3 Surprising Facts About Income Taxes

Retirement

3 Surprising Facts About Income Taxes

Posted by Infinite Wealth Advisors, LLC
4 years ago | June 22, 2015

Tax Forms and Broken PencilMany taxpayers, especially those in the higher income brackets, were disappointed in the 2014 tax laws passed by Congress.If you’re facing higher income taxes in the coming year, consult with a skilled tax professional to brush up on your tax knowledge, because some of these facts may have a surprising impact on your tax bill.

Marriage is not always a good idea – financially speaking. Most people assume that marriage provides one of the best income tax deductions. But for people in upper tax brackets, this is not always true. Depending upon your respective incomes, you and your spouse may actually owe more taxes once you combine them. Of course, marriage is not all about money, but you should definitely discuss the financial implications with your accountant before you tie the knot.

Your estate tax exclusion is portable. You may already know that part of your estate may be excluded from estate taxes after you pass away. But did you know you also pass on that exclusion to your spouse? Once your spouse is gone, his or her heirs can drastically reduce or even eliminate estate taxes by combining both of your exclusions. This is a complicated tax move, though, so instruct your heirs to consult with an estate planning attorney. Then they must file IRS form 706 within nine months of your spouse’s death.

A trust can reduce your estate tax burden. If you know your estate will be subject to some taxes after your death, you can reduce those taxes while still leaving money to the people you want to receive it. You do this by establishing a variety of trusts, or one charitable foundation that your heirs control. Now you can enjoy peace of mind knowing your money will go to a worthy cause rather than the IRS.

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