Tax Issues for Wealthy Taxpayers
There are a number of tax issues that seem to face our wealthier taxpayers. Following are a list of these taxes. Knowing these exist will help you better understand how to manage your taxes.
Phase Out of tax breaks:
As your income rises, you phase out on your itemized deductions, personal exemptions and dependency exemptions.
An additional .9% Medicare tax is due on earned income above $200,000 for single filers and $250,000 married.
An additional 3.8% tax is due on net investment income. This creates a maximum tax rate for our high income taxpayers on capital gains of over 24%.
All clients have a requirement to report foreign held accounts. However, this seems to apply more to our high income clients. There are several reporting requirements. If this applies to you, make sure to let your tax adviser know.
While many of our clients will not be subject to Estate taxes, since the hurdle is over $5 million per taxpayer, this still applies to some of our high net worth clients. Careful planning can help reduce the burden of estate taxes.
High income taxpayers have a higher audit risk than lower income tax payers. In 2014, the tax rate for households with income over
$1 million was over 7 times the rate of the general population.
Please see our Legal Statement.