Déjà vu all over again. We have been here before, specifically in 2011. I am referencing a debt...
Important Tax Information
I am afraid many Americans will be a bit shocked when they complete their 2013 taxes and clearly understand the impact of the new tax laws. Please understand, if you are waiting until February or March of 2014 to find ways to save on your 2013 taxes, it is too late except for the low hanging fruit. Proper tax planning is planning for 2014 today.
With that said, this time of year we receive many questions on IRAs, Roth IRA, and other saving accounts. Following is a quick tax guide on the new number for 2013 and 2014. There aren’t many changes but I will list both years to eliminate any confusion.
A couple of notes to point out, first, like in 2013, 2014 does not have an income ceiling for Roth IRA conversions. A Roth IRA conversion is when you roll money from a traditional IRA into a Roth IRA and paying the taxes in the current year. Based on current tax laws, both the contributions and growth from that point on are not taxable at distribution.
Second, the limit for IRA contributions is based on two factors. Whether or not you have a retirement option at your work and modified adjusted gross income (MAGI) limits. This gets a little complicated and not easily explainable via an email like this, thus if you have any questions regarding this, please call us.
The area I find most are unaware of is the new capital gain tax laws. If in 2014, your taxable income is less than $73,800 for those filing jointly or $36,900 filing as a single, the capital gains tax is zero. Between $73,800 — $457,600 and $36,900 –$406,500, the capital gains tax is 15%. Any taxable income over those levels is at 20%.
Finally, when planning for 2014 don’t forget the 3.9% investment tax for those with taxable income above $250,000 filing jointly and $200,000 filing as a single.
We understand that this is not a fun time of the year for us (at least the 53% of us who pay taxes). However, there may be options for you to reduce your tax liability. Let us help you plan now, not in March of 2015.