Gain Harvesting Before 2013 Tax Changes May Be A Good Idea – Seeking Alpha

Starting next year you must add a 3.8% Medicare tax to your investment income (including interest, dividends, gains, rents, and royalties — a.k.a “unearned income” as the IRS calls it), if you have adjusted gross income for IRS purposes of over certain levels.

The basic tax rates on short and long-term gains are scheduled to rise by variable amounts in 2013 depending on income (5% is a good round number for that for many investors), and then the 3.8% Medicare tax is on top of that.

Is paying tax now and reinvesting better than paying taxes later and at perhaps an 8.8% higher rate (and then who knows about 2014)? Given the straights we are in nationally and at the state levels, 2014 rates could be worse.

via Gain Harvesting Before 2013 Tax Changes May Be A Good Idea – Seeking Alpha.

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