New Medicare, investment taxes worry Naples’ wealthy, money managers say
By June Fletcher, Naples Daily News, Fla. | |
McClatchy-Tribune Information Services |
This spring, tax-filing time is one of them.
Tax hikes are in effect for most Americans this year because of the end of a longstanding
That increase is costing the brown-bag set as much as
But for the wealthy, there's another source of angst: additional taxes that went into effect last year and will be whacking their wallets for the first time when they file their 2013 returns.
"It was a surprise to a lot of people," said
And if they didn't reduce their taxable income last year using various allowed strategies, unfortunately -- at least for the 2013 tax year -- "there's not a lot they can do," he added.
The first hit is the additional
All wages are subject to this tax, without an upper limit.
But for people in that bracket, it gets worse: There's an additional 3.8 percent net investment income tax on passive or unearned income, including income from dividends, stock sales, interest and rentals. It affects individuals, estates and trusts.
People who are exempt from
There is more pain for the highest-income households. To the extent that taxable income goes above the new 39.6 percent ordinary tax rate of
People are getting blown up in
Wealth manager
Those with lower incomes pay 15 percent.
The double whammy of taxation on two different income streams, plus the higher capital gains tax, is a top concern of top-tier households,
And because so many local residents depend on investment income from trusts and other sources, "people are getting blown up in
Of course, for those who did plan ahead, there are numerous strategies for lowering, deferring or avoiding the taxes,
For instance, taxpayers can contribute to Roth or individual retirement accounts; buy annuities or life insurance; or give away part of their wealth (up to certain lifetime caps) to children, charities or others.
"There's no one best strategy," he said. "It depends on the needs of each client."
Nevertheless,
That's especially true for a patriarch who might already have given away much of his wealth to others, he said.
And while the increased costs could mean a high earner might be cutting back to one overseas trip a year from their usual two, clients still can become emotional when they feel they are suddenly living on a tight budget, he said.
"In their minds, perception becomes reality," he said.
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