An article in the June 2013 issue of Forbes magazine certainly raised a few eyebrows in tax circles. According to the writer, William Baldwin, affluent retirees earning hundreds of thousands of dollars a year may actually pay zero federal income tax this year.
The article supplied the numbers to back up its claim and showed taxpayers how to do it.
Strategy: Load up on tax-favored investments in your portfolio. Current law encourages investors to take advantage of several key provisions permanently extended by the American Taxpayer Relief Act of 2012 (ATRA).
Here’s the whole story: Under ATRA, the maximum tax rate for qualified dividends remains at 15% for most individuals, although it increases to 20% for certain upper-income investors. What’s more, you’re taxed at a 0% rate on taxable income realized up to a specific point. For single filers, the threshold is taxable income of $36,250; it’s $72,500 for joint filers.
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