What Does the Future Hold for Federal Taxes?
There is no way to predict what changes will take place in 2012-2013 regarding changes to our Federal Tax system, but financial advisors and financial planners certainly need to be informed on what is being examined. The latest Kiplinger Tax Letter has outlined the president’s proposals:
- Letting the Bush tax cuts expire for those with incomes over $250,000. This will take the highest tax bracket back up to 39.6% in 2013.
- Limiting the value of itemized deductions to 28% for high income filers after 2012 and instituting a surtax on tax-free interest and the value of employer health coverage. Alternatively, imposing a 5.6% surtax on millionaires.
- Rolling back the estate tax rules to 2009 levels, with a $3.5 million exclusion and tax rate of 45%.
- For investment fund managers and others who are paid with a share of profits, taxing them at ordinary income rates instead of capital gains rates.
Which of these, if any, will go into effect? Well, that remains to be seen. But this certainly sets the agenda that will be debated.
To gain an understanding of income tax and issues that are particularly relevant to professionals who work with high-net-worth clients check out our course, Fundamentals of Federal Income Taxation*, and gain the knowledge to advise your client in a more engaging manner.
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