With your 2013 tax return just fading from the rearview mirror, your last thought is likely about your 2014 return.  Mid-year planning is particularly important for high-income taxpayers and anyone with substantial investment income. 

Here are a few reasons why:
• A tax law that took effect last year imposes a new 39.6% marginal rate on taxable income over $400,000 ($450,000 for married couples)
• Phase-outs for itemized deductions and personal exemptions included in last year’s law have increased effective marginal rates for taxpayers with adjusted gross income of $250,000 or more ($300,000 for married couples)
• Under a provision in the Affordable Care Act, taxpayers with modified AGI of $200,000 or more ($250,000 for married couples) now face a 3.8% surtax on investment income

Protect your portfolio. With the surtax looming, it’s more important than ever to keep an eye toward the IRS when managing your investments.

Beef up tax-deferred accounts. Maxing out on contributions to your tax-deferred retirement plans is one of the most effective ways to lower both your taxable income and your AGI (to minimize the effects of phase-outs of deductions and personal exemptions).

Postpone IRA withdrawals. Congress is expected to resurrect a popular provision that allows seniors age 70½ and older to transfer up to $100,000 from their traditional IRAs directly to charity.

Prepare for Obamacare. Under the Affordable Care Act, taxpayers who don’t have health insurance in 2014 will have to pay a penalty and the IRS is responsible for collecting it.

Taking proactive steps now can help save you time, effort and money later on. 

To read the entire article, please visit