This time of year we start talking to our clients about tax planning, but this year things are taking a somewhat different twist. With the November elections still to be determined, and additional parts of the Affordable Care Act going into effect in 2013, below are a couple of new things we’re thinking about this planning season.
Are you considering selling stocks, bonds, or investment real estate at a considerable gain? If so, you may want to consider doing it at the end of 2012, because in 2013, you may find yourself paying an additional 3.8% tax on those gains.
If you own a business, are you considering a bonus for yourself? If so, doing that in 2012 may save you from paying an additional .09% in Medicare tax which goes into effect for certain taxpayers in 2013.
If you’re under age 65, it may pay to push as many deductible medical expenses into 2012 as possible, as less of them will be deductible in 2012.
These are just a few of the items in the wind for the end of this year. If you’re a client of ours, expect to see a tax planning letter with even more ideas in the coming weeks.
The post this week is a quick one. If you extended your personal tax return, it’s due a week from today, with no more extensions available. This deadline tends to sneak up on people.
After that deadline passes, we’ll be turning to year end planning for many of our clients. Taking an hour or two to discuss taxes this fall will make next spring a far less surprising time, and allow us to help proactively plan for year end taxes.
The Alternative Minimum Tax (AMT) is something most people know nothing about. AMT was created in 1982 to assure that high-income individuals didn’t escape paying federal taxes..
The issue is simple: the income level at which the AMT comes into effect wasn’t “indexed for inflation”, that is, it wasn’t designed to increase over time as wages and prices did naturally. The result? Someone who was considered “high-income” in 1982 is considered very middle-class today. That income amount for married taxpayers? $45,000.
Income for AMT is calculated differently than for normal income taxes, and the rates are sky high – 26-28%.
Unless Congress passes a law adjusting that income threshold by the end of the year, the Congressional Research Service estimates 30 million taxpayers will be hit by the AMT – many of them middle income, average people.
We’ll keep an eye on Congress and bring you the latest.
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