We now know the rules by which to play our cards. The American Taxpayer Relief Act of 2012 (ATRA), better known as the “Fiscal Cliff Deal,” provided us with some certainty in planning for the first time in many years. Many tax rules and provisions were made permanent by ATRA.
Understanding your circumstances, recognizing the tax issues and developing planning strategies to optimize your after-tax wealth have now become more pressing. Unfortunately, ATRA did not simplify the tax code, but rather added to the complexity. For instance, there are four tax rates for long-term capital gains (considering the “Obamacare” tax) with multiple thresholds depending on “adjusted gross income” and “taxable income.” This complexity has caused us as planners to continue to focus on such strategies as tax-efficient investing, asset location, income distribution diversification and gifting programs.
We have attached a chart including “Key Tax Items in the Fiscal Cliff Deal” that highlights several parts of ATRA. We look forward to discussing and strategizing with you about the alternatives as part of your Master Planning process.
If you have any questions, please contact us.