Consider Accelerating Income to 2012
It is often recommended that physician practices defer taxable income to the following year or postponing some deductible expenses (Unless youare a C corporation). But this approach is only useful if you expect to pay a lower tax rate next year, and with the Bush tax cuts scheduled to expire at year end, many businesses and individuals may find themselves paying higher rates in 2013. If this is the case, then it may be more beneficial to accelerate some taxable income into this year so that it can be taxed at the lower rate.
Take Advantage of the 0% Rate on Investment Income
The tax rate on qualified dividends and long-term capital gains is currently zero percent for those who fall within the 10 and 15 percent tax brackets. This generous tax rate could be history by the end of the year, and now may be time to take advantage of it. If your income is too high to qualify for this rate (available to married couples making less than $70,700 or single filers making less than $35,350), then consider giving some appreciated stock or mutual fund shares to loved ones who fall within the lower brackets. Just remember, giving securities to anyone under age 24 could result in them being taxed at their parents’ rates.
Time Investment Gains and Losses and Consider Being Bold about It
Consider selling appreciated securities this year while the maximum tax rate on long-term capital gains from 2012 sales is only 15 percent. This favorable rate applies to appreciated securities held for at least a year and a day before selling. Biting the bullet and selling some loser securities—those currently worth less than you paid for them—before year end can also be a good idea. The resulting capital losses will offset capital gains from other sales this year.