Good point, Sandra. We actually have a pretty detailed question from Liz about asset allocation and capital gains.
One thing I think we should prepare for is a delayed filing season next year. Congress may not give the IRS enough time up update its computers. This happened a couple of years ago, when taxpayers who itemized their deductions couldn't file until Valentine's Day.
And Kevin, here's a quick follow-up for you from Diane
There's an old, but true, saying that you shouldn't let the tax tail wag the investment dog. The coming of the fiscal cliff might influence your decisions but shouldn't direct them.
The choice between actively managed funds and index funds is an individual one.
Diane...it won't happen. The rules are set for 2012 and the 0% rate is for sure.
A very important point. Thanks, Kevin.
So, for Liz, it might be worth reviewing her portfolio, but not making any drastic changes simply because of the fiscal cliff?
Here's one from Mike that I know you'll have an answer for, Kevin.
What we're telling people is this: if you were planning to sell stocks or funds in the near future anyway, there's a good argument to be made for doing it by year-end.
Sound and simple advice. Thanks, Sandra.
Mike, it looks more and more the payroll tax holiday will come to an end. Amanda, can you link to our kip.com story on this point. We even have a calculator to show how much it will cost you when the rate goes back up to 6.2%.
Sandra, you might be able to take this one from Oliver.
Now, remember the payroll tax holiday followed two years of the making work pay credit which followed one year of checks for everyone. Congress might come
up with a new stimulus.
The most likely scenario is that Congress will extend the AMT "patch," which will prevent it from spreading like kudzu. But if you paid in the past, you'll probably pay it again. One hopeful note: advocates of tax reform want to fix AMT once and for all, so relief may be out there. Someday.
Romney says he'd end the AMT; Obama wants to replace it with the Buffett rule
Thanks, Sandra and Kevin. We've got just a few minutes left, so let's try to get to a couple more questions
The 3.8% surtax will affect couples with more than $250K AGI and investment income. So if you have an opportunity to reduce your investment income for 2013, you may want to look into it.
You may also want to consider converting to a Roth, because qualified withdrawals will not be affected by the surtax.
Alright, and here's a final question from jsj
Not sure what you're getting at. You want to pay tax on gains at 15% now rather than risk facing a 20% rate next year? Might make sense.
Alright, unfortunately it's time to wrap up today's chat. Thank you all for some great questions!
Thanks for participating!
And a special thanks to Kevin and Sandra for helping us out today.
Happy to be here...on to the cliff......
But not over it (here's hoping)!
We'll be back next Thursday with another live chat about simple investing. We hope you'll be able to join us.
Enjoy the rest of your day, all.