Published November 07, 2013
With the end of 2013 right around the corner, now is the time to undertake a bit of tax planning to ensure your liability will be covered come April 15.
Major life events like buying or selling a home or getting married or divorced will bring major tax implications, but there is one major unknown that could bring significant changes: Congress.
There is little one can do about what Congress will decide to change in the final hours of the tax year. We are often surprised (and sometimes not) by what goes down at the last minute and this does not make for good tax planning.
While it’s impossible to know for sure what might be coming down the pipeline from Capitol Hill, some tax experts have sniffed the air and are preparing for some changes.
David Hryck, a renowned tax lawyer to stars and billionaire businessmen with the law firm ReedSmith, says filers can expect changes on deductions and capital gains.
Hryck, who has more than 16 years of experience representing high net worth individuals, is preparing for the following changes to go into effect for 2013 that should be factored in your tax plans:
“Dividends were taxed as capital gains at 15% but the legislation was expiring which would have treated dividends as ordinary income (taxed at 39.6% in the highest bracket); instead, the legislation continues to treat dividends as capital gains and tax them at 20% (plus Obama care of 3.8%). I think this overall was a good deal for taxpayers as there is still meaningful tax planning that can be done particularly where taxpayers have businesses abroad and can repatriate the cash from overseas operations at capital gains rates,” says Hryck.
He also suggests keeping an eye on:
He also suggests married same sex couples should also consider the benefits of filing an amended
tax return for prior tax years to the extent possible (generally three years) and of course for future years. “Now that the federal government recognizes same sex marriages, same sex married couples can take advantage of the tax benefits allowable to married couples on a retroactive basis.”
Many other tax law changes that went into effect during 2012 are established as permanent according to legislation passed at the end of 2013. However, tax law changes every 20 minutes or so leaving us wondering at the definition of “permanent.”