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Brought
to you by:
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| Hurlbut Insurance Services
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About Our Firm:
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Bringing you 39 years of experience to help meet your needs in the areas of life insurance, health insurance, disability insurance, long term care insurance, cancer insurance, fixed annuities, group insurance and employee benefit plans.
You may also want to check out HEB Health Insurance for no obligation health insurance quotes.
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| QUOTES from
the
Masters... |
| On Opportunities |
On Focus |
| "A
pessimist sees the difficulty in every opportunity; an optimist sees
the
opportunity in every difficulty." -- Sir
Winston Churchill
"The
foolish man seeks happiness in the distance; the wise grows it under
his
feet." -- James Oppenheim
"When
one door closes another door opens; but we so often look so long and so
regretfully upon the closed door, that we do not see the ones which
open
for us." -- Alexander Graham Bell
"There's
no way you can look into the game of life and determine whether or not
you'll get that big break tomorrow or whether it will take another
week,
month, year or even longer. But it will come!" -- Zig
Ziglar |
"Focused
mind power is one of the strongest forces on earth." -– Mark
Victor Hansen
"Above
all be of single aim; have a legitimate and useful purpose, and devote
yourself unreservedly to it." -- James
Allen
"What
this power is I cannot say; all I know is that it exists and it becomes
available only when a man is in that state of mind in which he know
exactly
what he wants and is fully determined not to quit until he finds it."
-- Alexander
Graham Bell
"To
do two things at once is to do neither." -- Publilius
Syrus
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Reduction in
Capital Gains and Dividend Taxation
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The
2003 Tax Act (Jobs and Growth Tax Relief Reconciliation Act of 2003 -
JGTRRA)
was signed into law in May 2003. The capital gains and dividend
taxation
provisions of the 2003 Tax Act, scheduled to expire at the end of 2008,
were extended through 2010 by the 2005 Tax Act (Tax Increase Prevention
and Reconciliation Act - TIPRA).
As
is typical of recent tax legislation, the 2003 and 2005 Tax Acts offer
tax relief to individuals, but do so through a variety of complex
provisions
that include retroactive, temporary and phased-in/ phased-out effective
dates. While some of these provisions may not apply to you, other
provisions will and you may want to revise your planning to take full
benefit
of those provisions.
Today's
topic
is the reduction in taxes on capital gains and dividends. If you
would like additional information on this topic, please call my office.
Reduction in Long-Term
Capital Gains Tax Rates
A capital
gain results when an asset is sold or
exchanged
for more than its cost basis. Capital gains realized on assets
held
for one year or less are short-term
capital
gains and are taxed at ordinary
income tax rates. Long-term
capital gains resulting from the sale or
exchange
or an asset held more than one year, however, receive
more favorable tax treatment.
Prior
to the passage of the 2003 Tax Act, the maximum long-term capital gains
tax rate was 20% (10% for those in the 10% and 15% income tax
brackets). The
2003 Tax Act reduced the maximum long-term capital gains tax rate from
20% to 15% for capital gains realized on or after May 6, 2003 and
through
December 31, 2008.
For
taxpayers in the 10% and 15% tax brackets,
the long-term capital gains rate was reduced from 10% to 5%
for capital gains realized on or after May 6, 2003 and through December
31, 2007, and to zero percent in 2008.
Capital
gains taxes were scheduled to return to the rates in effect prior to
the
passage of the 2003 Tax Act in 2009. As part of the 2005 Tax Act,
however, Congress extended the lower
capital
gains tax rates through 2010.
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For
Long-Term Capital Gains Realized:
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| Tax
Rates: |
Before
05/06/03
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After
05/05/03 through 2007
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2008
through 2010
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In
2011 and later
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| Maximum Tax
Rate |
20%
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15%
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15%
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20%
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| Tax Rate
(10% and 15%
tax brackets) |
10%
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5%
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0%
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10%
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Planning
Notes:
| 1. |
The "kiddie tax"
requires
that the unearned income, such as dividends and capital gains, of a
child
under a specified age be taxed at the parents' tax rate, which is
usually
a higher tax rate. Prior to passage of the 2005 Tax Act, the
"kiddie
tax" applied to children under age 14, meaning that the transfer of
appreciated
assets to children age 14 and older (and not subject to the "kiddie
tax")
who were in the 10% tax bracket could result in overall tax savings,
since
gain on the child's sale of appreciated assets was taxed at just 5%
(and potentially
at 0% in 2008). The 2005 Tax Act, however, increased the "kiddie
tax" age limit to under age 18 beginning in the 2006 tax year.
