We are advising our clients to plan now for the massive tax changes on the horizon for 2013. There are important steps they can take to protect their interests and preserve assets. Your CPA can provide essential tax tips and tactics to give you the tools to develop solid plans that take into account:
- Individual income tax rates – going up.
- Long-term capital gains rates – also going up.
- Estate assets over the $1 million exemption – taxed at 55% rate.
- The gift and estate tax exemption – down from $5.12 million to $1 million.
- Taxpayers whose income exceeds the threshold amount will be subject to a 3.8% Medicare surtax on net investment income. Individuals, trusts and estates in the highest 2013 bracket of 39.6% will have a 43.4% marginal rate.
We will know after the election if the politicians advocating and promoting higher taxes will maintain the political power to prevent the repeal of these tax planning complications.
Unfortunately, you do not have the luxury of waiting the November election out. The prudent course of action is to prepare for the worst-case scenario. Now is the time to understand what’s at stake and to make intelligent decisions. In particular, the change in the gift and estate tax exemption could lead to significant losses of wealth. Your CPA can work with you to determine the best options for your unique situation.
I have touched on only a few of the areas to be considered. It is an election year, and Congress is highly polarized. There will not be substantial new tax laws passed by year-end. You and your CPA should act now.
