John Rafal for Forbes writes: To say that many people got a rude awakening in the last six weeks courtesy of the Internal Revenue Service would be an understatement. Taxes for ordinary income went from a maximum of 36% to 39.6% — plus a Medicare add-on of 1.45% and health-care reform surtax of .9% for a total of 41.95%. Taxes for long-term capital gains and qualified dividends increased from 15% to 23.8%, including 3.8% for the health-care-reform surtax. Taxable bond interest went from 35% to 43.4%, as did short -term capital gains and non-qualifying dividends. The overall effect was a general tax increase of about 7% to 9% depending on where your income falls.
These changes caught many people unaware. The result: a larger tax bill that left people digging into cash reserves or liquidating assets. For others, there was the additional penalty for underpayment.
You already know the bad news about taxes. The good news (yes, there is some): There are investment opportunities and vehicles worth exploring that could lower your 2014 tax burden. But you must be informed, proactive, and willing to engage both your financial advisor and CPA well before the end of the year to get the maximum benefit appropriate for your situation.
To avoid being caught by surprise next year, I suggest you explore the following four strategies: [snip] The article Continues @ Forbes, click here.
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