Newspaper article THE JOURNAL RECORD

Wealthy Should Consider Accelerating Income

Newspaper article THE JOURNAL RECORD

Wealthy Should Consider Accelerating Income

Article excerpt

GD0;AGB;IP1,1.6;MC3;ITS;PS51,66;XP;END;

By Henry Unger Cox News Service ATLANTA - Congress took forever to pass a new tax package, but Charles Loudermilk isn't wasting any time trying to figure out its effects.

``Our personal accountant is studying that right now,'' said Loudermilk, chirman and founder of Aaron Rents, a major furniture rental company.

``I'll probably accelerate my income to take advantage of lower tax rates this year. . . . We'll be looking at stock and real estate investments as to whether to sell and take the gains now, or hold them.''

Like other wealthy Americans, Loudermilk is a key target of the new tax bill, which primarily takes effect next year. At the top end of the salary ladder, taxpayers face both higher consumption and income taxes, as well as lower deductions. By contrast, many other citizens will pay only higher consumption taxes.

But for those in the upper brackets, there's a tiny silver lining. They can make some moves this year to reduce their income-tax bills next year, while most taxpayers can do little more than cut back on driving, smoking and drinking.

The wealthiest Americans will see their tax rates rise from 28 percent this year to 31 percent next year. The group includes married couples without children who file joint returns and have taxable incomes exceeding $185,730, as well as those filing single returns with taxable incomes above $109,100.

As a result of the tax hike, wealthy taxpayers should consider pushing as much income as they can into this year, said Roger Lusby III, tax partner at Frazier & Deeter, an Atlanta- based accounting firm. He added, however, that he was giving general advice, which may not apply in individual cases.

Accelerating income can be done by:

- Taking bonuses now. Many upper-income taxpayers are employers who can control when they take the fruits of their labor. They should consider raking it in big this year.

- Don't delay sending out bills to clients.

- For those over 59 1/2 years old, who are thinking about pulling money out of an IRA or 401(k) account, it may pay to do it this year instead of next year.

The opposite strategy, however, applies to taxpayers who are not wealthy, but who make enough to put themselves in the upper middle-class. That's because their income-tax rate drops next year to 31 percent from 33 percent. Because of a quirk in the old tax law, they have been paying a higher marginal tax rate than the very wealthy. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.