
2012 comes to a close and 2013 begins with new 
changes in place.

1 Self-employed taxpayers face a similar 2 percent 
increase in their self-employment tax rate.

Carl H Davis, CIMA®, CRPC® is a Financial Advisor and 
Vice President with Ameriprise Financial Services, Inc. 
in Los Angeles , CA He specializes in fee-based financial 
planning and asset management strategies and has been 
in practice for 36 years. To contact him at 310-954-2566 
or via email @, or at 10880 
Wilshire Blvd, Los Angeles CA 90024

Brokerage, investment and financial advisory services are 
made available through Ameriprise Financial Services, 
Inc. Member FINRA and SIPC. 

This communication is published in the United States for 
residents of California only

© 2012 Ameriprise Financial, Inc. All rights 
reserved.File # 149053


The apps that are available for Facebook pages make it possible to shop, view 
YouTube channels, sign-up for emails, run contests and so much more right in a 
Facebook page. Here are 5 app ideas, (they are also know as tabs):

1. YouTube Tab: A Facebook page is a great place to promote YouTube videos. There are 
several apps that allow you to feed a YouTube channel into a Facebook page. In the Facebook search 
bar, type in the word “YouTube” and several options will come up under apps. 
2. Guest Book App: If your business is doing email marketing, you might install a Facebook app 
that allows people to join your list. If you use Constant Contact, you can install and customize their 
app in about 5 minutes, find it at 
3. Pinterest App: If you want to showcase your Pinterest presence on Facebook, you might 
install the free Pinterest app at 
4. Shop tab: There are several ways to set up a shopping tab that will feature your products on 
your Facebook page. If you use Amazon, you might install the amazon items app (www.facebook.
com/AmazonItems). Ebay and other carts also have apps for this. If you type in “shop tab” in 
Facebook’s search bar, you will find lots of options. 
5. Custom apps: Once you start adding apps, you might find that you want to build some custom 
apps. For example, we’ve added a custom tab called “The News Room,” (look for it at
hutdogs) it searches the web and pulls in trending news about social media and email marketing. 
These news rooms can be set up for any topic, you just have to decide what type of news would be 
valuable for your audience. 

Depending on the type of business, there are many strategies for adding Facebook apps. These 
Facebook pages are serving as interactive web pages for the businesses that have taken the time to 
customize them. Take a look at your Facebook page and ask yourself if you have interesting tabs/apps 
for people to interact with when they visit your page. Think about the audience you serve and what 
would be interesting to them.

About MJ: MJ and her brother David own HUTdogs, a creative services business that specializes in 
Social Media Education for business owners. Join their conversation on Facebook and get good tips 
and tricks about social media,

Sign up for their upcoming classes and presentations at: 


The latest on Business News, Trends and Techniques

By La Quetta M. Shamblee, MBA


Spread a little cheer with a donation of cash or other useful resources to support a group or 
organization that supports your community. Your gesture of generosity will serve as a much needed 
vote of confidence for the great work they do all year long. Your donation may also qualify for a tax 
deduction if you file an itemized tax return; so you can actually benefit by giving to others.

Any organization that relies on volunteer support to operate some aspects of its programs is always in 
need of donations. Cash is, by far, the most welcomed donation. Most organizations have websites 
accept online donations to make it easy for you to give using a credit card or electronic check. If not, 
just put a check into an envelope and send it to the mailing address posted on their website. If they 
are located within driving distance, they will gladly receive your donation in person.

Non-cash donations should meet two criteria. First, it should be something that they actually need, 
and second it should be something they actually want. With the exception of donating items to thrift 
shops, be sure to check with an organization before donating any used items. Make sure that your 
gift is appropriate and useful, not a convenient way for you to unload worn and obsolete items that 
really belong in the trash. Some agencies have “wish lists” in their newsletter or on their websites.

It is great if you can make a cash donation, large or small. However, theses organizations are in 
constant need of resources to serve their clients and to support the work of staff and volunteers. We 
encourage you to add a local charity to this year’s holiday shopping list. A short phone call or e-mail 
inquiry to determine their most pressing needs is a great place to start. We have prepared a sampling 
of some creative ideas in the following table.

Type of Organization

Sampling of Donation Ideas for Small 

Food Pantry

Bags to package food for clients; Gift certificates 
for 10 pies from a local restaurant

Local Clinic or Hospital

Annual subscription to magazine(s) for the 
waiting areas; potted plants for office area

Local school

Gift certificate(s) for a local office supply or art 
supply store to give to teachers; flash drives for 

Various nonprofit agencies

Small appliance for staff kitchen; one month 
supply of supplies for bathroom(s)