Nearly every year, come January 1, there will be a few clients that ask if we can help with their prior year taxes. Unfortunately once the year is over, there is very little we can do to help your tax situation. You can no longer contribute to your 401(k) or a FSA for the prior year. You can not sell securities for a loss or defer capital gains once the year is over.
We generally recommend investors see their tax consultants around October to get a projection of their tax situation for that year. However, in 2013 we highly recommend talking to your C.P.A. in July. This year we have seven tax brackets to contend with: 10%, 15%, 25%, 28% 33% 35% and a new 39.6%. The new 39.6% applies to individuals with taxable income exceeding $400,000; married individuals filing a joint return with taxable income of more than $450,000; those married but filing separate returns who have taxable income of more than $225,000 and individuals filing as head of household with taxable income greater than $425,000.
Even if you do not have income in that range, you may be affected by the Medicare contribution tax of 3.8% on all or some of your net investment income. This will generally affect individuals or head of households with a modified adjusted gross income (MAGI) of more than $200,000; married couples filing jointly with MAGI above $250,000, and those married filing separately with MAGI in excess of $125,000. These same individuals may also see a limit on personal and dependency exemptions and a limit on itemized deductions.
The tax code has become increasingly complicated; therefore, we believe investors should not try to plan for their tax liability on their own. Working with a tax adviser mid-year provides you about five months to make changes to your financial plan that can minimize your taxes without compromising your financial goals.
At Henssler Financial, we believe you should Live Ready, and that includes knowing when you need expert help. If you have questions on your tax strategy, the experts at Henssler are here to help. Contact us at 770-429-9166 or experts@henssler.com.
Disclosures
This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
