SL+Co - 2013 Year-End Tax Letter
Year-end tax planning could be especially productive this year. Timely action could nail down a host of tax breaks that won't be around next year unless Congress acts to extend them, which, at the present time, looks doubtful. For individuals, these include:
- the option to deduct state and local sales and use taxes instead of state and local income taxes;
- the above-the-line deduction for qualified higher education expenses;
- and tax-free distributions by those age 70 — or older from IRAs for charitable purposes.
For businesses, tax breaks that are available through the end of this year but won't be around next year unless Congress acts include:
- 50% bonus first-year depreciation for most new machinery, equipment and software;
- an extraordinarily high $500,000 expensing limitation;
- the research tax credit;
- and the 15-year write off for qualified leasehold improvements, qualified restaurant buildings and improvements and qualified retail improvements.
High-income-earners have other factors to keep in mind when mapping out year-end plans. For the first time, they have to take into account the 3.8% tax surtax on unearned income and the additional 0.9% Medicare (hospital insurance, or HI) tax that applies to individuals receiving wages with respect to employment in excess of $200,000 ($250,000 for married couples filing jointly and $125,000 for married couples filing separately)...