What's included in what will be taxed if your adjusted gross income is over $ 200,000 or $ 250,000? A lot - dividends, rents, taxable interest and taxable income from annuities, royalties, capital gains, REITS, and master limited partnerships, maybe more. Taxed at 3.8%. Yikes! another $380 on each $1000 over the threshold. How to reduce: If you are not already maximizing 401k or other retirement plans, do so now. Make your charitable contributions out of your IRA if you are over 70 and 1/2. Moving expenses. Capital losses up to $ 3000. Keep your high income producing assets inside your retirement accounts. Keep growth investments outside retirement accounts. Invest in tax-free municipal bonds. Time income if possible - sell one half of asset for gain at the end of December and the other half in January. Consider installment sales and like kind exchanges. Roth Conversions but stay below thresholds. Go offshore. Hold assets until death! Be Aware - someone can have the same income as you but pay less taxes due to your owning investment income over the threshold. It pays to look your income over and see how you can change it if you are set to pay this tax.
