It's midyear, and December is still a long way off - or is it? The bad news is time flies, and year-end will arrive sooner than you think. The good news is you still have time to identify opportunities to minimize your 2013 tax bill and to put plans into action.
The place to start is with an estimate of your 2013 income, sorting income into various categories such as wages, investments, retirement plan distributions, passive income, and active business income. Different tax rules apply to different kinds of income.
For instance, this year you'll pay an additional 0.9% Medicare tax on wages and self-employment income when the combined total of those items exceeds $250,000 on a joint return or $200,000 if you're filing as a single.
Two more reasons: The top tax rate on long-term capital gains is increased this year to 20% when you're in the top ordinary income tax rate (39.6%). And a 3.8% Medicare surtax may apply to net investment income, such as interest, dividends, and capital gains, if your adjusted gross income (AGI) exceeds $250,000 for couples or $200,000 for singles.
Another incentive to do an early income projection is the return this year to limits for higher-income taxpayers on personal exemptions and itemized deductions. These limits apply once your AGI exceeds $300,000 for marrieds or $250,000 for singles.
For guidance in your midyear assessment and tax-savings suggestions suited to your individual situation, contact our office. Put time on your side if you want to manage your tax bill for 2013.