It seems as though the only subject on the agenda of tax advisors is the uncertainty of taxes. In reality, we know what is certain about taxes this year and what’s still unclear about taxes in the coming years.
The most frequent questions that I receive from clients regarding future taxes generally center around income taxation rates for capital gains, dividends and ordinary income; and who will pay – everyone, the rich, the ultra-rich? Most of these questions focus on the 2013 tax year, when the built-in reversion to tax rules and rates that were last in effect during 2003 and 2005 kicks in. The so-called “sunset provision” of the 2003 Tax Act (which was extended through 2012 by the 2010 Tax Act) provides that individual income and capital gains tax rates, in addition to estate, gift and generation skipping tax rates, exemptions and credits all revert to their 2001 levels on January 1, 2013. As of today, no one is sure what will happen, either with regard to expired tax provisions or the soon-to-be expired lower income tax rates and transfer tax rules.
Despite the tax uncertainties of 2013, there are still opportunities to plan. To find out how, I suggest you read my white paper called Certainty in an Uncertain Sea of Taxes, which contains planning strategies that will help you take advantage of the generous tax rules we have in 2012… while we still have them.