Year-end tax planning in 2012 is topsy turvy. Usually, tax pros advise high-income taxpayers to push taxable income from the current year into the following year in order to delay taxes. Concurrently, they may pull deductions from the next year into the current year to offset income in the current year and lower the tax bill fort that year.
Unless Congress acts soon to stem the tide, taxes will go up next year, while certain tax breaks will be curtailed or eliminated. Plus, taxpayers face two new Medicare surtaxes on certain types of income under the “Affordable Care Act”, aka “Obama Care’, beginning in 2013.
What does this mean for middle to high income taxpayers? It means that they may want to do exactly opposite of what they normally do at the end of the year. In other words, the best approach might be to accelerate taxable income into 2012 while postponing deductible expenditures until 2013.
This advice comes with a caveat; the reverse strategy isn’t for everyone and there are a number of variables to consider. The most important one is the possibility that some or all of the tax increases scheduled to take effect next year might not happen.
With this in mind, I have created a list of the “sweet 16” tax strategies for this year-end. I will outline these 16 strategies, along with 9 strategies to cope with the new Medicare surtaxes, in future blogs.
Keep an eye out for it. It may cost you if you miss it!