If The President and Congress do not act before the end of the year, many significant tax cuts from the Bush era will expire. One of the significant tax increases will be in the area of estate taxes. If action is not taken these tax laws will revert back to what they were in 2001, and the exemption for bequests at death will drop to $1,000,000.
Additional taxes that will increase, if action is not taken, include income taxes (by removal of the 10% bracket and increases in the 25% or higher brackets) and long-term capital gains (which will be increased to 20%). Many favorable tax breaks, such as bonus depreciation, will no longer be available.
Tax planning strategies are extremely important to ease the transition into 2013. A good year-end tax plan could make a huge impact on taxes paid after the first of the year. With a successful strategy, the ill-effects of the Bush Tax Cuts expiration will be lessened.
© 2012 Parsonage Vandenack Williams LLC
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