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The American Taxpayer Relief Act Of 2012

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The American Taxpayer Relief Act of 2012 created a combined estate and gift tax rate of 40% while raising the estate tax exemption to $5.43 million in 2015. The gift exclusion stays at $14,000 in 2015. These changes generate some estate-planning benefits that most people haven’t yet realize. For example, many wealthy people didn 't bother trying to minimize capital gains in the past because the lower tax rate of 15% was better than paying 50% in estate taxes. Now people can benefit by choosing which assets they keep until death more carefully. Appreciated assets can be held until death and might fall within the $5.43 million exemption. This could be especially important when realizing capital gains could be subject to a higher, nearly 24% …show more content…

Marriage always generates tax questions, but you can often find substantial opportunities when your life changes in a major way. For example, consider two people who each own a home. The couple plans to sell one home and live in the other. In a display of marital enthusiasm, Carol sells her smaller home before the marriage and moves to Bob 's palatial home.

Unfortunately, the couple failed to take advantage of tax planning. If Carol and Bob had moved to the smaller home and made it their primary residence, they could have fixed it up, realized more money from the sale and avoided capital gains on $500,000 when selling a primary residence. Instead, Carol sold the home for $400,000 and had to pay capital gains on $50,000 over the $250,000 exemption for a single taxpayer. The home was originally valued at $100,000, so the sale generated a $300,000 gain.

Responding to the Medicare Surtax on Investment Income
The Affordable Care Act imposed a Medicare tax for the first time on investment income over certain limits. Tax planning could save up to $900 on each $100,000 of income. If you realize several million dollars in capital gains, finding a way to avoid the surcharge could generate substantial savings in six figures.

Tax Planning Tips to Remember for 2015 and Beyond
General tax planning tips apply to anyone. Although general

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