At Business & Financial Solutions, our goal is to provide the best solutions to excessive taxes. Ideally, we prefer to work with clients quarterly for the purpose of tax planning. Visits from clients once a year during tax season is generally not enough. Some of the solutions to tax avoidance must be taken throughout the year, as circumstances change. This is true often when it comes to planning for profit from investments, and capital gains tax.
There are several new tax laws and provisions to be aware of as we head into the 2013 tax season, but one of the most important ones is the change that is taking place when it comes to capital gains tax rates for individuals businesses and estates. Due to new fiscal cliff legislation, capital gains & dividend tax rates are increasing from 15% to 20% for singles earning over $400,000 and couples earning over $450,000. Additional changes include:
In the areas of capital gains, our services address taxpayers who may have problems with the 2013 tax preparation if they did not adequately prepare for this through effective tax services. Last year’s historically low capital gains tax rate of 15% has increased to higher rates that went into effect on Jan. 1, 2013.
The 15% top capital gains tax rate went up to 20%. Higher-income earners have to tack on another 3.8% (the net investment income surtax). This is something that should have been looked at before year-end, and services should be obtained to meet upcoming needs. Taxpayers that do not consult with professional services will be in for an unpleasant surprise when filing upcoming income tax returns.
There are ways to exploit the 0% rate while you’re alive. Those in an ordinary income tax bracket of 15% or below can sell stock at a 0% gains rate. For 2013 a couple can have up to $72,500 and a single up to $36,250 in taxable income and still be in the 15% ordinary income bracket. Add in the standard deduction and personal exemptions, and that translates into an adjusted gross income of up to 92,500 for a couple and $46,250 for a single filer.
Take enough gains to fill up that 15% bracket. If you’re in a high bracket but your adult children or parents aren’t, consider giving them appreciated stock. You can give $14,000 a year in cash or property each to as many individuals as you’d like without eating into your lifetime gift/estate tax exemption. The recipient of your stock gift takes on your basis—and later sells at the 0% rate.
Business & Financial Solutions has local offices in Frederick and Rockville. Our firm can provide services that help you avoid unnecessary taxes through effective oversight. We offer solutions within the tax laws that provide results for you, as the taxpayer, while avoiding complications with the Internal Revenue Service.
In addition to planning for estates, Business & Financial Solutions tax preparers can assist you with the preparation of estate returns, forms 1041 and form 706, as well as your state estate returns. Our tax preparers are efficient and timely.
Visit us in Frederick (Frederick County) or Rockville (Montgomery County) for your free consultation. Our services are designed to create solutions to problems with estates and capital gains.