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How Will the Fiscal Cliff Affect Seniors?
By Attorney John A. D’Onofrio

John A. D’OnofrioUndoubtedly, by now you have heard the many talking heads on your favorite news channel talking about the “fiscal cliff”.

December 31, 2012 is fast approaching, and with it the fiscal cliff - a series of federal spending cuts and tax hikes that will automatically go into effect in January 2013, if Congress doesn't act to override them.

Listed below are a few major items that all Seniors should be concerned about. Income that retired people receive from their investments is currently taxed at a maximum rate of 15 percent. If we go over the fiscal cliff, dividends will be taxed at ordinary income rates, up to 40 percent.

The maximum tax rate on long-term capital gains (investments held longer than a year) will increase from 15 percent to 20 percent.

The fiscal cliff aims to cut some $11 billion out of Medicare, in part by lowering payments to doctors. This could mean that individual patients will have to pay the difference. Alternatively, it could put cost pressures on medical facilities, forcing them to reduce staff. Lower payments could also lead doctors to limit the number of Medicare patients they will see. The fiscal cliff could make it harder for some people to find a doctor, and could mean longer wait times and a lower quality of service for those who do.

If the economy suffers after going over the fiscal cliff, then returns on your investments will most likely be lower. To add insult to injury, the lower returns will be taxed at a higher rate.

If you don't have an estate plan at all, or are worried that your previous plan is not appropriate, your next step should be to contact Attorney John A. D’Onofrio today at (412) 893-2552 or by emailing John at john@donofriolawoffice.com. D’Onofrio Law Office, P.C. is located at 500 Commerce Drive, Moon Township, PA 15108. This article does not intend to give legal nor investment advice nor is there an attorney-client relationship created or established by your having merely read the article.

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