Congress has adjourned for the election season, without doing anything about the uncertain state of taxes, a New York Estate Lawyer reports. Without anything being done, income taxes will rise for the middle class and the wealthy. The estate tax will rise to 55% for any assets over $1 million. Other tax provisions, like the one that protects 24 million families from the alternative minimum tax, have to be renewed or they will expire at the end of December.
“You would have thought we would have had some certainty by this point, but as we get closer to December 31, the uncertainty seems to be getting greater,” a prominent financial planner told a New York Estate Lawyer. President Obama plans to extend the Bush tax cuts for the middle class, but not for those who have incomes above $250,000. The top tax rate on income will rise more than 4% in 20111, while the tax on income from capital gains and dividends will rise 5%. And if Congress does nothing, the dividends tax will go all the way from 15% to 39.6%, matching the new income tax rate.
New York Estate Lawyers recommend moves like contributing to a 401(k), taking gains on taxable bonds, and gifting money to others at the maximum limits possible to avoid paying taxes on it later. Looking to the future, try to find big deductions to take when the tax rates rise (if they rise), or find ways to accelerate income forward, so it is taxed at the 2010 rates.
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