Those who will have a lot of money set aside in tax deferred retirement accounts or who expect to earn and extremely high income for many years should be prepared for how their money is taxed now and how it will be taxed later. This is important for making a comprehensive plan for your retirement and also estate planning strategy to ensure that your interests and needs are protected well into the future.
Although your salary investments and wages that are accumulated for under 12 months are taxed at what are now considered progressive income tax brackets, those that are held for many different years are not. These are calculated as long term capital gains and can have significant tax consequences for your savings. These tax rates could be 20%, 15% or 0%, all depending on your underlying income level. For example, those individuals who have taxable income under $445,850 and above $40,401 will owe 15% on long term capital gains. This also applies to married couples filing jointly with taxable income under $501,600 and $80,801.
If you earn under that top amount, you will pay zero in capital gains taxes, but going even $1 beyond means that your rate increases to 20%. There are so many different considerations in this planning process that it is important to schedule a consultation with an experienced and knowledgeable estate planning lawyer to get further information.
Talking with a lawyer helps you create an estate plan now, but it also gives you access to a resource in your estate planning lawyer when it comes to creating an estate plan in the future as the laws change, too.
Our Pasadena, CA estate planning lawyers are here to assist you with a plan for your future.
