INSERT DATE, FIRM LOGO
Dear [Individual Client],
As the year draws to a close, it is a good time to take stock of your tax situation and identify
possible opportunities to minimize your tax liability. Many of the provisions associated with
the American Taxpayer Relief Act of 2012 (ATRA) became effective in 2013, which means
they will have an impact on this year’s tax return.
The ATRA extended numerous benefits for middle-income taxpayers that can help minimize
your tax bite if you qualify. Tax benefits include many credits and benefits for families, some
deductions for state and local taxes and tax credits for making energy-saving improvements to
your home. If you are a higher income taxpayer, the ATRA increased your need to plan to lower
the impact of higher rates.
We encourage you to contact us at your earliest convenience to discuss how these laws affect
your tax situation and develop a strategy that makes sense for you. Among the issues you should
be considering:
Health Care Reform
The Affordable Care Act (ACA) has generated a great deal of confusion and concern. Taxpayers
who don’t have health care coverage may be subject to a penalty. Even if you already have
coverage, you may want to consider alternatives available in the newly created Health Insurance
Marketplace. We can help you assess what reform means to you and offer the advice you need to
make the best choices.
New Tax Laws in Effect

High-income individuals will likely pay more in taxes under the new law and should
consider options for minimizing their burden. The highest individual income tax rate rose
to 39.6% in 2013 and taxpayers at this income level also saw the dividend and long-term
capital gains tax rates rise from 15% to 20%.

In addition, the new 3.8% net investment income tax applies to single taxpayers with
adjusted gross income of $200,000 and joint filers earning $250,000. This new tax may
affect the effective after-tax return on the sale of your investments, but proper planning
may serve to minimize the impact.

Although the alternative minimum tax (AMT) originally was aimed at high-income
taxpayers, it increasingly has affected more and more middle-income taxpayers over the
years. The law indexed the AMT for inflation but the use of certain tax breaks could still
subject you to the tax.

Phase-outs of personal exemptions and the limitation on itemized deductions have been
reinstated. As a result, joint filers with adjusted gross income greater than $300,000 and
single taxpayers whose adjusted gross income exceeds $250,000 may see a decrease in
both of these deductions.

After several years of uncertainty in the estate tax area, the ATRA finally created some
permanency. The amount that an heir can inherit without owing estate tax is now set at
$5 million and will be indexed for inflation in future years. In addition, the estate tax was
raised to 40%.

Under the ATRA, taxpayers age 70½ and older can once again make up to $100,000
of tax-free distributions from an IRA directly to qualified charities.
For those who are paying college tuition, there is some good news. Several education-related
benefits were extended by the ATRA, including the American Opportunity Tax Credit, which
allows eligible taxpayers to claim a tax credit for some higher education expenses. Given
skyrocketing tuition costs, families should not overlook these credits and deductions as they plan
for college.
We can help you understand your tax situation and determine the best steps to address your tax
challenges and any other financial concerns. We are also available after tax season to advise you
on the financial strategies and planning decisions that will help you meet your goals. Please don’t
hesitate to contact us today to schedule an appointment to begin discussing your options.
Sincerely,
NAME, CPA