Retirement, taxes and wealth creation are hot topics over here at Smarter Women CO!!! Just a head’s up about the end of time and your tax responsibilies…
December 2012 is an important month. December 21 is slated as the end of the world according to Mayan Calendars. Whether this is correct or not, December 31 is the end of the Bush Tax Cuts. What does this mean for you?
The legal fight is over, and now implementation begins for the Affordable Care Act. State officials are scrambling to meet regulatory deadlines for establishing insurance exchanges, while critics of the law continue to push back against requirements for expanded Medicaid coverage. However this ends, there will pluses and an equal amount of minuses for all of us.
Taxes may be one of the most critical and yet overlooked factors in wealth creation over time as they can erode even the best returns. We all work hard for our money. If we all made the same amount, the person getting ahead would be someone who took advantage of the legal ways of keeping more of our income and making it work harder. Making strategic changes can help you keep more of your income. There are ways to grow your money tax deferred and take out income tax free.
Unless Congress takes action and the president goes along (whoever that is), rates will rise for everyone — not just “the rich.” Specifically, the existing 10% bracket will go away, and the lowest “new” bracket will be 15%. The existing 25% bracket will be replaced by the “new” 28% bracket; the existing 28% bracket will be replaced by the new 31% bracket; the existing 33% bracket will be replaced by the 36% bracket; and the existing 35% bracket will be replaced by the 39.6% bracket (this bracket has been as high as 90% in the early 1950’s-there is room for it to go higher).
Retirement and taxes
Right now, the maximum federal rate on long-term capital gains and dividends is only 15%. Starting next year, the maximum rate on long-term gains is scheduled to increase to 20% (or 18% on gains from assets acquired after Dec. 31, 2000, and held for over five years), and the maximum rate on dividends will skyrocket to a whopping 39.6%.
Currently, the standard deduction for married joint-filing couples is double the amount for singles. Starting next year, the joint-filer standard deduction will fall back to about 167% of the amount for singles. Bottom line: lots of lower and middle-income income couples will face higher tax bills due to a harsher marriage penalty.
A phase-out rule could eliminate up to 80% of a higher-income individual’s itemized deductions for mortgage interest, state and local taxes, and charitable donations.
What this all means is that you need to lower your tax bill and keep more of your hard earned dollars.
If you would like to learn more about taxes, retirement and wealth creation for women, give me a call today! 303-919-1020