Earlier in the week, David Johnston, of the New York Times, posted an article with advice for taxpayers earning more than $200,000 per year – who’s tax rates will likely go up in the next fourteen months. This is due to tax cuts sponsored by President Bush that are set to expire at the end of next year.
When the Bush cuts expire, the two top tax rates will move up from 33 percent and 35 percent to 36 percent to 39.6 percent. For a couple making $500,000, the added tax will be about $6,000 per year, for a couple making $1 million about $30,000.
The bite could be less than that for business owners, however. President Obama, on the campaign trail, proposed allowing founders of small businesses to sell their enterprises without owing capital-gains taxes. Congress has yet to act on this idea.
He also campaigned on the promise that there would be no tax increases on the bottom 98 percent of earners. Earlier this year, President Obama signed a two-year tax break that one of his economic advisers, Austan Goolsbee, said “included $63 billion for the Making Work Pay Tax Credit, a direct tax cut for 95 percent of workers and the magnitude of just about the largest middle-class tax cut ever.”
For high-income taxpayers, here are some steps to arrange your affairs to get the most benefit with the least tax when the Bush cuts lapse: