Important estate and tax planning numbers to know

I thought it may be helpful to provide some numbers and figures for 2007 that will probably not change significantly in 2008. Nevertheless, the following is a list of important numbers relative to every person’s plan:

1. Maximum capital gains rate (long-term): 15%
2. Maximum capital gains rate (short-term): Ordinary income rate of taxpayer
3. Maximum Social Security benefit: $2,116 per month (for an individual who reaches full retirement age in 2007)
4. Income tax threshold on Social Security benefits (single individual): Minimum 25,000
5. Married individual filing joint return: $32,000 (threshold)
6. Social Security Medicare tax: 1.45%
7. Retirement Plan Contributions: Maximum to be deferred $15,500
8. Catch-up contribution if 50 or older: $5,000
9. Maximum annual contribution to a defined contribution plan: $45,000
10. IRA required distributions: Must begin by April 1 following year the IRA owner turns 70½
11. Roth IRA required distribution: Distribution required only after death of the IRA owner
12. Estate tax limitations for leaving to spouse who is a United States citizen: Unlimited
13. Single individual: $2,000,000 (estate tax exemption)
14. Amount a person may gift annually without filing gift tax returns: $12,000 to unlimited number of donees
15. Amount of gift which may be given without any gift tax: $1,000,000 plus annual exclusions
16. Income tax standard deduction:
    Single person $5,150
    Married couple $10,300
    Head of Household: $7,550
    Married filing separately: $5,150
17. Limitation before attaining 28% for income taxes:
    Single person: $77,100
    Married filing jointly: $128,500
    Head of Household: $110,100
    Trust and estates: $5,000

When reviewing these figures, it is important to contact your financial advisor and accountant to ensure that you understand the relationship between the numbers and your tax status for this year as well as next year, so that pre-planning may be attended to.

By: Hyman G. Darling, Esquire