Capital gains and losses: For 2013 and thereafter, the American Taxpayer Relief Act of 2012 (ATRA) increases the 15% maximum tax rate for long-term capital gain to 20% for single filers with income above $400,000 and joint filers above $450,000. In addition, the top income tax rate for ordinary income is raised from 35% to 39.6% for these same tax filers. Keep in mind that short-term gains from assets held a year or less are taxed at ordinary income rates. Now is a good time to assess your situation. Depending on the results, you might be inclined to harvest tax losses to offset gains or vice versa. Remember that capital losses for the year can offset capital gains, plus up to $3,000 of ordinary income. Any remaining loss is carried over to the next year. Note: Investment decisions are further complicated by the new 3.8% Medicare surtax. Beginning in 2013, this tax applies to the lesser of your “net investment income” or modified adjusted gross income above $200,000 for single filers and $250,000 for joint filers.
Posted on: Thu, 22 Aug 2013 19:26:26 +0000
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