These Tax Breaks Are a Big Boost to the Wealthy

shutterstock_216949882

 

Even though the new presidential administration has already made several tax cut promises that would greatly benefit the wealthy, the fact is, high net worth individuals already benefit from several tax breaks that favor the rich. In fact, there are numerous ways that the wealthy can, and are already saving on their tax bill.

Let’s take a look at three of the most tax-friendly laws for high net worth earners currently in the tax code. The Social Security earnings cap is one way the wealthy save on taxes. Because the government caps this tax at $127,200, those who earn $128,000 and those who earn 12 million will pay the same Social Security tax rate. That is a huge savings for the nation’s highest earners, which amounts to $62,000 in savings on every million dollars earned above the cap.

Next up is the capital gains tax rate, which favors the country’s highest earners as well. Because this rate is much lower than the personal income tax rate and most middle-income workers don’t earn their money through capital gains the middle class often pay a higher tax rate than high net worth individuals that earn all their money through capital gains.

Lastly, the mortgage interest deduction also helps the wealthy save on their taxes. Although this tax break clearly helps anyone that carries a mortgage, the wealthy usually receive a much greater benefit because the amount they pay in mortgage interest is typically much higher. Therefore, they receive a much higher deduction amount. Plus, if you don’t have enough itemized deductions to exceed the standard deduction amount you won’t get to claim the mortgage deduction anyways.

https://www.fool.com/retirement/2017/02/25/3-tax-breaks-that-hugely-benefit-the-rich.aspx

Posted in

Successful Investing With Taxes in Mind

There are many ways to earn money, but no matter how you get your income the IRS wants its piece of the pie. That includes any gains you make from your investments when you sell them. Although everyone does have to pay tax on their gains, you shouldn’t give the IRS any more than what…

IRS Is Carefully Watching Bitcoin and Other Cyber Currency

Big Brother is watching. Always watching. In this case, Big Brother is the IRS and you might be surprised what they’re looking into now. Although, when it comes to the IRS, nothing should surprise us. Have you ever heard of Bitcoin? It’s one of a handful of virtual currencies that making buying and selling things…

Which Tax Breaks Will Be Restored for 2014?

It seems like every year at this time the conversations start to creep up in the media regarding which tax breaks will be renewed and which breaks will get the permanent axe. This year is no different as Congress already let more than 50 such tax breaks expire at the end of 2013. Now the…

Helpful Deduction Tips for Collectors

Are you a collector? Have you ever wondered if you could donate the items you collect to a charity auction for tax break purposes? If you are considering this scenario, there are some things you should know. The first thing you need to make sure of is that the charity you are considering is actually…