Take Advantage of Tax Breaks Before 2011 Comes to an End
November 3, 2011
Politicians in Washington continue to battle on how to reduce the nation's $1.3 trillion federal budget deficit.
President Obama is calling for a combination of spending cuts and tax increases for the wealthiest Americans,
while Republicans are pushing for spending cuts along. Because of this stand off, it's essential to take
advantage of available tax breaks and incentives before the year is out.
Under legislation passed last year, the Bush-era tax cuts were extended through 2012 with a top rate of
individuals of 35%. In 2013 the top rates are set to revert to pre-tax cut levels of 36% and 39.6% for single filers
with taxable income of more than $200,000 and for joint filers with more than $250,000.
Long term capital gains are currently taxable at 15%, or not at all for people in the two lowest brackets of ordinary
income, 10% and 15%. Those rates are due to reset at 20%, and a 3.8% Medicare tax of investment income is
set to begin.
Conceivably the law could change for 2012 and many experts expect changes for 2013, but experts urge to plan
based on the state of things as they stand right now, and not on what might happen in the future.