Cliff Morgan with the Strategic Wealth Advisory Group has some end of the year tax tips to help people understand what they can do now to position themselves financially for 2013.
Last Minute Tax Planning
1 - Capital gains rates are set to increase from 15 to 20 percent.
2 - Also, be aware that starting in 2013, a new 3.8 percent Medicare tax on unearned income, including interest, dividends and capital gains, will take effect. So cashing in these investments may make sense in the proper situation.
3 - Some college credits are expiring but there are over 153 different strategies for families with college students.
4 - Set up IRA and Roth IRA accounts before December 31st (Contribution limits for 2013 increase to $5,500. If you are age 50 or older, you can put even more. In 2013, you can add $1,000 to your contribution amount.)
5- Completing Roth conversions this year may save you a significantly
6- Gift generously before the end of the year.
7- Start creating your 2013 tax plan, because taxes are going up! 2013: What's on the Schedule (but not certain)
We know that, as of December 2012, the following is on the docket for 2013:
A return to federal income tax rates of between 15% and 39.6 %
Elimination of qualified dividend income (QDI) preferred tax rates
A return to $1 million for estate and gift exemptions
Elimination of American Opportunities Credit