It’s time to start thinking about next year’s tax bill, said Arden Dale in The Wall Street Journal. And thanks to “a slate of new tax rules,” pondering last year’s return won’t help you much. “The usual approach to estimating taxes—based on what one paid the year before—won’t be enough.” All taxpayers who earn more than $200,000 ($250,000 for joint filers) will face a new 3.8 percent surtax. And on top of that, there’s a new marginal rate of 39.6 percent for filers earning more than $400,000 ($450,000 for joint filers). So if you’re a top earner, “now is a good time to adjust estimated taxes—by either selling stock or making a charitable deduction.” And those new taxes are just the tip of an iceberg of complexities. Even some tax professionals are overwhelmed, so the time is now to talk with your financial adviser or accountant and “tee up” for next year’s taxes.
My wife and I have always tried to know early exactly what we owe, said Paul Sullivan in The New York Times. Since we don’t want to liquidate investments unnecessarily, “we would rather owe a bit more in April than find out we are getting a refund.” But last year’s drawn-out negotiations over the fiscal cliff and the sequester have made it hard to know how much to set aside. As new rules kick in that declare some deductions obsolete, change the definitions of investment income, and seek to pay for Obamacare, predicting your tax bill will get even harder. You shouldn’t assume that filing electronically means you’ll get a refund any faster; filers with complicated income may even have to file paper returns. And oddly enough, paying late and getting hit with a 3 percent federal penalty might not be the worst idea, if you’re sure you can get a high return on the money before settling your tax bill. Just be aware that some states “see the penalties as a revenue source”; in Kansas, for example, they can go as high as 24 percent. That’s reason enough to keep an eye firmly fixed on the calendar. While the IRS “expects people to make quarterly payments, it does not divide the year into the same quarters as everyone else.” So if you sell a business, securities, or shares of stock, “be aware of timing.”
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