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How To Prepare For Higher Taxes

Friday, July 15, 2011 - 9:27 AM
From SmartMoney.com
There's little agreement as to how the politicians in Washington will resolve the debate over the federal deficit. But taxes don't seem to be falling any time soon, and advisers say it's not too soon to start preparing.

Regardless of political promises to keep taxes steady, experts say budget cuts alone won't be enough to eliminate the more than $14 trillion national deficit, and states are facing their own massive shortfalls. Even if no new policies are enacted to raise taxes, several provisions are set to expire within the next two years. The one-year payroll tax cut expires in January. The Bush-era tax cuts, which lowered the income tax rate for all brackets and cut capital gains taxes, among other things, are scheduled to expire in 2013. That same year, new taxes will kick in to fund the new federal healthcare law. Individuals earning at least $200,000 and households earning $250,000 will pay an extra 0.9% levy on wages and a new 3.8% tax on investment income.expires in January.

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