In New Jersey, business owners and people of means who are thinking about their taxes should be prepared for every eventuality. This is especially true when lawmakers are considering raising taxes for various programs. Depending on the political viewpoint of those in power, the way taxes are assessed with fluctuate. Given the the ongoing debate, it is important for those with substantial assets to be fully prepared. Knowing the possible changes that could be on the way and how to avoid a hefty tax increase may require professional assistance.
What changes may be in store and how to save as much on taxes as possible
Knowledge is imperative when weighing options to avoid major tax increases. For example, those who earn more than $5 million could face a 3% surtax. Families whose combined earnings surpassing $450,000 and those who make $400,000 as individuals may see the marginal tax income rate spike to 39.6%. The capital gains rate might increase to 25%. The proposals are not as substantial as many expected, but people in these situations should still be prepared.
If possible, it may be wise to increase income prior to the end of the year. That might sound unusual – after all, who would not simply raise their income when they want to – but if there is a business transaction pending, it could be useful to accelerate its completion to derive tax benefits. A merger or a business sale are two examples. If people are expecting bonuses after the new year, they could try and discuss ways to get it before the end of the year. Gifting lucrative items to family members who do not earn as much is another tactic that is legal and effective. Changes to the estate tax is another factor. Currently, the lifetime gift exclusion is at $11.7 million. That could be lowered to $6 million. Those who are planning to transfer wealth should do this prior to the new year. Using an irrevocable trust is one way.
Professional advice can help with keeping as much money as possible
Tax planning may be difficult and confusing, especially with the current political climate. People who have accrued wealth and achieved success in life have the right to assess the current tax laws and potential changes to keep as much as they can. Whether it is through shielding loved ones from estate taxes with gifts or finding other legal methods to use the current tax laws to their advantage, it is wise to have legal guidance. Consulting with those who are experienced in taxes and estate laws can assist with these and other matters.