Triple Play is a weekly NJBIZ feature that asks top executives in New Jersey to talk about three things related to their industry.
Lisa Osofsky is partner-in-charge, Private Client Services and an incoming member of the executive committee at WeiserMazars, a leading accounting, and advisory services firm. She is based in the firm’s New Jersey office.
We asked her for three thoughts on how business owners and executives can reduce the impact of higher tax rates.
Reduce the NII tax. This NII (net investment income) tax of 3.8 percent applies to most portfolio items, such as interest, dividends and capital gains. The key is to determine how tax-free or tax-deferred investments, or the timing of capital gains, can play a role in your portfolio.
Defer income. The Medicare surtax on wages and self-employment income that exceeds certain thresholds is only 0.9 percent, but it can add up. An employee can defer bonuses or option exercises to stay under the threshold. If you are self-employed, you may be able to accelerate or defer income and bunch deductions to reduce income subject to the tax in one year versus another.
Maximize deductions. The most common itemized deductions that people claim are mortgage interest, real estate taxes and charity. When it comes to charity, if you donate appreciated marketable securities that you have held for more than one year, you gain two benefits: You help your favorite charity and save taxes by avoiding tax on the appreciation and deducting the full value of the stock.