Koontz & Associates on Post-Election Tax Policy for Individuals
Summary
As a result, higher-income individuals must decide whether to wait or take advantage of current rates now through accelerating income, postponing deductions, triggering capital gains or completing sales/acquisitions, and having closely-held corporations declare dividends before the end of 2012.As a result, higher-income individuals can consider such strategies as accelerating long-term capital gain, which has the certainty of being taxed at 15% maximum in 2012 or increase carryover losses into potentially higher rates in years after 2012.As a result, higher-income individuals must decide whether to wait or take advantage of current rates now through accelerating income, postponing deductions, triggering capital gains or completing sales/acquisitions, and having closely-held corporations declare dividends before the end of 2012.No single factor automatically triggers AMT liability, but some common factors are itemized deductions for state and local income tax, miscellaneous expenditures and home equity loan interest, and changes in income from installment sales.For the past two years, the employee share of Old Age, Survivors and Disability Insurance (OASDI) taxes has been reduced from 6.2% to 4.2% (with comparable relief for self-employed individuals).Self-employed individuals in a similar position should try to accelerate self-employment income into 2012.When it comes to individual tax extenders, the following have a strong likelihood of renewal:· Higher education tuition deduction· State and local sales tax deduction· Teachers’ classroom expense deduction· Qualified charitable distributions from IRAsJo Ann Koontz is an attorney and CPA practicing in the areas of real estate, business law and taxation.