3 Tax Breaks the Big Guys Use

High-income earners bank significant savings off these tax breaks, but the 'little guy' can, too.

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We’ve all seen the numbers. High-income earners are subject to higher marginal rates these days: 39.6% on incomes over $400,000 for single taxpayers and $450,000 on couples filing jointly on their 2013 returns. Additionally, single taxpayers with incomes over $200,000 and married couples with incomes over $250,000 are now subject to a 3.8% “surtax” on their investment-related income as part of Patient Protection and Affordable Care Act, better known as Obamacare.

Taxes185 3 Tax Breaks the Big Guys UseYet few wealthy taxpayers pay anything close to those percentages. Data for the past two tax years is not available yet, but in tax year 2010, the top 0.1% of taxpayers — those with incomes of more than $1.6 million per year — had effective tax rates of less than 23%. That’s far below headline top marginal rate of 35% that year.

So, how do the big boys do it?

Wealthier taxpayers will probably always have access to tax breaks that rank and file Americans will never enjoy. But today, we’re going to take a few tricks out of their playbook.


Article printed from InvestorPlace Media, http://investorplace.com/2014/02/tax-breaks-big-guys-use/.

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