nun
Thinks s/he gets paid by the post
- Joined
- Feb 17, 2006
- Messages
- 4,872
Rejigger Your Portfolio
"I don't think there's a better time to rebalance a portfolio than this year,'' says Mitchell Drossman, national director of wealth-planning strategies at Bank of America's U.S. Trust. The top long-term capital gains tax rate is set to rise from 15% to 20% on Jan. 1, 2011, when the Bush tax cuts expire. Next year also marks the comeback of a provision that shaves deductions claimed by upper-income taxpayers, in effect adding another 1.2% to the rate. Beginning in 2013 there's an added 3.8% Medicare surtax on investment income earned by couples with adjusted gross income of $250,000 and up. So consider taking gains in 2010, particularly if you'll need funds in the next few years. As you replace stocks sold at a profit with similar holdings, consider tilting more to growth than dividend stocks, Drossman says. Unless Congress acts, dividends in 2011 will be taxed as ordinary income, at a top 39.6% plus 1.2% rate. (Obama purports to favor keeping the dividend rate tied to the capital gains rate. But Congress is hungry for revenue.)
When I read things like this I think "what has this to do with me; a middle class guy who hopes to retire on $50k a year or less". Far too often taxation is explained in terms of how it affects the taxation of the rich to scare the majority of us.