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Last week I wrote a post about implementing your financial plan. With investing it is not so much what you make but what you keep that affects your wealth. As the Bush tax cuts phase out and the OBama proposed increases are phased in tax planning becomes more important than ever.
Just who will be affected when the proposed increases take effect? Taxpayers with incomes of more than $250 000 for married filers and above $200 000 for single filers will be affected by the changes. The proposed increases will raise the highest tax rate also known as the marginal tax rate. Additionally the capital gains and dividend tax rates will be increased and personal exemptions will be either cut or eliminated. While the changes will not take effect until 2011 many tax saving strategies take months to implement. For example it may make sense to capture capital gains next year before the higher rates go into effect in 2011. Plan to meet with your CPA at least some time in 2009 to strategize on ways to reduce your tax bill.