Archive for December 2012
In the past, I have advised my clients to defer income recognition and capital gain realization so that they can pay taxes later. Not this year! Under current law, major tax changes are set to happen at the end of the year. These include:
- Tax rates on ordinary income will rise. The rates for most brackets will increase by 3%. The highest top marginal tax rate (which was for income above $388,350 for both single and married filing joint filers in 2012) will go from 35.0% (in 2012) to 39.6% (in 2013).
After working as a financial advisor for six years and after reading tons of research, I have developed a good sense about how the average investor loses money. As the New Year approaches, I think it’s good to share my insight so that readers can determine if they are making these mistakes.
Conflict of interest
I cannot emphasize this enough: Wall Street firms don’t work for you. If you have a Merrill Lynch or Morgan Stanley advisor, expect to give away 2.5% of your money every year – about half of it will be in explicit fees, the other half will be in hidden fees. If you invest through insurance products, expect to give up 3.5 percent of your money.
This is an excerpt from an IRS question and answer article about the Additional Medicare Tax, which goes into effect in 2013. The full article can be viewed at the IRS website.
The following questions and answers provide employers and payroll service providers information that will help them as they prepare to implement Additional Medicare Tax which goes into effect in 2013. Additional Medicare Tax applies to individuals’ wages, other compensation, and self-employment income over certain thresholds; employers are responsible for withholding the tax on wages and other compensation in certain circumstances. The IRS has prepared these questions and answers to assist employers and payroll service providers in adapting systems and processes that may be impacted.
1. When does Additional Medicare Tax start?
Additional Medicare Tax applies to wages and compensation above a threshold amount received after December 31, 2012 and to self-employment income above a threshold amount received in taxable years beginning after December 31, 2012. Read the rest of this entry »
Also see Top 10 last month.
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