Overview –
Trial attorneys are extremely vulnerable to a tax landscape that is becoming hostile territory. The result of the American Taxpayer Relief Act of 2013 (ATRA) is that earned income is taxed at substantially higher rates than investment income. It is certain that is not how most high income taxpayers spell “R-E-L-I-E-F.” The top marginal income tax rate increased to 39.6 percent. The phase out of personal exemptions and miscellaneous itemized deductions could effectively add another 2 percent to the marginal bracket. State marginal tax brackets can increase taxation 7 to 10 percent to a total marginal bracket of 50 percent.
The long-term capital gains rate increased to 20 percent and most states tax capital gains as regular income. Additionally, as a result of the 2010 health care legislation, many high-income attorneys in 2013 will face the impact of a new Medicare 3.8 percent tax on investment income. Fortunately, the estate tax changes provided some solace. Although the top rate rises from 35 to 40 percent, a still higher 55 percent rate would otherwise have come back into effect, and ATRA leaves the exemption equivalent at $5.2 million per taxpayer. All in all, however, high-income attorneys have plenty of incentive to try to reduce the taxes they will owe when they earn large contingency fees.
Please see full alert below for more information.
https://www.jdsupra.com/legalnews/structured-settlement-planning-for-trial-95213/
No comment yet, add your voice below!