In 22 years of working with clients, I have yet to have a single person tell me that they want to pay more taxes. Indeed, the objective in managing assets is not to maximize returns, but rather to maximize AFTER-TAX returns. The cardinal rule of investing: “It’s not what you make, it’s what you keep.”
Sometimes, however, this worthy credo takes on a life of its own.
The Tax Cuts and Jobs Act of 2017 (TCJA) was only the fifth major change to the US tax code since the Internal Revenue Service started collecting taxes on income, early in the last century. Now that it’s 2019, we’ll actually get to see the new tax code in action.
At first blush, just looking at the new tax form, it appears that the objective of simplification may have been met!
Almost half (46 percent) of recent retirees wish they had planned better for handling taxes in retirement, according to a new survey from the Nationwide Retirement Institute. One in four retirees report having paid thousands of dollars more in taxes in retirement than they had expected.
For those with taxable investments, planning for capital gains taxes and taking steps to mitigate your tax bill is an annual tradition. If you have a financial planner or CPA, it's likely they've taken most of this responsibility off your hands or at least helped you address it. If you're on your own, however, mitigating capital gains taxes can be a daunting and confusing endeavor that's further complicated by the need to navigate the various tax laws, tax exceptions, and the different strategies that can be employed.
The Tax Cuts and Jobs Act (TCJA) led to major changes to the US tax law. You should be aware of tweaks that could affect your 2018 return.
1. Tax Rates Are Lower for Most Taxpayers
Like in previous years, there are still seven tax brackets but the new rates are lower for almost all taxpayers.
There are also changes in the income thresholds for each tax bracket. The highest tax bracket will apply to joint filers with an income of $600,000 or more and for single filers with taxable income over $500,000.
The year 2018 brought substantial changes to many of our clients' tax situations. Perhaps most notably, the increase in the Standard Deduction to $12,000 for single filers and $24,000 for joint filers is having a large impact on the vast majority of taxpayers. Most taxpayers are seeing their taxes go down in 2018, but there are still actions you can take to reduce your taxes further.
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