Wealthy Investors Use Losses to Minimize New Taxes

As the 2014 tax return filing season quickly approaches, wealthy investors are realizing the weight of their tax burden. Many investors did well in the market this past year but are watching their investment gains shrink due to local, state and federal taxes, such as:

• A 4.6 percent rise in income tax due to the American Taxpayer Relief Act, bringing the total percentage to 39.6 for the top-end tax bracket 
• Increases in both the Medicare payroll tax and Federal maximum net capital-gains tax, along with the 3.8 percent net investment income tax

In the New York Post article New Taxes on the Wealthy Cause Scramble to Offset Big Gains Weaver’s Mike Hirsh, Dallas partner in tax and strategic business services, suggests one way for investors to mitigate the tax burden is by taking advantage of market losses from recently purchased oil stocks or securities.

In fact, many professionals in the financial services and tax industries are telling their clients that offsetting market gains with losses may be the best course of action for their 2014 tax returns. Charitable deductions and shelters are also being utilized for this same purpose.