If you've already filed your 2013 taxes this year, you may have noticed that Uncle Sam took a bigger share. It all started in 2012 when Congress passed the American Taxpayer Relief Act – also known as the fiscal cliff tax bill. The legislation raised tax rates on Americans making a certain income and their investments. In addition, two Obamacare provisions aimed at taking more income away from job creators went into effect in 2013.
Here's what you'll want to be on the lookout for:
- Capital gains tax rate – Have any investments? Get ready to pay a lot more for them. The tax on long-term capital gains jumped from 15 to 20 percent thanks to the fiscal cliff bill. Short-term capital gains will stay the same for now, however.
- Reduced deductions and exemptions – Many smart taxpayers take a little extra time to figure out the deductions and personal exemptions they can take to reduce their overall tax liability. The federal government has decided that it wants to phase out these benefits and is decreasing the amount that individuals can deduct.
- Top tax rate – Before the law was changed last year the highest amount of income that the government could take was 35 percent. Now it has jumped to 39.6 percent. The only "good" aspect about this change is that the tax rate is linked with inflation, so it's possible for high income earners to bring in a bit more money before facing the highest rate.
With the government finding more ways to punish hard-working Americans, it's even more important that you find ways to preserve your wealth. You may want to consider strategies like real estate investing.