The age limit was raised again in 2007 so that, effective with the 2008
tax year, the "kiddie tax" age limit is under age 19, or under age 24
for full-time students whose earned income is less than half of their
own support. This
means that families who had planned to sell a child's college stock
portfolio
in 2008 in order to take advantage of the zero capital gains tax rate
cannot
benefit from this zero rate unless the child is at least age 19 in 2008
or age 24 if a full-time student, or unless the parents are in the 10%
or 15% tax bracket. |
Reduction in
Dividend
Tax Rates
Prior
to the passage of the 2003 Tax Act, dividends were taxed at ordinary
income
tax rates. With the passage of the 2003 Tax Act, dividends
paid by a domestic or qualified foreign corporation to individual
shareholders
are taxed at the new lower capital gains tax rates
(15% or 5%). Beginning on January 1, 2009, dividends were
scheduled
to again be taxed at ordinary income tax rates. The 2005 Tax Act,
however, extended use of the lower
capital
gains tax rates for dividends received by individuals through December
31, 2010.
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For
Dividends Received by Individuals:
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| Tax
Rates: |
Before
01/01/03
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After
12/31/02 through 2007
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2008
through 2010
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In
2011 and later
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| Maximum Tax
Rate |
Ordinary
income tax
rates
|
15%
|
15%
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Ordinary
income tax
rates
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| Tax Rate
(10% and 15%
tax brackets) |
Ordinary
income tax
rates
|
5%
|
0%
|
Ordinary
income tax
rates
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Planning
Notes:
| 1. |
The individual
shareholder
must own the dividend-paying stock for at least 60 days in the 120-day
day period surrounding the ex-dividend date to receive the favorable
tax
rate. |
| 2. |
Generally speaking,
the
15% top rate makes dividend-paying stocks more attractive from a tax
standpoint
than investments that pay out ordinary income, such as REITs and
taxable
bonds. Tax treatment, however, should not be the sole determining
factor in investment selection. |
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| MESSAGES
from
the Masters... |
ACTION
VS SELF-DELUSION by Jim Rohn
Knowledge
fueled by emotion equals action. Action is the ingredient
that
ensures results. Only action can cause reaction. Further,
only
positive action can cause positive reaction.
Action.
The whole world loves to watch those who make things happen, and it
rewards
them for causing waves of productive enterprise.
I stress
this because today I see many people who are really sold on
affirmations.
And yet there is a famous saying that "Faith without action
serves
no useful purpose." How true!
I have
nothing against affirmations as a tool to create action. Repeated
to reinforce a disciplined plan, affirmations can help create wonderful
results.
But
there is also a very thin line between faith and folly. You see -
affirmations
without action can be the beginnings of self-delusion. And for
your
well being, there is little worse than self-delusion.
The
man who dreams of wealth and yet walks daily toward certain financial
disaster
and the woman who wishes for happiness and yet thinks thoughts and
commits
acts that lead her toward certain despair are both victims of the false
hope which affirmations without action can manufacture.
Why?
Because words soothe and, like a narcotic, they lull us into a state of
complacency. Remember this: TO MAKE PROGRESS YOU MUST
ACTUALLY
GET STARTED!
The
key is to take a step today. Whatever the project, start TODAY.
Start clearing out a drawer of your newly organized desk...today.
Start setting your first goal...today. Start listening to
motivational
cassettes...today. Start a sensible weight-reduction
plan...today.
Start calling on one tough customer a day...today. Start putting
money in your new "investment for fortune" account...today. Write
a long-overdue letter...today. ANYONE CAN! Even an
uninspired
person can start reading inspiring books.
Get
some momentum going on your new commitment for the good life. See
how many activities you can pile on your new commitment to the better
life.
Go all out! Break away from the downward pull of gravity.
Start
your thrusters going. Prove to yourself that the waiting is over
and the hoping is past -- that faith and action have now taken charge.
It's
a new day, a new beginning for your new life. With discipline you
will be amazed at how much progress you'll be able to make. What
have you got to lose except the guilt and fear of the past?
Now,
I offer you this challenge: See how many things you can start and
continue in this -- the first day of your new beginning.
To
Your Success,
Jim
Rohn
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