In May of this year, there were some new changes made to the tax law. A new podcast has indicated that the new tax laws can affect your income in 3 key ways.
- The Tax Cuts and Job Acts is going to have a greater impacter on the money you earn through stocks.
- The two areas affected are the withholding tax brackets and the earned income area.
- Tax legislation is not going to have an impact on your equity compensation moving forward. A company’s stock price is going to make the biggest difference.
What does this mean for your tax cuts and the money you invested in stocks?
It is going to have an impact in 5 areas of interest. It is time to take a look!
1) The current laws keep the income brackets down to seven compartments. The rates now include but are not limited to, 10,12,22,24, and 37%. The highest bracket includes $6000,000 for joint filers and $500,000 for single filers.
The third lowest percent(22%) has those earning $1 million a year. The highest percent(37%), is linked to those earning more than $1 million a year.
Sign in https://www.mystockoptions.com/faq/index.cfm/catID/940B4218-8C5B-4177-8DA426245C0E10E7/ObjectID/17AAC844-5935-4EB6-AF9EB612AA30AE1C that way you can find out your supplemental wage rate. You can find out what bracket you fit into to pay the taxes you need.
The more you understand the table, the more you can plan your strategy. Pay what you need to in taxes and keep most of it in your stocks. Stocks offer a way to save money in taxes. Click here https://money.usnews.com/investing/buy-and-hold-strategy/articles/2018-04-12/5-ways-to-minimize-taxes-in-a-portfolio to find out how.
FYI: The higher your income, the more you might need to pay in taxes.
2) There are changes to the AMT(Alternative Minimum Tax). Are you familiar with your ISO(Incentive stock options)? They can trigger the ATM. You need to click here https://www.mystockoptions.com/faq/index.cfm/catID/dfe2fba7-9773-4ae3-bbe66cabb4ce79b8/ObjectID/3517A0BD-6683-11D4-AF69000102460375 to find out more.
3) There is no real change to the long-term capital gains rates. You either have 15% or 20%. There is a reduction in the short-term income brackets. That is going to affect your short-term gains. That is going to influence your short and long-term rates. This is going to affect your tax planning in some way.
One thing to keep an eye out for is the 3.8% Medicare Surtax. They are looking to repeal that in Congress right now. You may or may not be affected if that is part of your income tax portfolio.
4) Do you know what the Qualified Stock Grant is? It is the one that private companies use as part of their tax planning. There is a new version of the Empowering Employees Through Stock Ownership Act. This new provision now lets people opt to defer their income for tax purposes. They can do this at either the NQSO or the RSU. You can do this for at least five years as long as the company has met the necessary requirements. This could be a good thing. There is not enough information yet to make an accurate conclusion.
5) Do you use the estate tax or gift tax sections on your form? The money you get back is going to double in value. This is going to affect some more than others. Those who earn more are going to see the best results.