2013 Mid-Year Tax Moves
You know how good coaches are usually famous for making adjustments during the halftime of big games? Well, here I am — acting as your financial coach in matters tax-related, and we’ve just about hit halftime for 2013.
To begin, all you have to do is take your cash flow for the first half of the year, and multiply by two. Add up your wages, dividends, interest, and any other income, and then–if this represents approximately what you’re expecting for the second half of the year–double the sum.
Once you have your estimated 2013 income, give us a call: 847-243-3600 (or send me an email), and we’ll help you determine the appropriate tax rate and deductions to apply. Because once you’re armed with this info, we can help you determine the amount of taxes you might expect to owe for 2013.
By then comparing this against your projected withholding, you can adjust the withholding on your paycheck in advance as needed, and ensure a happy visit to our office in the winter.
This can also be a good time to organize your financial records and/or get started with some financial software. Getting organized now can make gathering a report of all those deductions a breeze, come tax time.
2013 Tax Changes To Account For
You should also take into account the fact that income and estate taxes underwent seismic shifts in January, rearranging the landscape for many taxpayers. Wealthy Americans in particular are facing higher tax rates on ordinary and investment income.
Unlike obvious moves, such as contributing to an individual retirement account or a 401(k) plan, these strategies require a higher degree of awareness and active planning.
Not all high-impact breaks are for the wealthy. Any homeowner can benefit from a provision allowing taxpayers to pocket tax-free income from renting a residence for as long as two weeks, and low-bracket taxpayers can pay zero tax on long-term capital gains.
Other important moves can help minimize estate, gift and inheritance taxes. This might seem like a less-urgent task now, since Congress approved in January a generous gift-and-estate tax exemption of $5.25 million per individual that is indexed to inflation. But there already is a proposal to scale back the exemption to $3.5 million.
Give us a call and we can help you plan so your 2013 income taxes will not be a unpleasant surprise for you.