Ugg! New tax issues for 2013

Posted on December 13, 2012 by Nancy Hecht

Nobody likes dealing with taxes. Just when we have gotten used to the current rules, change rears its ugly head. Here are a few changes to plan for in 2013.

Currently you can contribute $5000 to a Flex Spending Account. This will be reduced to $2500 as of January 2013. Each person may have their own FSA and contribute the $2500 even if your employer makes a contribution.

If your AGI is above $250,000 for married filing joint, you will now enjoy an additional 3.8% tax on your net investment income as a Medicare funding tax.

Still alive? Well the cost of living past 12/31/12 just got higher. The estate tax exemption will change as of January 1, 2013 from $5,120,000 to $1,000,000. The current maximum estate tax rate will change from 35% to 55%!

If any of these changes will apply to you, hire a tax pro. With changes like this – and more to come, professional help will keep you out of hot water.

Disclosures:http://www.hechteffect.net/?page_id=31

It is harvesting time – or is it?

Posted on December 4, 2012 by Nancy Hecht

The end of the year is the time when we all look at our tax picture to see what can be done to lower what we might owe. Harvesting capital gains, especially when we know the tax rates for capital gains most likely will be higher next year, is one approach. But think twice before you sell.

One question to ask is: “Can you afford to shrink your capital, and therefore future wealth?” The answer is to harvest your gain up to a point. Look at any investment losses you may have + $3000 of ordinary income over that loss amount.

By using this approach, you can reduce your current tax bill but not at the expense of your future.

Disclosures:http://www.hechteffect.net/?page_id=31