Financial Hide and Seek: Finding the Stealth Taxes that Congress Missed

Good afternoon!

The financial sector greeted 2013 with a collective sigh after spending a nail-biting few weeks unsure of how the potential Fiscal Cliff would affect us all in the new year.  I received many emails and phone calls during this tenuous time; most clients wanted reassurance that their investments were safe.  Keep in mind, the Fiscal Cliff sounds confusing because it is.  While the most obvious premises of the deal are more easily researched, there are stealth taxes that could be costing you money at this very moment.

As a Retirement Income Specialist, it’s my job to seek out these hidden taxes that could potentially hurt my clients.  I want to provide you with a brief synopsis of these stealth taxes, but to learn more you can set up an appointment to discuss current financial trends and how they affect your personal finances.  Set up an appointment by visiting us at www.warrenelkin.com.

There are two provisions that were previously dormant from the 1990 tax increase that, as of this week, are re-enacted.  The Pease and PEP will now limit deductions and exemptions for taxpayers in a higher income bracket.  Those who make above $250,000 will potentially suffer the steepest tax increases under this new law.

Of that bracket, married couples with two kids could see a 4.4 percentage point rise in their marginal tax rate.  Americans with incomes topping $1 million could lose up to 80% of itemized deductions, which includes mortgage payments, healthcare, local and state taxes, and charities.

While missing from the main coverage of the Fiscal Cliff deal, Congress has allowed the Social Security Payroll Tax Cut to expire.  Over the past two years, wage earners have enjoyed a 2-percentage-point-cut in the payroll tax.  By allowing this to lapse, that percent now returns to 6.2%, earning the government about $115 billion a year in revenue.  This means the average taxpayer now loses approximately $740 a year.

There are also other stealth taxes that are not covered by the Fiscal Cliff deal.  Things like Phantom Income Taxation, Social Security Taxation, and IRA losses you can’t deduct.  Have you ever heard of Phantom Income Tax before?  Are you paying taxes on your Social Security?  Do you have losses in your IRA?  These are great indicators that you could benefit from a simple review process.

All of these stealth taxes have variances, depending on income bracket, etc.  Don’t start 2013 in the dark about tax policies.  Meet with Warren before going to see your CPA or completing your tax return to learn what questions to ask your CPA to cut your taxes now and avoid tax problems in your future.

Make sure you have all the facts necessary to make the right decision with your financial future by calling us today! Speak with us now at 877-476-5051, email Warren at warren@warrenelkin.com, or go to www.warrenelkin.com to learn more about Warren Elkin and his unique process to make sure your financial decisions are made in your best interest.

Have a great day,
Warren Elkin

Photo courtesy of: www.smartgivers.org