Now that the debate over tax rates and the so-called “Fiscal Cliff” has ended – for now – taxpayers and their advisors will turn their attention to learning more about what’s inside the American Taxpayer Relief Act of 2012 and how it impacts them. Let’s review some of the more important details in the tax bill and address some of the planning implications raised.
The American Taxpayer Relief Act of 2012 (“Tax Relief Act of 2012”) signed by President Obama on January 2, 2013, to avoid the so-called “fiscal cliff”, represents the first major tax increase on upper income taxpayers in 20 years. Even though Congress failed to address a number of tough issues, the provisions contained in the bill are significant, and will impact consumer behavior for years to come. What follows is a summary of the more important provisions of the bill, as well as an overview of some of the planning implications.
While certainly not perfect, the new tax bill represents an important milestone. Although the 2012 tax return season may be delayed while the IRS struggles to finalize forms, and the 2013 withholding tables will certainly need to be adjusted to take the new rates into consideration, the clear take-away is that the tax bill disproportionately impacts high-income earners. What this means is that executives, professionals, business owners, high income and high net worth individuals and families still need planning advice and expertise now, as much as before.
Please contact M. Garrett Wheeler, via email Gage@successhawaii.com to receive a PDF copy of the entire 7-page document.