Sunday, November 9, 2014

5 year-end tax strategies to put in place now

Darla Mercado for Crain's Wealth writes: With fewer than eight weeks left in the year, it's time to gear up for year-end tax planning.
This year was a painful one for many high-net-worth taxpayers as they contended with higher levies on their 2013 returns from the American Taxpayer Relief Act of 2012. “When ATRA was enacted on the first day of 2013 and the new tax rates came in, people didn't understand how different it was going to be,” said Gavin Morrissey, senior vice president for wealth management at Commonwealth Financial Network. “It was an expensive lesson learned by everyone.”
To refresh your memory, the new law had the greatest effect on the highest earners: single filers with taxable income over $400,000 and married-filing-jointly taxpayers with taxable income over $450,000. Those two groups are now subject to a top marginal income tax rate of 39.6%, as well as a top marginal tax rate of 20% on long-term capital gains.
Those with more lower incomes, beginning at $250,000 for singles and $300,000 for married-filing-jointly, face the phaseout of personal exemptions and itemized deductions — known among tax geeks as “PEP and Pease.” 

Additional levies await singles with $200,000 and married couples filing jointly with $250,000 in income: They face a 3.8% surtax on the lesser of income over those thresholds or net investment income, and a 0.9% Medicare tax on wages over those thresholds.
This year, the levy might be even worse, because assets have climbed in value. The S&P 500 is up about 10% year-to-date, setting the table for potential capital gains taxes.
Here are just a few tips to avoid being scalped: [snip]  The article continues @ Crain's Wealth, click here to continue reading....


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