What We Know So Far.... | Tax Tip of the Week | No. 155

Watch Out!  2013 Taxes Are Coming!

Little publicized, but effective and starting in 2013, as a part of the Patient Protection and Affordable Care Act of 2010, enacted March 23, 2010, there will be a new tax of 3.8% applied to “net investment income."  This new tax would apply to taxpayers with taxable incomes in excess of $200,000 ($250,000 for married filing joint return). Net investment income is defined as investment income less allocable expenses. Investment income includes income from Interest, Dividends, Annuities, Royalties, Rents, and net Capital Gains from the Disposition of Property (unless property is used in a Trade or Business that is NOT a Passive Activity). We worked on some projections for a client with a large capital gain expected in 2013 and beyond.  It was not a pretty picture unless the law is changed by Congress before the end of this year.  Also, the long term capital gains rate will rise to 20% in 2013. Good tax planning will require proper timing of capital gains which could save thousands of dollars in taxes. We expect that Congress will enact more new tax rules late in 2012.  We will keep you posted. Give us a call to discuss how we can save you taxes if you are in this situation.You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt - the guy behind TTWTax Tip of the Week Video Series:http://youtu.be/BlhqUiVEsJo...until next week.