What’s Happening With Taxes?

Source: Great Beyond via Flickr

Tuesday Tips is a series of articles from local experts to help you save money, make better decisions and plan for a better future.

Many of the tax cuts that were put into effect by President Bush are scheduled to expire at the end of this year. Many of those tax cuts will not be extended. In this article, accountant Joseph Reisman compiles some of the things that will – and will not – change by the time tax season rolls around. He also offers a few tips so save money if Uncle Sam is digging a little deeper into your pockets this year.

Here are a couple of the changes that are likely to go into effect:

  • Long-term capital gains tax will increase from 15% to 20%.
  • The top tax bracket (currently 35%) will increase to 39.6%.
  • The next tax bracket (currently 33%) will increase to 36%, with an adjustment at the lower end.
  • The 10% tax bracket will remain.
  • Dividends will be taxed at 20% (currently 15%).
  • The standard deduction for married couples filing jointly will stay as is.
  • The 15% tax bracket for married couples filing jointly will remain.
  • The middle two tax brackets (currently 25% and 28%) will remain.

If you see changes in your future, what should you do?

  • Consider selling profitable stocks before the end of this year.
  • If your tax bracket will increase, accelerate income into 2010.
  • If your tax bracket will increase, delay some deductions for 2011.
  • Think about moving income into tax-free investments.

Politics is holding the American people hostage right now, so you won’t see a lot of action until after the November elections.

Don’t like what’s happening? Vote in November. Mark your calendar.

Joseph Reisman, of Joseph S. Reisman & Associates, has been serving tax prep and business accounting expertise from his Coney Island Avenue office for more than 25 years. Check out the firm’s website.

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