The resolution to the fiscal-cliff crisis at the end of 2012
avoided some potentially huge tax increases. But two provisions,
known as Pease and PEP, did return as a result of the compromise
among lawmakers, boosting taxes on high-income taxpayers. But how
do the provisions work, and will they affect you?
In the following video, Dan Caplinger, The Motley Fool's
director of investment planning, talks about the Pease and PEP
provisions, noting that they both take effect on single taxpayers
with income of $250,000 or more and joint filers with $300,000 or
more in income. Dan notes that the Pease provisions reduce
allowable itemized deductions, while the PEP or
personal-exemption phaseout reduces how much you're able to take
in personal allowances. Dan concludes with some tips on how you
can avoid the full brunt of these provisions in certain
Be smart about your taxes
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