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Wednesday, 12 September 2012 14:37

Tax cliffs

Many tax benefits gradually fadeout over as income increases. But not all: Tax cliffs have a hard and fast line where $1 more in income can cost far more in tax benefits. Don't believe me? Check out these three tax cliffs.

Earned Income Credit and Investment Income: Threshold not to pass: $3,200 in investment income. Benefit at risk: from $2 to $5,891. Earned income credit is a reward for working and is figured on four criteria: Adjusted Gross Income, Earned Income, Marital Status and Qualified Children. The credit is not a set amount; it varies from as little as $2 to as much as $5,891. But all along the range, if your investment income exceeds the cap ($3,200 in 2012) you're no longer eligible. Investment income can come from interest, dividends, sales of stocks, redeeming savings bonds AND rental property.

Published in Money

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