Monday, September 10, 2012

Curve Ahead - Danger - Investment Income and Gains

Under current law, in 2013 high income taxpayers will face a 3.8% surtax on their investment income and gains.  In addition, if the current tax laws are not extended, all taxpayers will face increased taxes on investment income and gains, not to mention higher tax rates on ordinary income.

The 2012 maximum long-capital tax rate may be lower than in 2013, depending on extensions of tax laws enacted years ago.  In 2012, the maximum long-term capital gain tax rate is 15%, but that is scheduled to increase to 20% (18% for assets held more than five years).

Due to the upcoming election, no one can predict what will happen between now and year-end.  But, one thing is certain, you should consider whether to sell your investments in 2012.  Tax rates should not govern your decision.  It also depends on whether appreciation is likely in future years, the need for funds for health, support, or education, and gift tax or estate planning purposes.