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Article:

Make Expiring Tax Cuts Work for You

Know What Changes Are Coming in 2013 & How You'll Be Affected

Income Tax Rates

What's going on: If the current cuts are not extended, just about everyone will see their income tax rates go up next year. The lowest rate would jump from 10 percent to 15 percent, and the highest from 35 percent to 39.6 percent.

Broadly speaking, Republicans would like to extend the current rates for everyone, or even make them permanent. On the other hand, Democrats, including President Barack Obama, would like to freeze the current rates for most people, but let the rates go up for those earning more than $250,000 in a year. 

How you can prepare: Basically, tax advisors suggest finding ways to earn more this year, while the rates are lower, and have less taxable income next year. If you expect an end-of-the-year bonus, think about asking your employer if you can get the check in December rather than January, for example. On the flip side, ask a tax professional if you should look for deductions that can be put off until next year. If you are going to take a loss on an investment or make a charitable donation, consider holding off until after January 1, so those deductions will reduce your taxable income next year. 

 

  • Sarah Shemkus

    Sarah Shemkus is an award-winning freelance journalist, marketing enthusiast, accomplished baker, occasional globetrotter and total nerd (with a particular fondness for spreadsheets). Most recently, she reported on business and real estate … Read more...