It’s the time of the year when investors who hold mutual funds in taxable accounts begin to brace for a potential nasty surprise.
Do you ever leave for vacation, only to be unable to escape a nagging feeling that you forgot to turn off the oven or lock the front door? Plenty of pre-retirees experience just such angst when they worry that they have overlooked a major tax issue when saving for retirement. Here are three things to remember:
Small business tax expert Jean Murray recently posted important reminders for owners of S Corporations based on the results of two recent tax court cases where the IRS ruled on S Corp owners not taking salaries. In one case the owner reported a net income for himself as president but didn’t issue a W-2 or report income from his S Corp.
Between the 15% capital gains tax increasing to 20% for those in the top tax bracket and the 3.8% Medicare surtax on passive investment income some investors are shouldering an 8.8% increase in capital gains tax. And that makes tax-aware investing more important than ever.
The new 3.8% surtax on unearned income that took effect on January 1 2013 applies to individuals with Modified Adjusted Gross income (MAGI) in excess of $200000 and couples with MAGI in excess of $250000. Of course the tax tail should never wag the dog but here are some strategies that might help you minimize the tax bite:
On January 2 2013 President Obama signed the American Taxpayer Relief Act of 2012 also known as the Fiscal Cliff Bill into law. While tax rates grabbed all the headlines the bill also included some good news for charities – and for philanthropically inclined Individual Retirement Plan (IRA) owners.
Amid intense political drama Congress passed the American Taxpayer Relief Act on New Year’s Day to avert massive tax increases for nearly all earners that were slated for January 1st. The best comment I’ve read thus far on the legislation comes from David Lifson an accountant at Crowe Horwath in New York.
With all the talk of higher taxes when the Bush tax cuts expire at the end of the year it’s important not to become so focused on future tax policy that we overlook some short-lived opportunities.
One of life’s certainties — taxes — is a little less certain in 2012. It’s increasingly unlikely Congress will address the expiring Bush tax cuts before the November elections. Instead the debate will be left to a lame-duck Congress or even pushed into 2013. That’s not great timing for tax planning.
It may have seemed a ways off when this provision was first introduced into the tax code but starting in 2013 couples filing jointly with more than $250000 of Modified Adjusted Gross Income (MAGI) ($200000 for single filers) will owe a 3.8% Medicare tax on the lesser of net investment income—including interest dividends capital gains annuities rents and royalties—or